Why Investment Banking?
“I looked at all the articles on your site but nothing told me WHY I want to do this. Can YOU tell me why I want to be an investment banker?“
It’s a question you’ll get in every interview.
But it’s also a question where 90% of interviewees give terrible answers, no matter what their background is.
I can’t tell you exactly why you want to do investment banking… but I can tell you what to say in interviews.
So, why investment banking?
The Conventional “Wisdom” – Saying the Generic
Most websites, books, and other resources recommend generic answers:
- You want to learn a lot.
- You’re interested in corporate finance.
- You like a fast-paced environment.
- You’ve always done well in finance/accounting classes.
- You want to work with smart and motivated people.
These answers aren’t “wrong.”
But there is a problem: interviewers have heard them thousands of times and will start dozing off if yours resembles one of the above.
A friend at a bulge bracket bank in Asia said one recent interviewee gave the following answer for his “Why Investment Banking?” question:
“I… just want to learn. Nowhere else would give me the learning opportunity, and I want to learn so much… I’m really interested in learning and investment banking is the best place to learn.”
Uh, so why don’t you just stay in school then?
The Real Way to Answer the Question
It’s not about “honesty.”
It’s about being personal.
You can include some of the “generic” points above in your answer, but you shouldn’t limit your answer to those.
Instead, you need to mention something from your background or interests that NOT everyone else can just look up online and regurgitate in interviews.
We’re going to look at 2 ways you can do this: the “Big Picture” method and the “Slice of Life” method.
The Big Picture
With this one, you talk about how you started out on another path but shifted your interest to finance over time.
This one works best if you’re:
- A Career Changer (at any level).
- A Non-Finance/Accounting Major.
- Interviewing with an Industry Group.
- Struggling to think of a specific incident that made you interested.
The strategy is simple: Background in One Field +Experience in Finance = Long-Term Success.
This is not the “Tell me about yourself” question, so you need to get your points across quickly – take any longer than 30 seconds and you’ll bore the interviewer, unless you were a male escort in a former life.
Example for MBA-Level Career Changer:
Let’s say you worked at a healthcare policy think tank, started to learn more about the business of healthcare, and then decided to go to business school to re-brand yourself and get into finance.
You would start by mentioning how you were interested in biology/medicine/healthcare originally, and enjoyed the work at the institute at first. But then you had to do a lot of research into healthcare M&A deals, you learned more about business/finance, met a lot of bankers, and you realized you were more interested in that side – in the future you want to advise healthcare companies on business decisions, so healthcare investment banking is the perfect match.
Example for Former Engineer at Undergraduate Level:
Let’s say you’re coming from a technical background, did a few internships, but then realized you were more interested in business.
Talk about how you did well in your internships, but became more interested in business after speaking with friends in different departments, and how you started following startup news, technology M&A news, and recent deals. You’re interested in being an investor in tech companies one day, so combining your previous background with banking experience would let you do this.
I used a similar story in multiple interviews and it always worked.
You need to modify these examples based on what you’ve done, but the basic formula is simple: Background in One Field + Finance Experience = Success in Achieving Long-Term Goals.
If you don’t know what your “long-term goals” are, just make them up to fit the situation.
The Slice of Life
With this method, you talk about how an event early in your life made you interested in business/finance and how your interest developed after that experience.
This one works best if you’re:
- A Finance/Accounting/Business Major.
- Coming in with previous finance/banking full-time or internship experience.
- A “Career Changer” but you can point to something specific that prompted the change.
So let’s say you’ve been a finance major since you started university and you don’t have a “career change” to point to. In that case, you need to think about your family, experiences growing up, school, summer camps, and anything else you can think of that can explain how you became interested:
- You saw your parents day-trading when you were younger and started following the markets.
- You went to an event for women in business and met some MDs at banks there, which got you interested.
- Your friend started working at a bank and you toured his office one day and met lots of people there.
- You were in an investment club and won 1st place in a competition by picking stocks no one else even considered.
It doesn’t need to be a unique story: it just needs to be something that not everyone else will say.
And don’t overestimate the competition: I know from interviewing people at “top” schools that 99% of interviewees don’t even get the basics right.
Once you figure out what your “event that made you interested in finance” is, start your answer by stating what it is and then how it led you into your major, internships, and jobs, and how you see banking as your next step to achieve whatever you’re thinking about doing in the long-term, which is hopefully related to business.
There’s nothing “wrong” with saying you want to learn or that you’re interested in corporate finance – but you shouldn’t stop there.
You need to set yourself apart by thinking about your Slice of Life or your Big Picture.
And Not Just for “Why Investment Banking”
You need to use this answer for more than just the “Why investment banking?” questions: you have to use it in your “story” and also when you’re networking, because anyone you contact will ask why you’re interested.
