by Brian DeChesare Comments (38)

Will a Gap Year Really Help You Win More Finance Job Offers Than an Internship at Goldman Sachs?

Gap Year Investment Banking
Do older people give better advice?

For example, can a Managing Director, a Partner, or a Portfolio Manager give you better career advice than an Analyst or Associate?

You might think that’s a clear “yes” because senior professionals have more experience…

…but after watching dozens of interviews and reading even more nonsensical articles, my personal answer is no.

The latest example comes to us from billionaire hedge fund manager Michael Novogratz, who said that students seeking internships should:

“Go do something different. Get on a motorcycle and travel through India and take photographs. Create a story where you learn something… I’m a big fan of the gap year.”

He pointed out that “kids” they interview always want internships at Goldman Sachs and McKinsey.

The reporter’s suggestion, which became the headline of the article, was that students might benefit more from traveling around India than from completing an internship at Goldman Sachs.

Before you cancel your IB internship plans and book a flight, though, you might want to pause and reflect for a moment.

Why Does This Matter?

I only saw this article because my social media person posted it on our Facebook page last week, and it drew a lot of comments and controversy.

Most responses were along the lines of: “This is a terrible idea! Plus, who can afford it? Don’t listen to this guy!”

Meanwhile, responses to the article itself on CNN were mixed to positive.

I always worry about these types of articles because, in my experience, people take what they read online way too seriously.

Also, online discussion tends to move in extreme directions and skips the middle ground entirely.

In my view, this hedge fund manager’s advice is mostly wrongbut there are a few kernels of truth that you should apply to your own internship and job search efforts.

What is the “Gap Year”?

If you’re American, you probably have little idea of what a “gap year” is. We don’t value free time, vacations, or active social lives very highly.

In other regions, however, people think there is more to life than academic and career success (I know, I know, strange concept, but just go with me here…).

So this “gap year” concept was born and became particularly common in Europe.

The idea is that after finishing high school (or university, or other life stages), you take time out to go off the beaten path and experience new things before going back to your regular academic / career path.

Since you’re unlikely to have much money (with exceptions for the trust fund babies), often this gap year turns into backpacking and trying to see as many places as possible for as little money as possible.

Allegedly, this “gap year” makes you more mature, gives you better perspective, and helps you clarify your long-term goals.

Supply and Demand

Over the years, I’ve conducted 200+ interviews with candidates and professionals from all six inhabited continents.

In every single case, students without solid internships were at a huge disadvantage in the finance recruiting process.

In some regions, like Mexico, you have no real path to winning a full-time offer at a bank unless you’ve interned there for 6-12 months first.

The real problem is supply and demand: there is an oversupply of candidates applying to business and finance-oriented roles, so hiring standards keep going up.

By contrast, if you were an engineer in Silicon Valley, you could switch companies every year and take tons of time off, and no one would bat an eyelash because engineers are in such short supply there.

Technically, a gap year in between high school and university shouldn’t matter because you’re not losing out on a great internship.

But in practice, many students extend this concept and end up doing gap years or “gap periods” after university, during university, in between rotational internships, and so on.

The Truth About Gap Years

Besides missing out on a potential internship, there is another issue with taking a year to backpack around to 27 countries: it probably won’t help you figure out what you want to do with your life.

The real way to “figure out your goals” or “discover your passion” (hearing that phrase makes me want to jump off a cliff) is to put in enough hours to get good at something, and then see how much you like it, relative to other options, once you’re at a certain skill level.

I tend to agree with Mark Cuban’s recommendation to follow your effort, not your “passion.”

So unless you want to be a professional travel writer or a tour guide, it’s unlikely that you’ll discover any career insights about yourself.

Yes, everyone should take time off periodically, travel is great (I fly ~150,000 miles per year), and studying / living / working abroad is essential, but the gap year is not such a great idea.

The Kernel of Truth: Most People Are Boring!

So even though this hedge fund manager’s advice is not correct, there is a grain of truth in it: most people are REALLY boring.

When I published the article about how you should be a line, not a dot, to maximize your chances of winning internships and jobs in the future, I was not recommending that you only do finance-related activities.

Yes, you need something relevant on your resume / CV from an early stage, but you also need to be a human being who has interests outside of internships at Goldman Sachs and McKinsey.

