by Brian DeChesare Comments (52)

So, What Should You Do at Investment Banking Summer Training Besides Getting Wasted Each Night?

So, What Should You Do at Investment Banking Summer Training Besides Getting Wasted Each Night?

You’ve just been through a warzone to get your offer: 53 interviews, 3 weekend trips to New York, and so much time spent staring at Excel that you’ve developed a monitor tan.

But things worked out, you accepted your offer, and you’re about to start work in 2 weeks.

You just need to make it through the training program first.

But that should be the easiest part of the entire process, right? Right?

Does This Really Matter?

When I first got questions about training programs, I was confused: it seemed like a topic that didn’t warrant much advice.

“It would be about as stimulating as all those suggestions over the years to create a recommended reading list,” I thought.

But then I sat down to think about it in more detail and started asking around, and realized that there might be some important and not-so-obvious points to make.

Why Training Programs?

They’re a combination of marketing and education: banks pride themselves on offering “the best investment banking training” – even though banks use the same companies to train you – and they want to get people from non-finance backgrounds up to speed quickly.

Beyond just teaching you about accounting, valuation, and finance, lots of banks bring in speakers from different groups and use them to introduce you to their culture and how things work.

For some inexplicable reason, a few banks really like to tout their training programs and use them as a selling point when interviewing candidates, which might just be the strangest recruiting tactic ever.

No one joins Goldman Sachs because their training program is so great – they join because of the name “Goldman Sachs.” Their training program could disappear tomorrow and it wouldn’t matter.

The “education” from these programs is most helpful if you’re not from a finance background.

You will indeed have a tough time at first if you know little about accounting, valuation, and finance – but then it would also be difficult to get an offer these days without knowing those topics to begin with.

Even if you are completely new to finance, training programs are still not that helpful because different groups have different standards and it can be hard to focus when everyone is talking to each other and chatting online.

So don’t stress too much over all the content – there are more pressing concerns during training, beyond just getting enough bottles every night.

What is a “Training Program”?

Right before you start working, the bank will fly you and all the other incoming analysts and associates to New York or London (or wherever your bank is based) and spend 1-2 months “training” you.

Translation: You get to spend each weekday in a crowded room learning all about Excel, accounting, valuation, and finance from outside training firms and occasionally internal speakers from the bank.

You follow along on your screen as they instruct you, and you keep Facebook and Gmail open so you can chat with everyone else about how bored you are and how the instructor has a receding hairline.

You may also get tests and case studies to complete, and group exercises similar to what you find at assessment centers. And then there are those fun standardized tests you have to pass – the Series 7 and 63 back in the day, and the Series 79 in recent times.

Sometimes banks also determine group selection during training, but most of the time it happens well before that – either at your sell day, or as part of the interview process itself.

You’re not working banking hours during this time – weekends are mostly free and you rarely stay late at night, which is the first and last time that will happen as long as you work in the industry.

If you’re going into an internship rather than a full-time job, you’ll get just a week-long crash-course rather than the 1-2 months that full-timers get.

Many boutique banks don’t offer training programs at all because it’s beyond their budget – you’re also not likely to go through training at private equity firms or hedge funds, because they’re small and they expect you to know everything you need once you start working.

If you’re going into sales & trading or another non-IB area at a bank, you’ll probably have some type of training as well but the material will be different and it might be shorter.

As you’ve probably guessed by now, the 2 most important words in everything I’ve written above are “crowded room.”

If you’re not meeting other people and networking during training, you’re wasting your time.

So How Do You Approach Training?

Ask most bankers about what to do during your training program, and you’ll get 1 of 2 responses:

  1. “Just get drunk every night! Party! It’s the best part of the analyst/associate program.”
  2. “Study hard and take all the homework assignments and case studies seriously! Oh, and if you don’t pass those exams, you’re screwed.” (This one usually comes from students who aren’t even in the industry yet)

Neither one of these is quite right.

On #1, yes, you should go out and have fun since this will be one of your last chances to do so in the next few years.

But you need to be strategic about how you do it and also make sure you meet the right people in the process.

On #2, despite rumors to the contrary, most of the work they give you does not matter that much. Just do reasonably well and pass what you need to pass – it’s almost irrelevant next to your deal experience in your first year.

But I Heard This Person Got Kicked Out for Slacking Off!!!

Most of these rumors are greatly exaggerated. Yes, if you do something incredibly stupid – kidnap the Managing Director’s son, start drinking at work, etc. – you might be removed from training, but that hardly ever happens.

If you already have your group placement, homework assignments and tests during training aren’t important – the senior bankers at your office don’t have time to read the details of what you did and then change your group based on that.

If you’re really concerned about not knowing enough or being disadvantaged next to everyone else there, learn some material before training starts.

If you’re reading this site you’re probably a Type-A overachiever anyway, so you’ve already signed up for modeling courses before you even got interviews.

Just dust those off and start going through all the material and you can doze off during training and still do well.

What About the Series 7, 63, and 79 Exams?

These are actually important to pass because some banks won’t let you start working for real until you’ve cleared the exams.

They’re horribly boring and you’ll forget everything you learned in about 2 days, but you need to pass them anyway.