Especially if you’re coming from a non-finance background, figuring out your “reason why” is critical because most peoples’ rationale consists of “I want to make more money!”
Other Possibilities
You can combine these two methods as well – just make sure your answer is short, because there’s nothing worse than asking this question and having someone ramble for 5 minutes after you’ve lost interest within 30 seconds.
Keep it to a few sentences and explain how your own background or some specific experience makes you a good match for the group you’re interviewing with.
Whatever you do, avoid stating the generic and talking about how you “want to learn.” You need to tie your “reason why” to what you’ve done in the past and what you want to do in the future.
Complications
There are a few situations where you may need to modify or add to your strategy:
- You’re coming in from an extremely non-traditional background and have changed your career so many times you don’t know where to start.
- You interviewed for banking positions before, but didn’t get any offers and ended up at a bank in a non-investment-banking position – and now you’re interviewing again.
- You did an internship but didn’t get a return offer and now you’re interviewing for full-time positions.
For #1, avoid the temptation to make your story “complicated.” Skip less relevant details and simplify your background so that it’s understandable in 30 seconds.
For #2, if you’re speaking with a bank you’ve interviewed at before, you should emphasize how you’ve learned / improved a lot since your initial interviews and have realized you’re even more interested now after completing your internship.
If it’s a bank you haven’t interviewed with before, say that you only became seriously interested over the summer and don’t mention your previous interviews.
For #3, say that you did well but didn’t like your group and didn’t fit in with the culture. You can’t lie about receiving an offer – but you can position it as being a “lack of cultural fit” rather than you not performing well.
Why Investment Banking?
That’s your homework: go and spend 30 minutes planning out what you’re going to say and which approach you’ll use.
And whatever you do, please don’t use the word “learn” 10 times in your response.
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Thanks for this site, I have found it extremely helpful.
I got into an early MBA program at a top 3 bschool right out of undergrad, and the program requires me to work for 2-3 years. I currently work a corporate job and I was hoping to leverage the prestige for a better pre-MBA job.
I have no banking experience but I have done some corporate finance and some consulting type stuff.
I was wondering how someone would view the early MBA thing, does it help me at all?
It may help a bit but usually they only care if you’ve actually completed the program. It’s still worth mentioning but I don’t know that the program itself will help that much.
Great article again Brian.
You mentioned that for an engineering, you can use the background in tech + interest in finance = success in becoming a tech investor
But how about if you are interviewing with a generalist group or some group that is not tech related? Do you just change the tech investor portion into something else?
Thanks a bunch.
Eric
I think we talked about this before, but yeah I would just say something like, “I’m interested in learning about a different industry and either being an investor there or starting a company there one day” and mention how your technical background gave you the analytical skills necessary to do it.
Does this relate to all aspects of investment banking including the public finance group at BB firms? Also, can you shed some light on the PF group? Is it actually investment banking? Are there similar exit opps to PE or VC or HF? Does it help for b school? thanks brian!
Yes, it applies to other groups but of course you need to modify it somewhat based on the group. I don’t know too much about the PF group but most people would not consider it “investment banking” – you can still move elsewhere afterward, but it’s not the same as banking. May help for b-school, but most people think it’s a notch below banking.
Off topic comment but after thinking a long time about what I want to do after banking I realized I would like to go into S&T. Any idea on how to position myself when contacting recruiters? I realize it will be harder to break in but definitely what i want to do after, any advice is much appreciated.
(to the poster above Public finance does not = PE and HF. You are raising money via bonds IE: Muni bonds for a road, so its all capital raising, might be useful transition into an ECM role at a bank but PE / HF will not like it as much as it is 1. not related to the market and 2. no modeling experience. Still better than not being in IB though)
Hmm, you need to focus on your interest in the markets and any evidence of trading / personal portfolios etc. that you have. Say you learned a lot in banking and did well, but realized you’re more interested in following the market and the news each day rather than the long-term projects you get in banking.
Dang! This article is one day too late.
I was asked exactly the same question at an interview with a boutique yesterday.
My background is on the buy side (asset management) and I also just got through my CFA Level I. So they pointedly asked me why I was interviewing for Investment Banking at all. I don’t think I made the cut.
This would have helped so much.
Oh, BTW, whoever has not bought Brian’s Interview Questions book should go and do so NOW. All the technical questions I was asked was straight out of that book. If only I had paid more attention to those fit questions…
Well, thanks for the endorsement.
Yeah you have to be prepared for this question in any interview, even if it’s not for banking – but hopefully you have a better idea now.
