Sure, it’s great if you can defy all odds and get into finance in the midst of a recession.
But let’s be honest: there’s always a chance that things may not work out, simply due to probability, bad luck, and the general lack of hiring.
So, if you don’t get into investment banking, private equity, hedge funds, or whatever else you’re after, what are your best alternatives?
In other words, how do you decide which “Plan B” option is best and which one you can actually leverage to move onto something better?
Rather than giving generic advice, we’ll go through a couple common “Plan B” options and look at the advantages, drawbacks, and key considerations for each one.
The Problem with “Plan B” Planning
There are 2 big problems when you consider any “Plan B” scenario:
- It’s really, really hard to time the market. Like, almost impossible.
- It can be very, very difficult to transition over to a front-office finance role later on.
These problems are lessened if you’re only resorting to Plan B for your internship. If you’re going to the fall-back plan for a full-time offer, you’ll encounter greater difficulties.
Whenever you’re consider your backup plan, you need to take into account the 2 problems above and consider how much your plan depends on timing the market, and how difficult it will be to transition over later on.
So let’s go through some of the more common options you might be considering, and look at each one through the lens of these 2 key points.
This is a popular one these days.
“I’m an accounting major and didn’t get into banking! Should I go to an MBA program right after graduation?”
“What about the Harvard 2+2 program? Will that get me in?”
The bottom-line is that business school is a bad idea if you only have minimal work experience.
Theoretically, a top MBA program allows you to re-brand yourself and break into new industries, but the reality is more complicated – especially when the economy is bad.
Business school is a terrible “Plan B” if you’re just out of undergraduate or you’re graduating soon – it’s a better move if you’ve already been working for 3-5 years and you’re looking to make a transition.
But even then, your success will depend greatly on the state of the hiring market – so it’s always a gamble.
Despite what new programs like HBS 2+2 may claim, banks are still heavily biased against anyone who lacks substantial experience.
Other Grad School (Master’s Programs and More)
Master’s programs are a better idea for anyone who didn’t break in during the first round and wants to have another chance at it.
But don’t expect that the degree itself will give you any advantages.
You go through such programs to give yourself more time to prepare for recruiting, to make a stronger impression, and to land more offers next time around.
But don’t expect to come in as an Associate after finishing a 1-year Master’s program – that’s just not the way it works.
The best reason to do one of these programs: if you got a lot of interviews but didn’t end up with offers, or you didn’t up with the right offers – and you’re at a school where you can take advantage of on-campus recruiting.
Corporate Finance / Strategy at Fortune 500/1000 Companies
Of the “non-school” options, going to a corporate finance or strategy position at a large company is the closest to front-office finance work that you’ll find outside the industry.
If you get this kind of offer, but have nothing else client-facing in finance/consulting, it’s probably in your best interest to take it.
But there are 2 problems you’ll face:
- You may not get to work on any acquisitions / partnership deals, so it will be more difficult to “spin” your experience into looking finance-related.
- You will still be at a disadvantage vs. anyone who has had a banking/private equity internship before.
You can’t do much about the second one; that’s just the way it goes. But for the first one, you should push to work in groups and teams that do more transaction-oriented work.
In other words, try to be involved with business development as opposed to internal strategy planning. You want to be valuing and evaluating acquisition, not dreaming up operational strategies.
You could also run into difficulties if you go to a smaller firm rather than a Fortune 500 / 1000 company, because the name is less credible and it won’t stand out – so try to work somewhere well-known if you go this route.
Middle / Back-Office Work
We covered this last year in one of the most controversial articles to be published on this site, “Holla Back, Office: 7 Reasons You Shouldn’t Work in the Back Office,” but just to re-cap: it’s really, really hard to transition over from middle or back-office work to client-facing work, especially if you’re working full-time.
It’s easier if you’re trying to move into prop trading or sales & trading, because the middle/back-office people there actually work with traders closely – but it’s much harder if you’re trying to make the move into banking or private equity.
I’d advise against this as a “Plan B” unless you truly have nothing else – even delaying graduation or taking time off to do something else is usually a better idea.
If you want to make the transition after working in the middle/back-office, keep in mind the following:
- It’s often easier to move to another firm rather than transferring internally.
- You will need to “build a buzz” about yourself in a front-office division by networking extensively and getting to know people there who will push for you.
This is an incredibly difficult transition to make in a poor economy – but hey, nothing’s impossible.
