Stuff Investment Bankers Don’t Like: The CFA, Your Activities, Your Ph.D., and More
I’ve noticed a disturbing trend lately: many readers have the wrong idea of what will help them with investment banking recruiting.
Thinking that they need to do “something” at the last minute to boost their chances of getting into the industry, they come up with all sorts of “creative” – yet marginally effective – ideas.
Read on to see exactly what not to do to get noticed in recruiting.
1. The CFA
I must get more comments about the CFA than any other topic (yes, even you, models and bottles).
There are hundreds of reasons the CFA (any level) is a waste of time for getting into investment banking (note those highlighted words carefully, and read to the end of these points before leaving an angry comment), but here are the top 3:
a. It’s not necessary for advancement and the majority of investment bankers don’t even have it.
If you want to be a portfolio manager, go ahead… but for the rest of us it’s marginally helpful at best.
b. Studying for the exam requires an obscene amount of time – almost 1,000 hours according to the website.
Think about how much networking you could do in that same amount of time: let’s assume 900 hours of study time for the CFA (300 hours per level).
Assuming you can plan and conduct 1 informational interview in 1 hour total, that’s nine hundred new contacts.
Which do you think will be more useful: a single line at the bottom of your resume, or almost 1,000 people who can help you get interviews?
c. There’s almost no correlation between the CFA and what you actually do as an investment banking or private equity Analyst / Associate.
Last time I checked, the CFA curriculum did not cover administrative work, due diligence, pitch books, and the financial modeling specific to banking.
Please, no more email or comments on the CFA. Use those 900 hours and do some networking, learn another language, or go on a trip around the world – any of those would be more helpful for getting into finance.
Clarifications to the Statements Above: In some situations and geographies the CFA can be useful – for a full discussion, please read this newsletter article on the pros and cons and when you should think about the CFA.
The reason why I made such strong statements above is this: most comments and questions I get on the CFA are coming from people with low grades at lesser-known schools with no experience who think that the CFA will magically get them into Goldman Sachs investment banking.
2. Your Activities
“But wait,” you say, “I thought it was really important to be ‘interesting’ in interviews?”
It is – but bankers pick resumes mostly based on work experience and whether or not they know you.
Now if you’ve done something truly impressive – like starting a non-profit that built 1,000 schools in Southeast Asia – that can actually help you.
But let’s be honest: many activities are just resume padders, and having 1 name or 50 names won’t make a difference if that’s the case.
If you have absolutely NO finance experience and nothing even related to business on your resume, then you can play up your activities – but otherwise avoid it.
3. That Investment Club You Started
If you can’t get a real internship, start an investment club or student-managed fund instead, right?
Actually, this logic is not terrible: it’s certainly more helpful than the CFA, and in the absence of real business experience, it looks better than being a lifeguard or working at a restaurant.
But no student-run investment club is going to put you on par with the guy who did 2 summers at Morgan Stanley.
You should only do this if you can’t find a part-time, school-year, or summer business-related internship of any kind.
4. Your “Internship” Waiting Tables
Truthfully, being an investment banking analyst is much more similar to being a waiter than it is to most “real” internships.
You need to multi-task, you’re always running around, you have to deal with annoying clients all day, and you have to do a ton of grunt work.
But bankers themselves don’t see it that way and won’t acknowledge this type of work experience as equal to a “real” internship.
You don’t want to write about any of this unless you have nothing else to point to.
5. Bloomberg / FRM / CPA / Other Meaningless Certifications
Similar to the CFA, most other certifications are also useless – although on the up-side they don’t waste nearly as many hours as the CFA.
Some of these certifications – like the FRM and CPA – have nothing to do with investment banking, while others – like Bloomberg – are somewhat relevant but useless compared to, say, calling 5 alumni.
Remember, the only part at the bottom of your resume that most people even read is what’s in the “Interests” section.
Bored office workers always want to meet interesting people, but no one wants to meet well-certified people.
6. The GMAT
While getting a decent GMAT score is important for business school admissions, it’s less relevant for getting into investment banking at the MBA-level. And it’s even less relevant at the undergraduate level.
If you had to take it for business school anyway and earned a good score, you can list it if you want – but if you don’t have room, cut it.
But if you haven’t had to take it for any reason yet, don’t do it in hopes of getting a good score and using that to propel your way into finance: your time is better spent elsewhere.
7. Non-Native-Speaker-Level Language Skills
Ok, this one is not 100% true.
It helps to have some language ability, even if you’re not native speaker-level – something is better than nothing.
But unless you’re at an extremely high level (i.e. you could watch a university-level lecture on economics, understand everything, and then write a brilliant 10-page paper about it in that language), you can’t leverage language abilities to move to offices in other countries – there’s too much reading and writing required.
There are some roles – like trading and certain back and middle-office positions – that don’t necessarily require language mastery. But if you’re reading this site, you’re probably more interested in areas like investment banking and private equity, both of which require a lot of communication and reading/writing.
8. Your Ph.D.
After the CFA, this might be my #2 question received via email:
“Will a Ph.D. help me get in? Do banks care about my quantum physics skills? What if I’m the next Isaac Newton?”
First off, if you’re smart enough to write the next Principia, you should not be in investment banking because you’re going to get a lot dumber. Go write a book about your discoveries and win a Nobel Prize.
The math required in finance is VERY simple. Addition, subtraction, multiplication, and division if you get really fancy.
Most of what you do in M&A is administrative: sending emails, keeping track of different buyers, and updating Word documents.
So the only reason to get a higher degree is if you want better access to recruiting channels at a more prestigious school – and even then, stop at the Master’s level rather than doing unnecessary work.
9. Financial Modeling Courses
“Wait a minute, you just RELEASED your own financial modeling course, and now you’re saying that banks don’t care whether or not we’ve gone through them? Are you crazy?”
No, I’m just being honest.
The *knowledge* you gain from these courses is very helpful, especially if you don’t have a finance background or you want to prepare before you start working.
But listing the course itself on your resume – no matter which one it is, or whether you invest $100 or $10,000 – doesn’t guarantee you anything.
The bottom-line is that if you want to prepare for interviews and for work itself, these can be a good option – but they fail as mere resume padders.
Wait, So What DO They Care About?
- Work Experience
- Educational Background (more applicable if you’re a student)
- How many people you know at their firm and how much they like you (networking)
But there’s a problem if you’re trying to use any of these to boost your chances at the last minute: each one takes years or months of effort – you can’t do it overnight.
But It’s the Last Minute and I Really Need Something!
It’s pretty much impossible to add anything substantial if you only have a week left before interviews begin – but if you have a few months, here are 2 quick examples of how you can make some impressive-sounding last-minute additions:
- Study abroad program / some kind of international experience. (doesn’t need to be 3-4 months – something shorter is fine)
- Summer, night, or part-time program at a well-known school.
Any type of study abroad program is also great to talk about in interviews, especially if it’s to a completely random country or region. Going on a trek to Antarctica stands out more than going to Paris.
Doing some type part-time or summer program at a brand-name school is more helpful if you’re not going to a well-known school right now – anyone scanning your resume quickly will say, “Aha, I recognize that name.”
Of course, none of these tactics will make up for a lack of solid work experience or lack of contacts in the industry.
But if you’re struggling to stand out with only a few months left, you don’t have much of a choice – you have to take what you can get.
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