If You Can’t Get a Paid Finance Internship or Job, Should You Offer to Work for Free?
As graduation and summer internship season approach, you may be considering unpaid options more seriously if you’re still looking for an internship or job.
On the surface, this seems like an easy one, supported by straightforward logic:
- Banks and other financial services firms are hurting due to the recession.
- Therefore, they don’t want to pay anyone very much – or anything at all – to work for them.
- So if you ask for pay, you may not get interviews or offers…
- But if you offer to do it for free, they’ll be a lot more receptive!
After all, who wouldn’t want to give up some short-term earnings if it ensured long-term success?
One small problem: the logic above is 100% flawed.
It’s usually a bad idea to propose an unpaid work arrangement – except for a few specific instances, which we’ll get into below.
“Your Logic Is Flawed!”
The logic above assumes that firms are not hiring because they can’t afford it (see statement 2).
But with the way the market is right now, most firms are not hiring because they don’t have enough work to go around.
It doesn’t matter whether they pay you $10,000 or they pay $0: if they don’t have any work for you to do, you’re still “costing” them (just in time rather than money).
There are some exceptions: Restructuring groups and hybrid consulting/banking firms focused on turnarounds are relatively “hot,” and most PE firms and banks still hire a minimum number of interns and entry-level Analysts/Associates each year.
Funds of funds and tiny startups that have sprung up recently (many of them formed by ex-bulge bracket guys) are also looking for people, though in many cases more so at the VP/MD-level than at the Analyst/Associate level.
But aside from the tiniest of boutiques, your salary or requested salary makes almost no difference in whether or not they’ll consider you.
And by “boutiques” I don’t mean Lazard or Evercore – I mean extremely tiny firms with 3-4 guys max, because they’ll care about even small expenses.
But Will It Work for You?
Offering to work for free is most appropriate if you’re an undergraduate or a recent graduate. If you’re any older than that, you’ll look a bit desperate immediately asking for an unpaid opportunity.
Yes, everyone knows the market is awful, there are no jobs, and that you would take whatever you could get right now – but no, you still shouldn’t openly admit any of this.
So if you’re in an MBA program or you’ve been laid off recently – or you’ve been working for awhile – I would not recommend leading your call or email by saying, “I’ll work for free!”
If whomever you’re calling happens to raise it as an “objection” (e.g. “We can’t afford anyone right now”) then it might make sense to offer a rebuttal (e.g. “What about an unpaid experience?”).
But you should wait until they actually raise an objection before you make your “counter-proposal.”
This strategy will not work very well if you’re more experienced – most firms don’t like to take experienced people on for free, just due to legal/HR reasons and general principle.
But if you are targeting somewhere truly tiny, it can work… one MBA-level reader last year actually got an internship at a startup prop trading firm using this strategy.
Strategies for Undergraduates
If you’re younger and want to use this strategy, I would state this upfront (“I wanted to ask about unpaid summer intern openings…”) only if you’re going for the tiny, no-name, 3-4 person firms.
Even most “boutique,” middle-market, and other, smaller banks have formal recruiting processes in place and will not be receptive to this approach – so I’d save it for an objection rebuttal if it comes up.
Other Tactics
If you’ve already spoken with firms and tried to propose unpaid internships with no success, what else can you do?
Talk to Places That Already Have Standard, Unpaid Internships
Plenty of firms actually have a culture of taking on unpaid interns, whether during the school year or in the summer.
Rather than trying to pitch yourself to a bank that doesn’t actually want unpaid help, why not try these places first?
One that comes to mind in the SF Bay Area is FT Partners; and there are other regional boutiques that like free labor, often found through university organizations and business frats.
(Yes I know everyone hates FT Partners, this was just a quick example for illustrative purposes)
If you ask around within business frats and other groups you can find a lot of information on other tiny firms in your area that do this.
Go Into Finance Industries That Are Known for Not Actually Paying People
The most obvious example: prop trading firms, especially small ones, are known for paying extremely low (or non-existent) salaries and only giving you a percentage of your P&L as pay.
Not all companies do this, obviously, but it’s far more common in the world of prop trading than it is with investment banks and PE firms.
So if you went to a tiny, no-name trading firm they might just assume that you’re willing to work for no salary, on a 100%-commission basis.
That’s not great for you, but at least it gives you the possibility of making money – as opposed to a real “unpaid” internship where you’ll just get experience and contacts.
Related Finance Jobs
If you can get something that’s finance-related but not directly in banking/PE/investing of any kind, there are 2 advantages:
- You are more likely to actually get paid… and therefore stay afloat for awhile longer if that’s a major concern.
- You’re more likely to actually get a job or internship in the first place – especially if you target firms that are not used to receiving cold calls and cold emails from random, well-qualified, and well-spoken strangers.
Lateraling from this type of role into banking is 100% dependent on the market, which no one can predict. But doing something is a better choice than going for banks that just aren’t hiring right now.
The Non-Profit Angle
Another approach: if you can afford to work for free for a summer or for an extended period of time, apply to non-profits or similar organizations that have some relevance to finance.
Why?
Well, unlike most “normal” companies, pretty much any non-profit in existence would love to have additional free labor at their disposal.
On paper, it might not seem too relevant to finance – so you’ll have to spin it appropriately and focus on the “business results” of what you did, whether that was getting additional donors, raising money, or recruiting.
Also (and this is something I’ve only seen mentioned once elsewhere), there’s actually increased M&A activity among non-profits, because they are strapped for cash.
If you could work at one that was in the midst of some type of deal, you could use that experience to look like you did something finance-related and tell a good story about your interest.
The Unpaid Conundrum
So, should you offer to work for free if you can’t find anything that pays you?
