Why Not Even a Boutique Investment Bank Will Hire You – And What to Do About It
“It’s soooo easy to work at a boutique bank, all you do is cold call them and submit your resume and you’re set.”
“If I have a 2.0 GPA and no work experience, boutiques will still hire me, right?”
“I’m applying to bulge brackets, middle market banks, and boutiques. Can you rank my chances at all of them? Also, can you rank the banks, schools, Excel macros, and the models in AJ’s video?”
No, no, and no.
I’ve got some bad news for you: you’re not good enough to get hired, even at a boutique bank.
I know this because I recently went through a hiring experiment of my own: searching for associate editors and finance wizards.
While this site may not be a boutique bank exactly, the similarities are striking: scarce resources, revenue in a similar range, a relentless focus on ROI, and 150+ applicants for only 1-2 open positions.
I learned enough through doing this to tell you exactly what you need to get hired by a bank – and what you need to get hired by me in the future, if we’re on the lookout for more help.
What You’re About to Learn
This one’s very “meta” because I’m stepping back and telling you something about the site you’re reading and what goes on behind the scenes.
And then I’m somehow linking that to banks, the hiring process there, and throwing in plenty of sarcastic comments and pop culture references.
But hey, people always say I’m “mysterious,” so why not have some fun and reveal more information for once?
Close your YouTube window, get some yerba mate, cocaine, or sugar-free Red Bull, and take your seat – because here’s what’s coming up in this monster article:
- What (boutique, or any) banks are really looking for - and why you’ve never made a compelling case to them.
- How banks really review applications and resumes and the single best way to stand out and win offers.
- Why offering to work for free is often a bad idea, or at least not as enticing a proposition as you might think.
- The truth about how “big” this business and the size of similar sites – and why the notion that any of us would “go public” is laughable (Hmm, I hope this doesn’t make anyone mad…).
- Secret, behind-the-scenes information on this business (OK, I might change my mind on that one by the time I finish writing).
- And oh yeah, an introduction to (some of) the new writers, the new site design and Facebook page we just launched today, and more.
Why Does Any of This Matter?
Simple: because you need to understand what the other person is thinking if you want to be successful in getting hired, being in a relationship, selling products, starting your own investment fund and raising capital from investors, or anything else.
I’ve written a lot about how to apply to banks, how to craft your resume, and so on, but what you’re about to read is different because it’s all about psychology and getting inside the mind of the employer.
First, do not take any of this personally.
Nothing here is directed at a specific reader who applied for the advertised positions. I received so many applications that it’s impossible to even remember who said what.
Instead, I’ll be referencing general trends I saw, observations of what banks are looking for, and how the readers who are now writing for the site won me over.
If you think I’m too blunt and you’re looking for good “bedside manners,” find a doctor and check yourself into a hospital right now because I’m about to get even more blunt.
Why Would a Bank Hire You in the First Place?
One of the best and most overlooked articles on this site is this fantastic interview with a headhunter at a top recruiting firm, detailing what banks and PE firms are actually looking for.
I know you’re too lazy to read through the whole feature, so here’s what you need to know: a bank will hire you for one of three reasons:
- If you help them make money.
- If you help them save money.
- If you help them improve a process (save time).
Realistically, you’re not going to help a bank make money or save money at the entry-level unless you’re a once-in-a-lifetime superstar or your family owns a $100 billion steel conglomerate in your home country and you can get Fortune 500 CEOs on the phone in 2 seconds.
Which raises the question of why you’d ever want to move down the evolutionary chain from conglomerate mastermind to Excel monkey, but we’ll save that one for another day.
So your only hope of getting hired – at least right out of school – is to save them time.
And that’s why analysts and even associates do so much grunt work: by fixing those PowerPoint slides or grinding through Excel, you’re doing work that the senior bankers no longer have to do – which frees them up to bring in clients and generate revenue.
So, What Could You Do for Me?
The similarities are striking:
- You’re not going to generate more revenue (with a few exceptions – see below).
- There’s no way you could save me money, because my main expenses are headcount and infrastructure-related and everything else is minimal (just like at a bank).
- …But you could save me time. A lot of time – by writing content and answering questions.
In case you’re confused about the first point, here are the only two actions that would generate more sales for this business:
- Creating new products (or services);
- Marketing those new products (or services); also optimizing existing marketing.
Note that writing articles does not necessarily result in higher sales.
It’s just like equity research at a bank: indirectly, over the long-term, more content means more traffic and more exposure and therefore a higher revenue potential, but you can’t link the two directly.
Some readers who applied figured this out and proposed schemes to promote their own products and split the profits, asked about starting up resume editing and/or mock interviews, offering in-person classes, and so on.
