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.
Break Into Investment Banking
Free Access to Exclusive Content for Members Only!
Sign up for The Banker Blueprint today and enjoy:
- Free Report: 37-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews.
- Exclusive emailed bonus material.
- Free Banker Blueprint newsletter with more in-depth advice.
- Unlimited access to all articles, videos, and advice - and free updates whenever new content is added to the site.
Hi,
I’m currently pursuing my Bachelors degree in Electronics and Telecommunication (Penultimate year) in Bangalore, India. I’m planning on switching to finance or consulting at some point in the future. So, basically I should do an MBA after working for a few years? Are there any internships I could do before though? I get only about 4-6 weeks in Summer and a month during Christmas. Most of the companies I looked up offer an internship for a minimum 8-10 week period. Will this be a problem? And should I concentrate on my field now or try for training/internships in Finance (Which I have no knowledge about at the moment)?
Yes I’d suggest you to network with people in finance to see if they can make an exception for you so you can intern for a month. If you know you want to be in finance, focus on finding internships in finance so you have a better idea of what working in finance is like–this will allow you to better make decisions down the line
Hi there,
I was interning at a PE firm before and now would like to try ibd for a summer internship. What would be some good responses if they ask “Why would you move PE to IB?” Can I say that, being on the sell-side is more challenging and I definitely enjoy working under pressure?
More transaction-based in an IB & more deal exposure. No, because working on buy-side can just be as challenging.
Thanks for the response! And what would be a good answer when they ask “Why IB over S&T?”
Moreover, do you think is a good idea to network with as many people as possible with one firm, since some of them might be the ones who interview me?
IB = want to learn more about how M&A process works, understand how to value companies, be involved in due diligence process
S&T = market driven; very fast paced; not project oriented like IB
Yes. And other firms too.
In terms of networking, I met this MD in person a couple months ago, and we had a good chat, but after a while I tried to set up another coffee chat with him, which he did agree and forwarded to his assistant to arrange it but his assistant never did, and afterward whenever I tried to e-mail him, he never replied back.Since now is recruiting season, do you think is a good idea for me to call him up?
2nd question, I know normally you need a good reason to follow-up with the connections, but what would be a good reason or excuse to follow-up with them? And I guess since it’s recruiting season now, I should try to stay in touch with them at least once in every 2 months?
Yes.
Yes. Just follow up. They know you want a job, no need to sugar coat it.
Hi,
I have been working in healthcare industry (In pharmaceuticals,operations- SALES and Marketing)for 14 years. Currently,I am at middle level management. I intend to do a MBA from an international school and am interested in getting into investment banking in the healthcare industry.
The desire is driven by my basic strengths – analytical, strategic and learner. Am interested to get into M&A’s in Healthcare industry / strategy. Request your opinion on this shift at this point of my career.
http://www.mergersandinquisitions.com/industry-specific-interviews/ should help when you land an interview. To land an interview, network extensively during your MBA
Hi there,
I networked with an analyst and he asked me some technical questions on the spot, and I couldn’t answer most of them since I have not started preparing for the technical questions–does that mean I have no chance with the firm at all?
I wouldn’t say so because I wasn’t there though chances might be slim if you couldn’t impress him. But then again, an analyst doesn’t have much say in the hiring process. If you can get someone w the hiring power to like you, you will increase your chances significantly
So would you recommend me to continue networking with more senior level people in the firm? Or practice the technical (which is what should be done anyways) and then “impress” him later.
Yes continue networking & practise the technical at the same time
Hi,
so I am interviewing again this year. I would take your advice to say I have completed investment banking internship and are more interested in joining them. My question is if they ask why did I fail last year, is it ok to explain like this, I applied on the last day before deadline, or I was not well prepared for the interview? Does it sound I was not serious with them? Thanks!
No. Come up with a better reason – spin a story at a positive light
How is this not different from “tell me about yourself”? If an interviewer asks me “tell me about yourself”, do you add this “why banking” at the end?
Thanks!!
Just to be more clear, isn’t this question the same as Step 5 of “Tell me about yourself”? So when I am answering the 1st question should I add the answer to this question in or should I wait for the interviewer to ask “why M&A/banking” and then answer?