Only if you’re a student or recent graduate, or you’re going for a truly tiny startup firm (or maybe a non-profit).
Otherwise it will just backfire on you, especially if you’re not a college student.
P.S. We got lots of great networking questions earlier this week – we collected them all and will be answering as many as possible in our live discussion next week.
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Tags: cold-calling, finance internships, investment banking, Networking, understanding investment banking, unpaid internships
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What about private wealth management if you can’t get into investment banking? What are some exit opportunities if you go that route and what are common salaries/hours?
Pay and hours are both less, but still higher paying than an average job.
Typically you just stay in PWM, but the easiest exit opportunities would be going to a hedge fund or doing some type of trading.
It’s better than other options like back-office work, but still makes it more difficult to ultimately transition into IBD (since half the people in PWM probably want to be in IBD already…).
For high school students, how would one go about contacting and finding firms that would consider offering an unpaid internship…in Canada.
Same strategies you always use when cold-calling: introduce yourself briefly, ask directly what you’re looking for, and don’t give up until you get through to someone useful… i.e. not HR, make sure you can actually speak with a banker or at least the person in charge of hiring. It goes without saying, but you’re wasting your time unless you’re going for extremely tiny firms as well.
Interviewed at a fund manager as a undergrad for an investment analyst position, didn’t get the offer despite the fact that they thought I could do the job. Offered to work unpaid to gain experience – they accepted and they actually gave me more interesting alternative asset work than the guy who was getting paid. The unpaid position eventually turned into paid position (Note: worked hard)
Six months part-time unpaid turned into full time offer. In the meantime, interviewed for M&A summer internships and got the job due to my alternate asset experience. Resigned from funds manager before Summer. Completed summer intership and got offered a grad position (note: worked hard)
At the end of the day, experience is everything and you’ll always be trapped in a vicious cycle if you don’t have any experience. Who cares if it’s unpaid – the fund manager was quite impressed that I was willing to work unpaid.
Right, but I think your situation was a bit different in that you already interviewed with them and they were clearly interested in you to begin with.
I recommend against offering it upfront if unless they have already considered you and said no for various reasons… it’s like going up to a member of the opposite sex who’s clearly not interested vs. someone who’s already somewhat interested in you.
Experience is everything, but keep in mind that you were also much younger than many readers and for someone with 5+ years of experience it looks a little weird to offer to work for free.
Hi M&I,
I am a rising senior (UNC Chapel Hill) and will be interviewing for FT positions in the fall. Unfortunately, I didn’t get an internship this summer and will be studying abroad.
I’m concerned about my situation and I’ve been trying to think of ways to offset my lack of experience. Would it make sense to register for the CFA Level 1 exam in December in order to demonstrate a commitment and interest in finance?
It would help, but the CFA is not going to completely offset your lack of finance experience. For the hours and time/effort you put in, it’s far more effective to try to find something part-time in the fall when you get back and point to that as evidence of your interest… even something unpaid (as I say above) would be a good idea, just so you can say that you’ve done something in the real world that looks relevant.
Hi M&I,
I’m at a critical career decision point.
I’ve been an IB analyst for the last year at a boutique that has been doing very badly in the last few months. Threats of retrenchment are looming and getting real by the day. My boss has selected a couple of us to be seconded to a developing country to start up the IB practice there and has hinted that if I do not go along with it, things will not be pleasant. I can foresee plenty of administrative shit in the new place since it is a start up with zero deals in the pipeline, and the seniors who will be going along are of not top quality. My option if i decline is to be transferred to another dept. such as wealth management/treasury, or take a tremendous pay cut and hope that deals will come by in the developed country I am in.
Do you see any benefits in being part of a team starting up an IB franchise in a developing country? And, do you have any general advise for my position?
I had a friend who had to do something like that. I think it comes down to whether or not you see yourself in that country long-term – going there will make it more difficult for you to move elsewhere. Having that experience of starting a local branch will look impressive on your resume, but you’re right in that it won’t be much in the way of real deal exposure.
Personally, I would only move to the other country if you could see yourself working there for the next few years and possibly longer than that.
Otherwise, I’d stay here and do some networking/cold-calling/cold-emailing on the side to introduce yourself to other boutiques and hopefully move somewhere more stable… and getting moved to another division would then be a backup plan.
I’m a freshman (first year) and would appreciate any experience (including unpaid). How would I find these no-name HFs and boutiques? It’s a long shot to get anything but I would just cold-email these firms. I’m hoping for the experience to put me in good stead for summer internship cycle next year. Any other things to help me stand out would be great especially since I’m from a non-target.
Thanks.
I would look on that thread on WSO (http://www.wallstreetoasis.com/forums/regional-boutiques) and ask people there to post a list of firms in your area. You can try to find them via Google searches but it’s a real long shot, you really need Capital IQ.
Hi there,
I enjoy reading your tips for application in other interview scenarios.
But just to keep up with the pace (being a non finance person) what do the abbreviations PE and IBD stand for? … such as in “PE firms” or “getting into IBD”
Thanks
PE: Private Equity
IBD: Investment Banking
James is correct. Maybe I should add a glossary to the site…
FTP literally sucks. It is really shitty place.
Never said it was good, only that it was available.
Would it be appropriate to ask for an unpaid internship based on the fact that I have no experience in finance? I’m going for my MBA one year from now but I want to get some experience with an investment firm beforehand…
That’s fine, but I wouldn’t necessarily bring it up right off the bat… maybe wait and see if they object, and then offer it up.
is the interviewing process different when volunteering to do an informal unpaid stint rather than a formal gig? could you get one with no finance exp?
It’s not any different really, same types of questions. And yes, you can get one with no experience… see the case studies on this site.