by Brian DeChesare Comments (265)

Why Investment Banking?

View of a small bronze replica of Rodin's The Thinker statue, with a dark, cloudy blue sky in the background. The Thinker is often used to represent philiosphy.

“I looked at all the articles on your site but nothing told me WHY I want to get into this industry.

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.

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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:

  1. 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.
  2. 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.
  3. 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.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hey Brian,

    If they ask me to walk through my resume and through that I explain why IB, and they ask me why IB again in a later question, do I just repeat what I said?

    1. They shouldn’t even ask the “Why IB?” question if you have told your story properly…

      http://www.mergersandinquisitions.com/how-to-tell-your-story-investment-banking-interviews/

      And if they do ask, it is just the last part of your story.

  2. Hi Brian,

    I hold an MSc in Finance from a target school in London, cleared CFA Level I, and currently studying towards Level II. I have a really solid finance background and ended up in Bloomberg as a Data Analyst out of my Master. I have been there for 2 years now and I am bored as hell doing operational stuff. I feel like my brain is shrinking and miss the intellectual stimuli that for example I had when working with my peers during my Postgrad in London. I truly want to shift to Investment Banking, and to the say of my peers working at organisations like UBS, SocGen, and others, I do not miss the profile. After hundreds of tries I was able to secure an Assessment Centre at JP Morgan (unsuccessful), and was waiting for another AC the last Autumn at RBC, but the positions got filled up quickly. Probably you will ask yourself why I did not do internships of sort etc. I was studying English during summer holidays in between terms and never had guidance whatsoever. I come from a very rural background and I strongly believe this is what made me hungry with ambitions. Yet I do not understand, what am I missing?

    Thank you for your answer

    1. It’s tough to say because I don’t know your previous work experience, but my guess is that the lack of internships hurt you most. If you’ve already been working for 2 years, you might have to consider an MBA at this point. Or, go to a Big 4 firm or an independent valuation firm, or something else that is closer to IB and move in from there.

      1. Thank you for your response. I have done an Internship in a Real Estate Investment Management Firm in London for a month, where I analysed a fund’s performance. The results were used to present to clients their superior returns. The same company liked me and sent me to Milan where I participated in the creation of a new real estate fund for which our company was the vehicle. Here I have done everything in just a bit more than a month: I operated financial models, I liaised with due diligence advisers and debt providers, I heavily helped in the due diligence process, did reporting for clients and management, and regularly attended the TAC (Transaction Advisory Committee), taking notes, preparing the minutes, and where I was also asked for my opinion. I really felt valued, they offered me a contract although they knew since I joined I would be taking a Graduate position at Bloomberg in London. At Bloomberg my main task was of data entry for new Corporates and Financials issuances. I did learn a lot, but after 6-months that learning curve just stopped altogether. I moved to another team maintaining Structured Products (fixed income securities with embedded options). I moved from interacting with DCM desks, to interact with Sales and Trading professionals. In all this you also interact a lot with back office (Mumbai, Chennai, etc…), probably the most frustrating part of my job. For someone who has never interacted with back office the way I do, saying that it is really hard to speak basic finance with them, may sounds arrogant. Currently I am leading a team of 7 analysts looking at client inquiries on yield and spread analysis. Our goal is to build a library with dynamic financial models that can be used to quickly match discrepancies to that client receive timely explanations. As an example, the ASW and the Z-spread are off although they should be close. I would need to investigate the issue. It may be a data issue, a script issue, or simply the client is doing some mistakes. Whatever that maybe the bottom line is that if I would not understand about financial modelling and finance, I would not certainly be able to do such a thing.

        I tried to summarise more or less everything, but I am sure your expertise will see far through those lines.

        I appreciate you coming back to me.
        Matt

        1. I think you should go for non-IB front office roles: Real estate, lending, credit funds, etc. They are easier to get and you would have a much higher chance with your background.

  3. What if they ask why IB and not Private Equity/Equity Research etc.? Can I say that 1-I can probably learn more by being an Investment Banker because the job is more demanding and 2-for Private Equity it can take from 5 to 7 years to see the results of your work while in M&A for example you wait less?

  4. Hey Brian, i’ve ran into a bit of a problem with the “why investment banking” question. My story revolves around how I began university in Kinesiology, but transferred into after working a couple years at BMO (Just as an administrative clerk). But recently as I was networking, the individual stumped me with “why not consulting?” I had no idea what to say and i’m worried about that response coming up again in an interview. Any suggestions?

    1. Because you want to work on deals, do more financial than operational work, and actually see the firsthand impact of your work.

  5. Hi Brian/ Team,

    Thanks for the post. I am currently working in Asset Management and I am being interviewed to move to M&A for the same company. I am having trouble coming with a good story, What do you guys think of the following? Is it convincing?

    First : I have always had a passion for corporate finance and the markets. My current job requires me to follow current events and I always see myself more interested on M&A deals since they are linked directly or indirectly to everything we do.

    Second: I explain how I am really good at my job but that I need a bigger challenge and that this division is going to allow me to leverage the skills that I am already comfortable with and expand my technical knowledge. After more than a year learning about the business and meeting with different people (name of people). I believe M&A is the best place for me, where I will be able to add value from day one, since I have already working for the firm and I know the culture very well, I am really good at dealing with clients (internal and external), managing people’s expectations, I am very comfortable working under pressure, I don’t mind doing long hours and to be honest for me is a matter of doing something that I will enjoy.

    1. You need to cite some specific deals you’ve followed, how you learned about deals in your current role, and how you’ve taken steps to learn the technical side on your own. Your reasons are too vague right now unless you can get more specific about your interest in M&A. Talk about M&A deals like a sports fan talks about football games.

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