Thanks once again!!
Go w the flow. When timing is appropriate talk about why banking. But don’t blabber on. Pls refer to previous answer I posted
Tell him/her your background. Talk 20 secs. Wait for him/her to ask you more questions. Then talk..then lead to why you’re interviewing (why banking)
A couple of questions regarding phone interview:
1) Since I was working in relevant field before (PE in summer), What kind of questions would I be expected regarding my previous internship? Would they go really deep into it?
2) For phone interview, would the interviewer ask me every single job experience, or he/she would focus only on the finance-related internship?
Thank you!
1. http://www.mergersandinquisitions.com/private-equity-interviews/
2. It depends. Perhaps he/she will focus on finance-related internships but he/she cld also touch upon your previous roles in other industries too
Hi Nicole,
1) Since this one will be an IB interview, will it still be the same format as the link you provided with me?
2) My internship was mostly focused on research and didn’t involve much about modeling, what would be a good response if the interviewer asked why didn’t I do much modeling?
3) And in terms of phone interview, will they be around 30 minutes as well?
1. More info on IB interviews: http://www.mergersandinquisitions.com/investment-banking-superday-interview-guide/
2. Say you’ve had some sort of exposure to modelling and demonstrate your knowledge of it. I’m sure you’ve been exposed to some sort of modeling/quant work in research. However, if you don’t know something, admit it. And don’t focus on your weakness, emphasize your strengths in interviews; impress them
3. Yes. Longer/shorter depends on your chemistry w interviewer
I am planning to write “I met this friend in a finance club and since he worked in boutique investment banks before, he really got me interested about banking because of the fast-paced environment and excitement of working on various deals.” — Is that considered a “good response” for “Why investment banking? If not, what could I do to improve/make it sound better?
You may want to be a bit more specific because “fast-paced environment and excitement of working on various deals” sounds generic. You’ve got to address the why IB over other divisions. If you want specific guidance on how to make your case sound better, perhaps you could check out our resume & CL editing/coaching services http://www.mergersandinquisitions.com/investment-banking-resume-review/
I am reading, my first year, Investment and Financial Risk Management at Cass Business School in London. I have attended a number of networking events and talks. In particular the events organised by Women in Business Society and the UK India Trade Event, gave me greater motivation to become active in the industry. I’ve always had an interest in political and economic world events, finance allows me to focus that broad interest to study and predict what will happen next in the markets as a result of these events.
What do you think of this? it is honest and genuinely does reflect my feeling about wanting to go into finance, however I am worried this isn’t what employers are looking for.
thank you
I’d suggest you to get an internship in finance to boost your chances.
Hello,
For some reason your method for “Why Investment Banking” is very similar to the method for “Your Story in 5 steps”
What are the main differences in the way I should answer those two questions?
Thanks
They are quite similar. The main difference is that with the “Why Investment Banking?” question, you don’t spend as much time explaining your spark and growing interest, and it’s a shorter response overall.
Brian,
like the question above, can you clarify little more about how I should approach “walk me through your resume” versus “why investment banking?”
Also, do they ask BOTH walk me through your resume and why investment during the interview or do they just ask one question?
Yes. Both – even if the questions are not framed that way because you have to address why IB and why you’re there interviewing
Walk me through your resume – your experience, what you’ve been through (education, internships, work experience, etc), why you made the choices you made
Why IB – Why are you interviewing for this job in IB? What makes you so eager to get into IB?
How much will it help if an MD is helping me A LOT (i.e. setting up a visit to the office, giving me contacts, etc)? Do I still have a chance coming from a non/semi-target? I even got a call from HR because of him.
Yes. It helps a lot. Now forget about the fact that you came from a non-target and focus on your interviews!
Hello,
Great article, this site is one of my favorites on this internet. I wanted to ask what your prediction for investment banking will be going into the future. I am currently a high school senior interested in finance and was wondering, once I get out of undergrad, will there still be as much money and opportunity in investment banking (or I guess finance in general) as there is now or do you think it will diminish in the coming years?
It will always exist because companies always need to buy, sell, and raise capital. Trading is more likely to suffer than banking because regulations there have gotten stricter. Average pay will come down, but you will still make more than in any other field (unless you start your own company and are mega-successful).
