Stuff Investment Bankers Don’t Like: 2016 Edition
Do you get dumber with age?
Maybe not, but you do start noticing more and more dumb things around you.
No matter how much the financial or hiring markets change, people tend to repeat the same foolish tactics over and over.
The last time I addressed what not to do to get into investment banking was in a 2009 article titled “Stuff Investment Bankers Don’t Like: The CFA, Your Activities, Your Ph.D., and More.”
At the time, I thought it would be true “evergreen” content: what could ever make the CFA useful?
But a lot has changed in the past seven years, so the list of what not to do has also changed.
Consider this article an update where I partially or fully retract my previous ideas, present some new ones, and explain what to avoid:
What Has Stayed the Same: A Rose by Any Other Name
In the original article, I listed nine tactics that were useless for getting into banking – and by extension, also useless for eventually getting into private equity, hedge funds, corporate development, and more:
- The CFA.
- Your Activities.
- The Investment Club You Started.
- Your Internship Waiting Tables.
- Bloomberg / FRM / CPA / Other Meaningless Certifications.
- The GMAT.
- Non-Native-Level Language Skills.
- Your Ph.D.
- Financial Modeling Courses.
Of that list, I consider only two to be useless today:
- Bloomberg / FRM / CPA / Other Meaningless Certifications – Sorry, these are still not a great use of time. Even recent interviewees with certifications like the CPA have confirmed this point.
- Your Ph.D. – Nope, this one still won’t help you. In fact, it could easily hurt you because you’ll appear over-qualified. Would a Physics Ph.D. be willing to go from a thesis on quantum mechanics to pitch books or “channel check” grunt work?
Yes, in some markets, such as India and South Africa, becoming a CA is helpful/required to get into banking. But the CPA is viewed a bit differently and doesn’t necessarily help as much in the U.S.
As for Bloomberg, the FRM, and other certifications, they are just not relevant for most of the roles we cover on this site.
What Has Changed: All That Glitters is Not Gold
Most of the other items now fall into the “can be helpful in certain situations” category.
Let’s start with my favorite, the CFA:
The CFA: Now Sort of… Useful?
Ninety percent of the critical comments on the original post completely missed my point about the CFA.
I was not saying it’s completely useless; my point was that for the amount of time invested, you could probably do more useful things (and if you think time is an unlimited resource, think again!).
However, I’ve given up on explaining this nuance because the Internet has made most people too dumb to understand nuance.
Also, I now view the CFA as more useful for two main reasons:
- You don’t have to pass even the first level, or come close, to benefit from it. Just write that you’re studying for it, speak to it in interviews, and it will sound impressive if you’re a career changer, or you’ve been working full-time in a demanding job. No, you can’t write “CFA” after your name until you pass and get enough work experience, but the talking point matters more than the letters.
- It is useful for certain markets and jobs. Emerging markets seem to value it more highly, and certain hedge funds, asset management firms, and equity research teams do care about it. And yes, even some bankers and PE professionals will be impressed if you’re studying for it or you’ve passed a level while working 70-80 hours per week.
With that said, you still have to prioritize.
If you have a 3.0 GPA from a non-target school, or you haven’t had any internships, please stay away from the CFA until you fix those problems first.
Consider the exam if you’re interested in the public markets, you have good work experience, you know valuation and modeling, you have good stock pitch ideas, and you’ve already done a fair amount of networking.
Your Activities: Useful for Getting Noticed
I’m going to retract most of what I said last time around about bankers picking people primarily based on work experience and networking.
While those are important factors, you also need to stand out.
Internships, even ones at top firms, no longer impress as much as they used to, so “interesting” activities and hobbies matter more.
This one has also become more important because many candidates come across as extremely boring now.
However, one of my original points – it’s better to have 1-2 substantial activities rather than a laundry list of 10+ – still stands.
That Investment Club You Started: A Step On the Path
This one is more useful today because you need to start much earlier to have a good shot at getting into finance.
You still won’t win an IB internship at Goldman Sachs if your only experience consists of a student-run investment club, but it can be a helpful stepping stone to an internship at a small firm and then a bigger bank.
Your Internship Waiting Tables: Got Communication Skills?
I’ve noticed lately that many candidates have poor social skills.
Both social skills and communication skills have fallen in the past few years, so why not improve both at the same time?
If you mostly sit behind a computer or in the library and rarely interact with humans, it is in your interest to do an internship where you wait tables, do door-to-door sales, cold call people, or something similar.
Don’t do this in your second or third year, but if you have the time, think about it in your first year of university or right before school begins.
The GMAT: Cover for Your Low GPA?
As with the CFA, the GMAT should not be the first item on your priority list (well, unless you’re applying to business school).
But a high GMAT score can sometimes “cover” a bit for lower grades.
A score above 700 won’t help much if you have, say, a 2.5, but if you’re more of a borderline case, it’s something to consider.
If you can get a high score in 100-150 hours of study, it might be more viable to do that than to boost your GPA at the last minute.
Non-Native-Level Language Skills: London Calling?