When readers write in and ask for feedback on their stories, my most common response is:

“It’s well-structured, but it doesn’t set you apart. Come up with something that only you could say, and use that to pitch yourself.”

The most common objection is: “But not everyone has climbed mountains in Japan” (I only climbed Mt. Fuji once and I will never do it again) or “It’s too expensive to travel or do something interesting” or “I don’t have time.”

The problem is that people take an “all or nothing” approach and assume that substantial internship experience precludes you from doing interesting things, or that doing interesting things precludes you from getting solid work experience.

So I propose two solutions to this problem: 1) Complete a “productive gap year”; or 2) Take a “gap week” or “gap month” and spin your shorter, cheaper experience into sounding awesome.

Solution #1: Do a “Productive Gap Year”

If you need to take a year off, I understand where you’re coming from.

When I quit banking, I was tempted to sit around on the beach for a year – unfortunately, I ran out of money much sooner than that.

If you do follow this path, the lack of a formal internship at a finance firm will still hurt you… but you can get a lot out of a “year off” despite that.

Here are two examples of how you could use a “productive gap year” to gain interesting experiences while also developing useful skills:

Example #1: Go abroad, but stay in one place (or only a few places) and combine language study or volunteer work with financial skill development.

This plan has many benefits, including lower expenses, less time wasted in transportation, and the ability to get to make real friends.

For example, maybe you decide to go to Indonesia and study the language while also learning to sail or scuba dive.

Since the cost of living is low, you don’t need a fortune saved up to do this, and if you really do need extra money, you could always get a job teaching English.

In your spare time every few days or at night, you could also research stock pitches and you could brush up on the required financial modeling and valuation skills.

You don’t even need to spend that much time on this; you could spend 5-10 hours per week on it and come up with 3-4 stock pitches in a year.

By the end of this gap year, you will have some great stories, knowledge of a useful language, and “evidence” that proves you could add at least some value to a hedge fund or asset management firm.

(Well, assuming you made the right calls on those stock pitches…)

Example #2: Go abroad, but use your time to focus on networking while you’re teaching, working, or doing other activities.

The best example of this one is this excellent interview with a reader who left a back / middle-office role in the UK to teach English in Mexico.

He didn’t just do this randomly – he was strategic in choosing to teach business English, AKA English for employees of banks.

In the meantime, he also studied Spanish (since it’s useful and much easier than other “useful” options if you’re a native English speaker).

Then he leveraged the connections he made while teaching, plus his previous experience at banks in the UK, into interviews at banks in Mexico City.

You could approach this in other ways as well: just find any job that puts you in contact with finance professionals, whether that’s teaching, doing guided tours, training people to windsurf, or anything else you can think of.

Solution #2: Take a “Gap Week” or “Gap Month” and Spin It Into Sounding Impressive

This solution is intended for you if you believe it will take too much time or money to do something interesting, or if you agree that a traditional gap year may not be the best idea.

Yes, it will still cost something, but there are so many sites with discounted travel options it’s absurd. For cheap flights, check flightdeal.com or this section of flyertalk.com.

All you have to do is find something off the beaten path for a short period of time and then use one of our spinning techniques to make it sound great: omission of facts, hedged exaggeration, re-adjusting the focus, or blaming a 3rd party.

There are some good examples of how to apply these techniques in the comments accompanying the article, but here are two of my favorites:

  • Six Months of Unemployment to… Shepherd: One reader was unemployed for six months and claimed he took time out to become a shepherd on a farm. He did visit a family member’s farm for a week, but then he spun this short experience into his unique angle in interviews and explained all the leadership skills he gained in the process.
  • Sports Team M&A Advisory? One coaching client spent a week of his summer in early university visiting 2-3 famous stadiums, hall of fame locations, etc. He then spun this into his “finance spark” by saying that he traveled cross-country researching what made sports teams viable acquisition targets, and that his broader interest in finance developed from that.

The list goes on.

If you have an imagination and you can use Google, this should be straightforward – and if you need help spinning what you did, leave a comment below.

Gap Years vs. Goldman Sachs

So in the end, no, a gap year will never beat an internship at Goldman Sachs – at least not if your long-term career goal is something other than “travel writer” or “tour guide.”

But you can certainly apply some of the ideas from gap years to make yourself into a stronger candidate and win offers more effectively.

If you find yourself wanting to do the gap year anyway, make it shorter, do something useful for your long-term career, or do some networking and skill set development at the same time.