Those applications stood out because they offered a win/win proposition: save me time (it might take me 1 hour to edit a 2,000 word article but 3-4 hours to write and edit it myself), earn more money, and also help them earn more money.
Interestingly, no one asked about helping with one of my most time-consuming but also highest revenue-generating tasks: creating financial modeling courses.
I don’t blame you, though, since the average course takes around 400 hours to create. You’re probably better off studying for the CFA, or at least ordering bottle service for 100 nights straight.
Resource Reality Check
So you understand why no small bank (or small business of any kind) would hire you unless you help them make more money, save money, or save time, right?
Now you must understand the reason why they are so strict with whom they hire: limited resources.
When venture capitalists search for the next Facebook or Google, they’re looking for B2B companies that could potentially serve tens of thousands of businesses, or B2C companies that could serve tens of millions (or more) of consumers.
Think about the math there: 10,000 * $100,000 (average selling price for an enterprise software product, for example) = $1 billion. Which is obviously much cooler than a million dollars.
Or, on the consumer side, 10 million * $100 (average selling price for a new gadget, for example) = also a cool billion dollars.
Those revenue numbers are big enough to support massive companies – maybe not quite Fortune 500, but pretty close.
Now, do you think there are ten million people in the world who are interested in investment banking?
More like 100,000, possibly up to 1 million if you’re feeling aggressive and you want to include related fields.
So no matter what you think or what you’ve heard, no “company” that serves a small market like this one - whether it’s finance, consulting, business school admissions, the GMAT, or anything else – could ever have the resources of a Fortune 500 company.
Boutique banks work under similar constraints: a bulge bracket bank might be able to look past spending $100,000 on a new hire, but to a boutique that’s a massive expense that will significantly impact the owner’s profit.
And then recall another disadvantage for boutiques: if a single deal fails to close, they might have no revenue at all - or at least revenue that’s much lower than what they expected.
So hiring even a single analyst is an ordeal that attracts a lot of scrutiny: the last thing they want to do is pay for your salary and bonus when one of the two deals they were working on that year falls through.
As a result, you shouldn’t assume that working at boutique banks is “easier” just because they’re smaller – they’re more careful about spending money than bulge bracket banks.
But I’ll Work for Free!
This is a common response to limited resources at small banks, and it makes sense intuitively: if they can’t afford to pay you a good salary, why not offer to work for free?
The problem is that nothing is ever “free” because time is often more valuable than money – especially for senior executives.
Here’s a translation of what a Partner at a bank might think when you offer to work for free:
“Great, he’ll take up 20 hours per week of my time and will use this to pad his resume so he can leave for a bigger bank. I’ll have to hand-hold him through everything and answer annoying questions, and I’ll have even less time than usual to wine and dine clients.”
The only way around this problem is to prove that you can hit the ground running.
I used to think that self-study modeling and other training courses were nonsense, but after having weighed in on hiring decisions at banks and now for my own business, I think they make sense if you can use them to establish your ROI to an employer upfront.
Offering to work for free can solve this problem of limited resources, but you still need to make a compelling case for how you’ll make them more money (unlikely), save them money (possible but unlikely), or save them time (we have a winner!).
I sometimes get emails that read like this:
“Hi, your site is awesome! I would like to contribute in any way I can, but I have no skills, I don’t know anyone, and I haven’t worked in the industry. But I’m willing to help you for free! What can I do?”
I appreciate the effort, and it makes me happy to know that you care so much that you’d offer to help out.
But this is not a good way to approach a bank, myself, or any other employer.
State upfront how you’ll be valuable in terms of earning money, saving money, or saving time, or don’t bother.
How They Really Review Applications
OK, so now you understand what banks – actually all employers – look for in applicants, and how boutique banks and small businesses alike have limited resources and must therefore take hiring decisions seriously.
Now consider how most firms review applications.
First, my own story: I had just gotten off a 16-hour flight and was in town for a friend’s wedding.
In the middle of a wedding weekend, I was meeting up with friends I hadn’t seen in 10 years and also dealing with a disaster on another work project, so I ended up sleeping only 6 hours in 3 days.
I ran out of time to finish (or even start) reviewing applications, and got through only a small portion of them while on yet another flight – in the midst of sleep deprivation and barely being conscious.
Oh, and then I had to change around the finance wizard role at the last minute and re-think whether or not I would actually need someone to help with that.
And then I decided to bring on multiple readers to write for the site rather than just 1 or 2.
I mentioned the 6 hours of sleep in 3 days, right?
All of that may sound unusual, but it’s the norm at banks.
They never really know how many people they need until it’s too late and they desperately need to hire more; your resume is most likely to be reviewed by a sleep-deprived analyst who just wants to go home and pass out, so exhausted that he’s forgotten about bottle service.
This is not like college or business school admissions where they take their time to review applications and “get to know you as a person” – application screening is random, unpredictable, and illogical.