As a practical matter, you have to be freaking good at a language to use it when writing 100-page CIMs or detailed investment memos.
However, in some markets, such as London, being “fluent” in a language can still set you apart even if you’re not good enough to write perfectly crafted 100-page memos with it.
This one depends heavily on your age and experience level: if you’re 21, 22, or already well beyond that, now is not the time to embark on a 1,000+ hour quest to master another language.
But if you’re getting started much earlier than that, and you want to work in London or another market like Hong Kong where you work across multiple countries, studying another language to a high level can be very helpful.
Financial Modeling Courses: Retracted!
I’ll officially retract my views on this one.
These days, it is pretty much expected that you’ll have some knowledge of accounting, valuation, and financial modeling even as a younger university student.
You don’t necessarily have to take a course, but you have to learn this material somehow, especially if you’re a career changer.
Memorizing formulas matters far less than being able to apply these skills to real case studies, stock pitches, and investment recommendations.
New Stuff Investment Bankers Don’t Like: My Kingdom for a Horse!
So that’s my list of partial and full retractions.
But I’ve also observed some new, troubling behavioral patterns.
In other words, new stuff investment bankers don’t like:
- Your Previous Investment Banking Internships
“Wait a minute,” you say, “This is crazy talk. How can bankers expect you to have previous internships, but simultaneously not like or care about them?”
You just hit the nail on the head.
It is now tough to impress with a normal IB/PE internship.
These internships have become a “check the checkbox” item: yes, you need them to get interviews, but an internship alone won’t boost your chances dramatically.
I’ve also heard stories of bankers deliberately ignoring internship experience and asking about other topics, though I wouldn’t quite call that a trend.
- Being Boring
One coaching client a few years ago had solid internships, high grades, and very good technical knowledge, but still failed to win the offer he wanted.
He didn’t connect well enough with interviewers because he jumped into proving himself too quickly.
I told him to do volunteer work in another country, take up a new hobby, or otherwise make himself more interesting… and he completely ignored me and got another internship instead.
- Double Majors
- Last-Minute Resume Padding and Interview Cramming
- Non-Target Schools
- Useless Case Studies and Models
But none of that means double or triple majors are worthwhile.
You’re much better off majoring in one subject, getting the highest grades you possibly can, and doing a minor or taking a few classes in the other areas.
For the same reason that delaying your graduation isn’t a great idea, anything that starts with “last-minute” is also a poor idea: you need to start far earlier today.
A single internship or activity, even if it’s a fantastic one, is unlikely to boost your chances dramatically.
And since more interview questions now relate to conceptual understanding, memorizing a bunch of questions at the last minute won’t help as much.
The main exception to this rule is that you can take up a new hobby/interest/activity late in the process and use it to appear more interesting.
It is getting harder to break into the industry from non-target schools.
It’s still possible – as recent stories show – but in every interview I’ve conducted with a non-target student over the past year, he/she has said something like:
“It’s really, really tough, and I also got lucky. I came close to transferring, or I did transfer.”
Transferring is not always the best move, but you should strongly consider it if you’re in your first or second year and you’re serious about finance.
It’s all about probability: the recruiting process is very random, and you need to boost your chances in any way you can.
Many large banks explicitly limit the number of slots available for non-target students, which reduces your chances before you even set foot in the room.
Just like my comments about the CFA get misinterpreted, it seems like my other statement, “the level of technical rigor is higher,” also gets misinterpreted.
This change does NOT mean that you should spend days or weeks creating models for companies with 2-page-long Cash Flow Statements.
Instead, it means that you must know the principles very well, and you must be comfortable creating simple models quickly and using them to answer case studies.
And most importantly, you have to be intelligent about picking companies.
No one will be impressed because you built a model for a company with messy financial statements; they’ll be impressed because you can present your findings convincingly in two minutes.
- Waiting Around to Recruit You
Just like private equity recruiting seems to move up earlier each year, the same thing has been happening with summer internship recruiting.
It’s not a universal trend at all banks/schools, but I’ve been hearing from a lot of students going in for summer internship interviews in November and hearing back in November (or sometimes October!), as opposed to December, January, and early February as in past years.
If you get a summer offer in early November, you’re extremely likely to accept it because you won’t have anything else by then… and in most cases, you should accept it.
The risk of waiting for a marginally better offer and then getting nothing is just too high.
Stuff Investment Bankers Don’t Like: There is Nothing Either Good or Bad, But Thinking Makes It So
The main difference between 2016 and 2009 is that fewer tactics fall into the “useless” category now.
Just like Hamlet pointed out a few hundred years ago, “there is nothing either good or bad”: many of these tactics can be useful, but only if you have the right background, geography, and career goals.
But the biggest difference is that internships and experiences that used to set you apart no longer do that quite as much.
If you walk in and expect to impress them with a previous boutique banking internship, you might just get a “So what?” reaction.
So more than ever, you need a “hook” to boost your odds.
Bonus points if it’s something bankers like.
(OK, maybe skip the trophy wives…)
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