And if you choose to ignore this advice and find yourself motorcycling through India, don’t say I didn’t warn you.

Your chances of getting traditional internships and jobs might be worse, but maybe you can apply to Michael Novogratz’s fund with that gap year experience.

I hear they’re hiring.

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. Knollyjam1

    Hi Brian,
    I am an undergraduate who is currently applying for summer IB internships (London). I am hopeful I will secure one and then have my final year of university after that. However, after this I have considered taking a year out before committing to IB properly. How much of a problem do you believe this would pose when going to apply for roles a year later (and 2 years after my internship) and in what ways could I participate in things or spin my year into actually being a worthwhile experience?

    Thanks

    1. It’s generally not a great idea to do this because the bank may or may not keep your return offer around while you take the year off. If you want to take a year off, do it before you begin the entire internship –> full-time recruiting process. You can spin the time off into sounding useful by working on finance-related side projects, self-study, certifications, etc. in addition to whatever you’re doing for most of the time.

  2. Hi there! Question: I am an ex-premed with no finance internships (but work experience that can be spun). I’m a rising junior at a target school. Would you recommend finding an academic year internship– and if so, what kind, and how can I go about doing this? Or should I focus my energies on student investment groups? Thank you.

    1. It will be almost impossible at this stage because junior-year recruiting now starts BEFORE your junior year even begins. See:

      https://www.mergersandinquisitions.com/investment-banking-university-student-high-school-student/

      You might look to this story for some ideas:

      https://www.mergersandinquisitions.com/last-minute-investment-banking-recruiting/

  3. Mark McCarthy

    Hey Brian,

    Great article.

    Last year I got accepted into a target uni in UK. Couldn’t accept it due to financial circumstances changed last minute with me not being able to obtain a loan. I am going to start this course in September now.

    As I had no fall back due to the last minute nature of the situation, the past 5 months I have worked in Australia as part of a small team dealing with Cyclone Debbie claims in insurance. Lodging, reviewing, analysing and paying out claims. On top of this I have traveled a good amount. How do I spin this to turn it into something positive.

    I have done a Spring Week in Sales& Trading with JPM in Canary Wharf and a 6 month internship in Operations with not such a well known firm. My internship experience is not impressive at all. Bearing this in mind do you think I’ve destroyed my chance of breaking into a role in Trading?

    Thanks for

    1. Say that you learned about the financial services industry by working on operations at an insurance company and looking for efficiency improvements. You also learned about the differences in the local Australian market by doing site visits to other locations. No, you still have a good shot of winning roles at banks if you’re going to a target university.

  4. Mikhail B

    Hey Brian!

    I had summer internship at a bank and then I got my first IB internship in fall. I did not give serious consideration to IB full time until late October 2016, the fall semester of my senior year. It seems like I have missed out on the entire recruiting process. I have recently graduated and will now be working in non-profit for a few months.

    How can I spin this in my resume to speak about the gap year?

    1. It will be almost impossible to spin because the first question will be “Why didn’t you accept a return offer if you were serious about IB? Did not receive a return offer? Why are you now in a completely unrelated field?”

      If you want to spin the non-profit experience, maybe apply to groups that have something to do with non-profits (healthcare, education, nursing homes, etc.) and say that you wanted to learn more about the industry like that. But this will very tough no matter what you do.

  5. Hi Brian,

    What about a gap year between a SA at GS and a FT job? IB gives offers for one year after a summer internship, so isnt it a good idea to travel in this period instead of joining immediately (sometimes possible) or doing other internship/FT job?

    1. Uh… maybe? It depends on your region because some people finish the internship and go back to finish university in the next year, so a gap year isn’t really possible. If you can do it and you already have previous internships, sure, go ahead.

      1. Nicolas

        Yeah I am done with the University and have an internship at BB this summer and a FT at MBB (hedge not perfect but still, already done an internship there) – talking about LDN. Thanks for the response ;)

  6. PREGRADWONDERER

    Great post!
    Still relevant in 2017!

    What about taking a year off of the traditional M&A career path and going into VC in a small boutique in a foreign country for a year or so ?
    I already have 4 internships (15 months of experience total) in DCM, Leveraged Finance, finance division at top 3 telecom, and risk group at 100+bn AUM fund and am in my final year of uni.

    1. Sure, you could do that, but I’m not sure what the VC role would add to your career if you already have 4 internships. It wouldn’t hurt you, but it wouldn’t necessarily help that much in this case.