And that’s why you need to stand out above everyone else to even have a fighting chance of being selected.
How to Stand Out
Here’s how you might have stood out when applying to work with me:
- Writing something good and relevant (i.e. about finance or business and not about your vacation last summer – yes, I left it open-ended but what did you think I wanted to read about?) and presenting a thoughtful list of topics.
- Pointing out gaps in existing content (potential to drive more traffic and therefore more sales) or ways to save me time (“I imagine you spend a lot of time editing, but with me you can cut that down to half your current time because…”).
- Suggesting ways to earn more money (e.g. creating your own product and splitting profits, starting up resume editing or mock interviews again, etc.).
You might now say, “Wait a minute! But you didn’t ask for any of that, how can you expect me to have read your mind?”
The punch-line: No boutique (or any) bank asks how you’ll earn them more money, save them money, or save them time, either, but you damn well better demonstrate how you’re going to do at least one of those if you want to get hired.
So you need to point out:
- How you found a new potential buyer that everyone else overlooked in an M&A deal (potential for more revenue).
- How you improved the processes of keeping clients updated, putting together models or pitch books, or otherwise saved senior bankers time.
- How you uncovered wasteful spending –subscriptions they’re paying for but no longer using, expensive tools, and so on – or even how you saved a client money by creating an analysis that resulted in a recommendation against an acquisition or certain deal structure.
I’ll admit that being aggressive about these points may seem desperate if you’re focused on large banks – so you have to be more subtle and only bring these up once you’ve gotten to know someone, or when opportunity knocks in an interview.
But there’s a good chance that you’re moving into finance from a different industry, or from a non-target school, or from some other background that isn’t the best match for the Goldman Sachs to KKR to HBS to World Domination “track.”
If that’s the case and you’re going for small banks to get your foot in the door, aggressiveness wins the day because people actually pay attention to what you say – and if you don’t believe me, just check out these reader accounts of aggressively cold-calling their way into boutique banks.
If you’re more senior, you should focus on the revenue-generation / client relations side and less on the “I learned all this stuff on my own so I can save you guys a lot of money by doing all your grunt work for you” angle.
While we’re on the topic of standing out, knowing me in-person also made a huge difference – that’s why I asked Peter to start helping with BIWS last year, and why Nicole is now responding to comments and writing for the site.
I always trust people to uphold their promises more if I’ve met them and known them in-person for some time.
And this applies directly to networking and getting into banks as well: you don’t stand out if you’re another anonymous application and you haven’t spoken with or met any of the people at the firm.
If you think this is too expensive or too time-consuming, you have the wrong priorities.
Forget about student activity #232 or trying to boost your GPA by 0.02 and focus on what really matters: getting to know people in your industry and positioning yourself for future success.
I’m not saying that you should have attempted to meet up with me in-person to boost your chances: I’m just pointing out that if you had known me before I even published the application, your chances would have been higher.
Why No Boutique Will Hire You – Or Will They?
Oh, they’ll hire you – if you can show how you’d pay for yourself, and then some.
If the bank expects to make $2 million in revenue from a few deals this year and they’re already spending $1 million on existing employees, why would they hire you for an additional $100 – $200K per year?
They wouldn’t – unless by hiring you, they could free up senior bankers to bring in even more revenue than that, or unless you cost them very little but saved everyone a lot of time.
So no more questions about why it’s so hard to get into finance, even at a boutique – OK?
What Next: New Design, Social Media, New Authors, and More
You might have noticed the new design we launched today (I like to do this every year) – it’s not a dramatic change over the previous one, but it does improve a few details, it makes the full list of BIWS courses more obvious, and it adds in some snazzy social media sharing buttons.
I’ve used Twitter for a while now, but there will be more consistent updates and postings from now on – so you should go follow M&I there.
And then we’ve also entered the 21st century and finally set up a Facebook page – it’s brand new, so you can get in early and get a much higher ROI than all your friends. And word around the campfire is that you may even get the chance to win free bottle service in the future.
You can check out (some of) the new authors on the updated About page – not everyone is listed there yet, but more bios will be arriving soon.
In the interest of full disclosure, some of the new authors are using pen names due to sensitive situations at work, or because they want to share stories that their employers would not be happy about.
Given that I used a pen name for the first 1.5 years of this site (“The Inquisitor” did sound cool) and that things worked out OK, I hope you’ll be fine with this.
I’m not going to dramatically change the format of the site and start posting five 10,000-word articles per day or anything – I don’t have the time to edit and manage all of that, and you don’t have the time to read that much.
Instead, you’ll see more articles and interviews on a wider range of topics going forward – with the first one coming up in a few days.
In the meantime, let me know how those boutique bank applications go – you now have everything you need to know, and even more coming up soon.
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