Where can I learn how about the technical questions they will ask me, I have a good amount of time to become a wizard at these technical questions (years) so how should I go about learning the content that they could possibly ask me?
http://breakingintowallstreet.com/biws/
Hello,
I am currently a sophomore majoring in economics. I have never had a banking or even business internship, however I am interested in applying for an internship position at an IB firm this summer. I have never worked before and do not have much of a resume to speak of. What should I say as my reasons for wanting to go into the field of investment banking.
You should ask yourself why you want to get into IB. We can’t help you if you don’t have the answer to it
i came into my undergraduate as a business economics major, got a wealth management internship with merrill lynch through a contact, but then didnt make the gpa requirements to make it into the actual major to take upper division classes, so i ended up graduating with a degree in european studies. ive taken a few trips to germany and spain and taught math there, so i told interviewers that i switched majors after coming back because i was so interested in understand my cultural background. i took 2 years off after undergrad and tutored, and now im in a m.s. accounting program. im having a hard time connecting my european studies BACK to a grad degree in accounting/related field to banking). did i even spin my unrelated major correctly in the first place? any help would be really appreciated. thanks!
I don’t quite understand how you switched from European studies to MS Accounting either. You would know better than I do why you decide to get a grad degree
well after i graduated with european studies, i was still interested in finance, but more so who actually makes sure the numbers people play with are correct (auditing). so i took some time off and took classes in accounting because thats what i wanted to do. i ended up applying to a m.s. in accounting in order to finish up my the required courses to sit for my cpa. after getting into the program, i now have an interest in ib. im having trouble tying all of my switches in interests together in order to show the interviewer a logical reason im truely interested in ib. i would have a total of 4 sparks: 1. wealth management, 2. studying european studies, 3. accounting, 4. ib? is having 4 sparks in my life too much? i feel like i need to explain all my changes in interests, in order to make my “story” believable. please help.
You should explain why IB clearly and focus. You should focus on your why IB/finance spark
how should i frame my response if they ask why the change of interests so much?
I think you’d know better than I do because its your story. Difficult for me to help you on the comments page.
I am not sure about my answer for this question: I usually start out by saying IB is my personal fit because I am a competitive person. Then I explain that I am studying 5 class, work for 2 internship and 2 part time job. I love being busy and under pressure. Then I tie back to IBD that “I know in IBD there is always competition to close deal, to pitching ideas to client” and “with me, Investment Banking is a personal fit”
Do you think that sounds personal enough? Is that a little bit cliche’
That sounds cliche and no it doesn’t sound personal enough. I think you should “personalize the spark” a bit. Maybe tell a story that attracted you to IB or something…
Thank you! I actually add on 2 others reason that I like the transaction business (curious abt strategy behind the deals,etc) and learning opportunities. But I want to show that it’s a personal fit for me. I had a Banking experience before and realized that I thrive in a fast paced, multi-task,pressured environment where I have lots of responsibilities. Do you think that sounds better? Should I spend 10-20sec to tell my banking experience to personalize it? Thanks!
If you had banking experience before, yes, definitely talk about it and use that to set yourself apart.
Sure. Personalizing it would help.
Hi i am doing an Honers degree in International Business Management and i want to get into investment Banking. are there any recommended courses post grad or other that i should apply for?
Get into a top tier target MBA program
Great article. I was an undergraduate psychology major, then worked for a real estate company as a project manager in an emerging market for 3 years and was recently accepted to a top MBA program in the US. I am looking to break into IB, specifically real estate investment banking. My long-term career goals are to provide developers in emerging markets with financing options as well as advise real estate companies on business decisions. Is that a good long -term goal? And how would I link working in a developed country such as the US to a goal I have that is related to emerging markets?
[WORDPRESS HASHCASH] The poster sent us ’0 which is not a hashcash value.
I think I understand the differences in the functioning and purpose of the different divisions at a bulge bracket, but what kinds of differences in day to day work, lifestyle, atmosphere, pay, etc. are there between investment banking, investment management, securities, etc.? Are some easier to get into from a more quantitative background vs. liberal arts? You can apply to more than one for internships, is it okay to do this/are there some that go together? Thank you!
