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 start-up 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.
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.
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.
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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