  7. Hey Brian,

    I interned abroad in India my freshman year (non-target) and was curious as to how I could spin it off. My role was as a consulting/research intern where I did case studies (glorified biographies) on prominent social entrepreneurs within the area. It was a great experience and I had the ability to travel and meet these amazing entrepreneurs and their businesses, but I am unsure how to relate this to a banking analyst role. Thanks for the help.

    1. Bump – would really appreciate the help.

    2. Talk about how you gained client management skills, learned how to deal with difficult/stressful situations, and extract information from important people, all of which are skills you’ll need in IB (even if all of that is a huge stretch).

  8. Hi Brian,

    Thanks for posting the article. I have been doing investment banking for 5 years now and am thinking to take a break (gap year) from IBD. During this break, I plan to travel abroad, do volunteering work or possibly take on a short-term internship with a PE shop to diversify my experience and then apply for business school afterwards. What are your thoughts on taking a gap year from full-time employment prior to applying for B-School? Also, would the short-term internship in PE give me an advantage in Post-MBA PE recruiting?

    1. I think it’s potentially a good idea if you use it productively (which it sounds like you are). And the PE internship would definitely help with post-MBA PE recruiting (a lot of people would say it’s almost impossible to get in otherwise). I’m not sure how much it would help with business school applications since you have to apply so far in advance, but it could help set you apart from all the other bankers who are applying to similar roles.

      1. Hi Brian,

        Just a quick follow-up, “I’m not sure how much it would help with business school applications since you have to apply so far in advance, but it could help set you apart from all the other bankers who are applying to similar roles”, for “similar roles”, are you referring to B-School or post-MBA PE recruiting? Thanks for the help.

        1. I meant “applying to similar PE roles.” Some bankers will attempt to do this post-MBA with no pre-MBA PE experience, which is very tough. So that type of internship would definitely set you apart and help improve the odds in your favor.

  9. Hey Brian,

    I’m working at a growth equity firm this summer, and I was wondering if you thought it would be acceptable to include this experience on my resume as “private equity summer analyst”? Or should I just leave it as “growth equity summer analyst”?

    1. I think you can probably get away with that as long as your description makes it clear you were working on growth equity deals there.

  10. I *grew up* in India, and have taken tonnes of pictures there. I am going to kill in this industry!

    1. There you go. Get started right away!

  11. Hi Brian, I was unsuccessful in getting a finance/consulting internship and am now struggling to find a job and also about to graduate. What is my best shot? Take a gap year? Or cold calling etc? Should I go for the same ‘gap’ year experience as you have described? Or do an internship (if possible)? Thank you in advance.

    1. I would aim for internships at smaller firms at this stage. Doing a gap year wouldn’t make much sense in your case if you haven’t had full-time work experience yet. So at this stage, probably aggressive networking at smaller firms, push for a “trial internship” at one of those places, and then see if you can extend it into a full-time role.

  12. Hi Brian, I have four years of experience in finance. I took a gap year two years ago and I was successful in coming back to work in finance. But I was unemployed since last year. I used my time to turn my hobby into something, and I built a website to sell stock photos. But I find interviewers don’t appreciate non-finance related activities. How can I spin my story? And how can I explain “two” gaps in my timeline? Thanks!

    1. I would spin the website experience into “doing fundamental research on Internet companies” and say that you wanted to learn how those types of companies operate in-depth, all so you could better research the industry and come up with investment theses. It would help if you could then present 1-2 examples to them.

      I’m not sure what you did during your first gap, but maybe take a similar approach and spin it into sounding like you were doing industry research to be able to better pitch stocks or present investment ideas, even if that is a huge stretch.

  13. I think there’s a world of difference between taking a gap year pre-college vs. post. To see to world as an 18-19 years old without any money, much experience, etc is quite a experience and I would highly recommend it. Plus at that age, you’re not really giving up anything. Sure you’ll graduate a year later, but in the grand scheme of things, it doesn’t really matter. Given how easy is it to get a deferrals (college in general loves gap years), I don’t understand why so few american students do it. I took a year off after high school where I traveled and surfed the Americas and Asia and worked in a ski resort for a winter and snowboarded a lot and it was something that I spoke at length with pretty much every person I interviewed with while recruiting for IB in undergrad. While there was a clear minority who thought the idea of wasting a year of future earning was beyond dumb, the vast majority were very interested in my experiences and viewed them quite positively (I won a few offers from BBs and my personality / international experience was apparently a defining factor). At the end of the day, there’s often very little separating candidates so being interesting and someone people would want to work with has a lot of weight.