How do you ensure that you will get asked this question on its own? I know you’re supposed to talk about your “story”, touch upon past experience, and how this led you to banking. So I feel like you have to mention a little about why you’re there interviewing for investment banking – but if you do, you risk that they may not ask it specifically on its own and then you don’t get a chance to fully explain why banking.
Also, if you’ve had an interest in business for a while, and majored in Finance, shouldn’t you talk more specifically about why banking (as opposed to S&T for example) – and in banking you gain a more diverse skill-set and learn more about the industry than any other job? Thanks again.
There’s no way to “ensure” that you’ll get this question – sometimes they’ll ask explicitly, and sometimes they won’t. You definitely need to touch on this in your story though – and I would remind them at the end once again why you’re there and how it’s connected to your future.
I would not mention why banking vs. S&T because then it makes them think that you might be interested in other fields – focus on the “why banking” rather than “Why it’s better than other alternatives.”
Is 24 too old to be an analyst?? Can you give me a rough percentage of ppl who are 20-22 and 23-25? Thanks!
It’s not too old, I know people who got in older than that. Don’t know exact percentages but basically no one is under 22.
Could you provide some advice for the situation i’m currently in? I’m 19 this year and has been in architecture for almost 2 years. I found out about IB few months ago doing research for an investment challenge game, and am deeply interested in it.
I’m planning to take A levels next year, and then a Bachelor. If all goes well, I’d graduate at 24, or 25. Will I be too old to be an analyst?
Another path that I have in mind is to take up a foundation course, which will lead to a University of London External Programme, graduate around 23, or 24 then going for Master’s at target schools.
http://www.mergersandinquisitions.com/age-investment-banking/
Those plans are both fine; you really need to get finance-related work experience though.
According to current situation on global market = downturn + threat that France and Germany will convince England to reduce/vanish bonuses for Ibankers, I think, now it’s better to go into MC. Why?
1.salary of analyst: 60000 + 0-10000 bonus in both industries the same.
2. MC works less hard than IB, right?
3. MC get perks as points on loyalty programs so after getting retired will travel&sleep in hotel for free
4. better exit opportunities which in today’s world, when everything changes so dynamically, constitutes definitely great advantage.
but still
5. MC not as prestigious as IB – well, IMHO
I’d still do IB even if it was 50k-70k with no bonus.
Bankers still make more than consultants, even in a downturn.
While “the hours” in consulting are not as long on paper, you travel almost every week and that gets very tiring. No matter how cool it sounds at first, living out of a hotel and getting on multiple flights each week gets old very fast.
As far as exit opportunities, you could argue it gives you a broader set but honestly you’re at a big disadvantage if you want to get into finance from consulting.
I think the real underlying lesson here is that if you can’t think of an honestl and good answer to “Why Investment Banking?” that truly comes from your personal experiences and inclinations, then you should probably consider another career.
For those who are truly serious about IB and their respective career paths following an analyst stint (or those truly serious about an IB career for incoming associates) would not have much of a problem with this question.
So, the only real answer to “Why Investment Banking?”, imho, is to do some serious soul-searching until you can pinpoint exactly why.
At what age to bankers typically start doing their MBA in order to move into PE?
You don’t need an MBA to do PE. Most bankers move in after 2 years, though some do so later than that.
So how many years into their PE Career do they decide to to do their MBA?
MBA is not necessary for PE. In fact, most bankers who transition in don’t have an MBA… they might go to back to school a few years afterward, but it’s not necessary.
Do you think it is a bad idea to take an offer at Citi or BofA considering their financial situation? How much better is it to go to GS or MS?
If those are your only options, I would take them. But if you have offers at any other banks the others are probably better.
I’m currently a sophomore at a non-target and will be transferring to a target school starting next fall. My question is, is it really that important to have a sophomore year summer internship? I do fully plan on having a junior year BB IBD internship, however, I probably can’t get a relevant finance related internship sophomore year. Would not having a PWM internship or a “typical” sophomore summer internship really look bad and put me at a disadvantage vs. others that did have sophomore internships; when it comes to junior year internships and eventually FT recruiting?
Thanks for your continued help!!
You’re at a disadvantage but you can still get an internship the next year.
Brian, what are your thoughts on Teach For America straight out of undergrad? Would a program like this help with finance/consulting/b-school/corporate recruiting? Thanks.
It’s a good program, but it’s always tougher to get into those fields if you’ve already graduated… it has a solid alumni network and it might be good for business school, but it’s still going to be tougher to get into competitive fields afterward.
Coming from a liberal arts school with no quantitative background, I feel like I’ve been completely tanking at my first month of work. My associate constantly reprimands me, and because I was put immediately on a deal, I feel like I’ve had no time to even learn that everything needs to be formatted, even for internal calculations, or little things like checking for updated stock prices. How do I make sure my reputation doesn’t get completely shot and that I’m not fired before Christmas?