Yes, some roles like structuring/trading are more quantitative and requires one to be able to calculate numbers on the spot. Some like sales in S&T/marketing in AM are more qualitative. You might be interested in http://www.goldmansachs.com/careers/choose-your-path/find-your-place/index.html Yes, it is ok though you might want to do some research on your own and figure out which divisions suit you most
I’ve been reading this great website for quite a while, but its my first post. I wish i read this site a few years ago. Ok, so in short, i just turned 27, have a us bachelor economics degree and a master in management degree from a prestigious european school, i started my own company and its not doing bad, but its in a really bad market (my home country which is pretty poor). So my question is can i still try and break into IB, and do I have a chance for an MBA even if i dont have work ex with major companies. Thank you so much
Can be challenging if you don’t have prior IB experience!
I just finished an internship this summer at a merchant bank this summer, so now I have finance experience to put on my resume so I can apply bigger firms in the IB position. My prior experience is all retail such as grocery and clothing stores, which has nothing to do with IB. Should I still put them on my resume to show I have been active and busy while being a student? Or should I just put my summer internship experience on there?
You might still want to list your experience in retail briefly. List your impact and what you did there. I’d focus on your summer experience though
If i have previous banking internship experience is it ok to point to a past deal that solidified my interest? Or should I even explain before that why banking?
Sure. It works
Hi Brian,
I majored in Banking in undergrad and now work for a commercial bank in Zimbabwe. I am applying to top business schools in the US for the Fall 2013 entry. I will have 5 years experience on matriculation( one in treasury at Barclays; two in Microfinance and the other two in retail banking at Ecobank Zimbabwe. I would like to get into investment banking and will leverage on business school to do that.
I am not sure of how I can craft my story on the ‘why IB’ question. Do you have any leads.
I was doing very well in Microfinance. I crafted new products and worked on project appraisal for the start-up. I however left to try out banking when I got offered a job as a Relationship Manager at the bank.
I really want to venture into investment banking. Please help on how his kind of background fits IB.
You should ask yourself what draws you to banking first. You can always say that after taking several classes in bschool (assuming you get in) & meeting various contacts in the industry, you realize you have a passion in banking given [why you're interested in banking and why you prefer banking over microfinance]
Difficult for me to help on comments page. Hope you get the gist of what I’m saying
Sorry Nicole, forgive me. typed Brian in error.
How should I best answer the short term and long term career goals in investment banking summer internship interview?
Please see below for a basic guideline you can use. You’ll have to craft an answer based on your own personal experiences to make it more personal.
In the short term I am interested in learning specific skill sets so I can assist seniors to pitch to clients and advise clients on their financing efforts. In the long-term I’m excited about getting the opportunity to start bringing in deals.
I’m doing a bachelor in accounting at a second-tier school, what can I do in my first year to put myself in a better position for year 2 BB summer internships?
Will doing a summer internship at a local financial management firm (http://www.nobleapex.com/catalog/index.php?language=en) beneficial at all?
I’m starting to network but don’t know how I should follow-up with contacts. Please help! Thank you so much :)
Since you’re only in your first year, yes this internship will be helpful. In your junior year however, what’ll really be useful is experience with an IB.
To follow up, please refer to
http://www.mergersandinquisitions.com/personal-networking-mistakes-career-fairs/
http://www.mergersandinquisitions.com/turn-cold-calls-warm-follow-up-alumni-conversations/
http://www.mergersandinquisitions.com/rock-your-informational-interviews/
This is gold, thank you very much!
I was rejected recently for student work experience/internship at Merrill Lynch but I have another opportunity next year, and I’m determined to get in with the help of your blog. Thank you.
Hi, thanks for this great posting!
I am now pursuing a Bachelor Degree of Arts in English in China, as well as a Dual Degree in Finance. How can I use my art background in English in answering the why IB question? It’s not like other majors such as IT or healthcare that have a specific industry to focus on. Is it weird if I say that I would like to combine my expertise in English and my interest in finance? Please help me on this.
You may want to talk about your finance spark – what got you interested in finance, and how your communication skills can be valuable for financial firms.