    However, there’s no question that taking a gap year or extended period outside of work anytime after starting college will have a significant impact on your ability to recruit. In this, the timing is key.

    1. Yup, that is very true. I think the problem with the advice in that article is that they didn’t really distinguish between pre vs. post-university gap years. And like you said (and like I mentioned here), it makes a lot more sense to do this before starting university. Afterward it is tougher because it is so dependent on timing and what hiring for the year looks like.

      I think Americans just don’t understand how to travel or lack passports or something (Yes, I have a very high opinion of my own people…).

  14. Footloose

    Hi Brian, thanks for posting this article, it is very timely. I have been working in finance for close to seven years, and I am very interested in taking a gap year to brush up on my language skills – basically bring a couple languages from conversationally proficient to business proficient. I believe that having these additional language skills can help me with my career and also I am suffering from some burnout. However, I am worried about re-entering finance after a year away, would you have any advice on how to spin this? Would be interested in setting up a private consult.

    Thanks!

    1. If you have 7 years of experience I think it’s less of an issue to take time off, especially if you’re going to use it for studying / improving business-related skills. You will probably get something of a “demotion” when you re-enter the industry, but you can’t do much about that because that will almost always happen when you’re away for a period of time. To spin it, I would make it sound like a combination of you wanting to move on and do something else + enhance other skills you have, and that you and your current firm mutually agreed it was the best move for you to make it. But I don’t think you really need to do much spinning here since you already have a long track record.

  15. Imperius

    Hi Brian, I have huge gap year of 5 years. This is due to my mental illness/disability that I acquired a year after I graduated from university. It was severe in intensity and duration, however I have recovered. I have literally done practically nothing other than recover from my illness. How would you spin a story like mine? I can’t imagine disclosing to employers about my disability and any mentioning of mental illness might draw discrimination and stigma. Thank you.

    1. That is a tough one, but I think you have to be truthful and say that you had a medical condition that you recently recovered from, and then say that while you were doing that, you also… [Insert something productive-sounding]. Even if you’ve only spent literally 2 weeks on whatever else you mention there, you can mix up the timing a bit and imply that you were working toward that while you were recovering. For a 5-year gap I think you would have to be somewhat truthful, but you could still make it sound a bit better by mentioning points like self study, progress toward exams, etc. even if you only stated on those very recently.

  16. Michael Novogratz’s advice is exactly what I hear from my 50 yr olf plus managers/superiors. After I got layed off my trusted mentor strongly pushed I should go “travel” and spend a month or two at the pool. I did spend a month relaxing at the pool but wanted to continue the fast path on my career.

    I’ve had two friends whose gap years/months have been for the best, however I know this is the minority. One friend took a 3 month journey around Asia after a tramatic break-up and a soul-sucking job in a boring town. She works in advertising which is far less structured and I think they saw it as “interesting” some firms even held her interviews for the 2 months she traveled. I also have one friend who graduated from a prestigous university and went to teach in China. He actually did parlay the random gap year into an offer at Goldman.

    1. Yeah, sometimes it can work well. But mostly in industries outside of finance, I would argue. I think a lot of the advice from older people comes from a projection of what *they* would do, given where they are now, rather than what makes sense for someone much younger who’s just starting out.

  17. polishingg

    Nice post, Brian!
    I have been in a PE for one year, unfortunately, without any successful closed deals although I have fully get involved in several auction bidding and one-one negotiation projects. What would you suggest to write on the resume to turn around this one year experience as many recruiters are supposed to favor closed deals on the candidates’ CV?
    Thanks much for your suggestions

    1. Yes, closed deals do give you an advantage. All you can really do to get around it is to label some deals “Pending” and write about them as if they’re about to close.

      Recruiters care more because they don’t know anything, but anyone who actually works in PE understands that you can get good experience even if the deal falls apart. So maybe pick the 2-3 best deals, act like they’re all “pending,” and then list a few other deals that actually *did* fall apart and label them “Cancelled” or something like that. That way, it seems like you’re “admitting” some deals fell apart but you’re being truthful about the “Pending” ones.

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