Talk to someone who knows what’s going on (i.e. 2nd/3rd year analyst) and figure out all their tricks and how they learned the ropes.
I am using your template to apply to sales & trading – I have been trading my own account for a couple of months now and wanted to mention this, where is the best place, how much should I say?
You could say that in your rationale for how you got interested in trading – either mention it in the beginning when you’re explaining why, or say it at the end right before you conclude and remind them why you’re there.
Probably best to do that in the covering letter then?
Also – do you think it would be ok to mention freelance ‘work’ in the work and leadership section? I code trading systems and technical indicators on a freelance basis, but again wasn’t sure whether this is legitimate ‘work’?
Thanks for your time.
No one reads cover letters. :) Freelance work is fine to mention, but if it’s programming I would not highlight it too much.
Hey,
I’ve been reading here for a while, since i understood that i wanna do I-banking … Im a smart software guy with excellent personal skills and very good with math …
Do i need an MBA to go into IB or there’s ANY chance someone will accept me as-is and let me learn/develop while working (my ass off, i know) ?
thx
Depends how long you’ve been working. Over 2-3 years and an MBA is your best bet.
Over 7 years of software development and lots of client facing time …
Guess the MBA is my next step then.
Hi, I read your <>. In your example of expressing the career goal, you said “I want to go into venture capital and doing investment banking is the perfect way to get there”. I need to ask you if it is safe to say you want to get to point B and using point A as a step, as in my career class in school I was taught to express long-term commitment to a position. Now I have an interview for a risk reporting position in a bank, can I tell the interviewer that I want to eventually do risk management and I see this risk reporting role a great way to get there (as through which I can learn the work knowledge about the risk)?
Hi, I read your The Banker Blueprint. In your example of expressing the career goal, you said “I want to go into venture capital and doing investment banking is the perfect way to get there”. I need to ask you if it is safe to say you want to get to point B and using point A as a step, as in my career class in school I was taught to express long-term commitment to a position. Now I have an interview for a risk reporting position in a bank, can I tell the interviewer that I want to eventually do risk management and I see this risk reporting role a great way to get there (as through which I can learn the work knowledge about the risk)?
It is safe to say that if you’re going for analyst-level positions, for associate level you want to be more committed.
Great site!
I was wondering would internship experience at the World Bank be looked upon positively by investment banks? I will be working in the Transportation division in Beijing, China
Thanks
Better than something non-finance-related, but not as good as IB/PE/HF and so on.
Hey Brian- Is it ok to say you wanna do i-banking because it gives you exposure to corporate finance and the fundamentals of business given my interests in doing business in the future? I’m not really sure about the business part because from what I have been told, analysts don’t get much exposure to the details of operating business or how it really works whether being in M&A or specific industry groups. But you still work on big business transactions, so what would be the correct way to phrase this?
You can say that but it sounds kind of generic – better to get something more personal if you can. I might not say “fundamentals of business” for the reasons you stated, you really don’t learn about the operations of real companies that much.
Yep I’ll definitely try to get personal with the question. But what exactly about businesses that we learn in I-Banking? I can back up the corporate finance part, but still haven’t figured out how to respond if, for example, they ask what you hope to learn about businesses by being an IBanking analyst.
You learn how management teams think through decisions, plan strategy, and decide how to use financing and acquisitions to build their businesses.
Hey Brian!
Thanks for your awesome posts, I think I have covered almost all of them and they definitely give the best insights I’ve heard into the ibanking world. I am a rising junior in a top ten college, for my experiences I have been doing nonprofit and several marketing internships in the past and right now I am trying to figure out how to tell recruiters that I am interested in ibanking after not so much finance experience. I am trying to figure out how in my interview I could say how I have apply the skills that I learned in marketing to ibanking, do you have any suggestions of skills that recruiters would especially like from marketing? Thanks so much!!
Tell them you know how to manage clients, set expectations, and pitch companies’ products… which are transferrable to banking because you’re also managing clients, pitching, and so on
Could you provide some advice for the situation i’m currently in? I’m 19 this year and has been in architecture for almost 2 years. I found out about IB few months ago doing research for an investment challenge game, and am deeply interested in it.
I’m planning to take A levels next year, and then a Bachelor at a target school. If all goes well, I’d graduate at 24, or 25. Will I be too old to be an analyst?
Another path that I have in mind is to take up a foundation course, which will lead to a University of London External Programme, graduate around 23, or 24 then going for Master’s at target schools. Do graduating one or a couple years earlier matter a lot in IB?
Answered in the other thread where you asked… age is fine, either option works but you really need to focus on getting finance work experience.
Do you mean finance work experience as in internship, or real proper job experience?
Internships if you haven’t graduated