An Entirely Different Industry & Role
Maybe you’re thinking about going to a Big 4 firm, working in advertising at a big agency, or even doing volunteer work or going to a non-profit for a few years.
The big downside to doing anything like this is that you’ll almost certainly need to go to business school to re-brand yourself and have a chance at breaking in later on.
If you’re considering one of these as a summer internship option, it’s not necessarily the end of the world – though if it’s your final summer before graduation you’ll face a serious uphill battle against those with more business experience.
There’s another danger as well: you might be “over-qualified.” Some readers with finance experience actually had trouble going after accounting-type positions as back-up options, because they seem over-qualified on paper – and no one likes to be known as a “sure thing,” as Johnny Drama might say.
If you do end up doing one of these full-time, you’ll probably need to go through an MBA program to have a shot at breaking in.
Becoming a Ski Bum
Ah, yes, the fabled ski bum option.
The problem with becoming a ski bum is that your fate is tied almost 100% to what the market is doing. You’re not gaining any relevant experience or making any contacts, so you aren’t helping yourself too much if things don’t improve.
If the economy rebounds and hiring picks up, you might be able to pull this off… but if it stays bad, you’re in an even worse position.
Personal story: A few friends from top schools went to teach English in Asia following graduation, at the peak of the bubble.
When they got back, the recession was in full-swing and they had a hard time finding anything despite having Ivy League names on their resumes.
So you shouldn’t do this unless you’re not set on finance in the first place. There’s nothing wrong with taking time off, but it does put you at a big disadvantage unless the market happens to miraculously recover in short order (not likely).
Well-known fellowships and other scholarly programs could be an interesting option these days, especially if they’re finance-focused. You’re not technically “working,” but you’re also not sitting on the beach.
But you’ll need to make whatever you did look finance/business-related – oh, and a lot of these programs are extremely competitive, sometimes more so than getting into finance in the first place.
This type of plan is still better than doing something middle/back-office related or in a completely different industry if you lack better alternatives.
The main downside to fellowships vs. staying in school or delaying graduation is that you can no longer use on-campus recruiting – so you’ll really need to become a networking ninja.
The good news is that many of the well-known programs have strong alumni networks that you can leverage, so it’s not as difficult as pounding the pavement and breaking in from ski bum-land.
Treasury / Government Work
This is a relatively new option for most prospective bankers, but it just might be the most interesting one on the list.
These days, governments around the world own stakes in almost every financial services company because of all the bailout activity – and they need fresh blood to help manage all these new “portfolio companies.”
It’s sort of like working in private equity, except you’re more concerned with saving the economy rather than earning a high return.
This is also one of the few finance-related areas that’s actually growing these days – and as the economy gets worse and more banks get bailed out, that need for fresh blood will only grow.
Especially if you’re going to school in the DC area (if you’re in the US), or in a major government capital elsewhere in the world, you should be strongly considering this one.
The only “better” options would be front-office finance work or doing business development at a large company.
Entrepreneurship… for a Summer?
A recession is the best time to start a company. Microsoft and Apple were both founded in the stagflation of the 70s, and many successful Internet companies today were founded in the aftermath of the dot-com bust.
Starting a company or organization shows initiative and leadership, both of which look good to banks – but the downside is that it also shows that you’re independent and free-spirited, which banks don’t like.
Actual quote overheard from a recruiter once:
“I don’t know if we should take him… he’s done a lot of creative ventures before, I’m not sure how well he would fit into a more structured environment.”
If you have this type of experience, you need to emphasize the leadership skills you developed and downplay your independence – usually the best strategy is to say you didn’t learn much because of the lack of structure, and that’s what appeals to you about i-banking.
Then there’s another paradox that you’ll encounter with entrepreneurship: if you’re successful, banks will wonder why you’d ever want to work 100 hours a week for someone else and make less money doing it – but if you’re not successful, it looks like you’re changing careers because you failed.
That can make it difficult to tell a good story, and in a lot of cases business school will be necessary if you want to make this type of transition.
One other note: private equity firms – especially smaller ones – are more impressed with entrepreneurial experience than banks are.
So if you’ve run a mid-sized import/export company before, that can be a strong-selling point if you’re applying to middle-market PE firms.
Plans C Through Plans Z
We’ve covered a lot of ground here with some common “Plan B” options you might be considering.
What else are you thinking about doing if you don’t get into finance in the near future?
Leave a comment here with some of your ideas and fall-back plans, and we’ll respond with thoughts and feedback.