I’m never going to produce a course on these because they’re too boring even for me – but I’ve heard that the Knopman materials are good.

Do not underestimate these exams because they are more difficult than you initially think.

There’s a lot of rote memorization (certain questions will give you choices of 5 days, 10 days, 15 days, or 20 days and you just have to know which one is correct), and it’s hard to cram and learn everything in a few days.

So yeah, make sure you pass these – but don’t spend every waking moment studying at the expense of networking.

OK, So Then What About Networking – What Do You Mean by “Make Sure You Meet the Right People”?

Going out and getting bottles every night is almost a good idea, but there are a few problems:

  1. You won’t have much money yet since you just started and may not even get a paycheck until training ends.
  2. It’s more helpful to know people in different offices and different groups instead of always hanging out with the same crowd.

Let’s say it’s 2 AM, you’re working on a pitch book for an industrials company, and you need to include a case study of a deal the Chicago office did but you don’t know where the files are.

If you don’t know anyone there, you’d be screwed – yes, you could just email the entire office and ask for someone to help you, but everyone is busy with their own fire drills and deadlines so they may ignore you.

But if someone sees your name and recognizes you from training, you’re in much better shape and you might actually get the answer you need.

It’s almost impossible to get to know people from every group and every office, so focus on 5-10 analysts/associates.

Get some geographic diversity (if you’re in the US, know people in a few different cities and also a few in Europe and Asia) and industry diversity (if you’re in an M&A group, get to know people in industry groups and also ECM and DCM).

Doing this is not difficult and I would feel silly writing a “guide.”

Each day there are plenty of breaks, and most banks throw lots of events and parties during training – take advantage of these and go up to meet new people there.

Just think of it as a big information session, only without seasoned bankers. And it’s even easier than information sessions because you have an enforced time limit and everyone else is new and wants to meet others.

Does It Really Help?

The main problem is the high turnover rate in finance – by the end of your first year, at least 50% of your incoming analysts/associates will be gone.

So it won’t help you forever, but it doesn’t matter too much because your first year is the most critical anyway – do well at first and you’ll get better work and better exit opportunities, and do poorly at first and you’ll get the MDs laughing at you and bottom-tier bonus.

During training, I made the mistake of constantly going out with the same group of people and not getting to know others.

Things still turned out OK (see: this site), but there were quite a few times when it would have been helpful to know people in different groups.

It’s not a question of life-or-death, but it will save you some headaches and possibly let you get 6 hours of sleep rather than 4 hours – at least on some nights.

In Short…

So do what you need to pass everything and learn the material, but don’t take any of it too seriously at the expense of meeting other people.

If you’re concerned about not knowing enough when you start working, start preparing beforehand and learn as much as possible from classes or training programs.

And make sure you find out about your office and who makes decisions there before you start working as well.

Get to know 5-10 people well so you have contacts in other groups and other geographies when you need something and no one else in your office can help.

It’s tempting to befriend only the incoming bankers in your own office or your own group, but that defeats the purpose of training: you want to spread your net wide and meet people from all over.

And if you’re already doing all this and you know accounting, valuation, and finance like the back of your hand, have some fun and try to show up for training every day without passing out on your desk – they might actually notice that, especially if you’re in the front row.

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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by Brian DeChesare Comments (33)

The Don Draper Guide to Investment Banking

The Don Draper Guide to Investment BankingA few years ago some banker friends and I were thinking about creating a TV show.

Entourage meets The Office: all the glamor of movie stars and the celebrity lifestyle, but in cubicles rather than Hollywood.

But the outside world has never hated Wall Street more, and post-financial crisis there’s no way a drama like this could ever take off.

Plus, there’s another small problem: it would be impossible to make a show more awesome than Mad Men.

Don’t believe me?

Here are all the lessons you could learn from Don Draper himself:

1. Have a Great Name

You cannot underestimate the importance of having a name that rolls off the tongue: “Don Draper” is 100x better than “Dick Whitman,” so it’s no wonder that Don assumed someone else’s identity.

You’re judged on your name just like you’re judged on your appearance: so if your name sucks, change it or come up with a nickname or shortened version that’s easier to pronounce (just make sure it’s done officially so you can handle those pesky background checks).

Some people succeed without great names, but why take the chance?

2. Don’t Hook Up with Co-Workers

While Don has had dozens of affairs, up until season 4 he never crossed the hook-up-with-co-workers line.

And when he finally did cross the line, he hit rock-bottom and found himself more adrift than ever before.

You’re required to have affairs and random flings if you’re in finance – just make sure they’re not with co-workers or things will head south very quickly once it ends.

3. If You Do Hook Up With Co-Workers, Don’t Take the Marriage Seriously

So you just had a random fling with your secretary, suddenly decided that you’re in love, and proposed during a trip to California?

If Don can do it, you can too.

Remember that you cycle through wives or husbands approximately every 2 years in finance, so it’s perfectly fine.

With the amount of money you’ll make, alimony is almost an afterthought anyway.

4. Don’t Take Your Employment Contract Seriously, Either

Don didn’t even have a contract with Sterling Cooper until everyone realized he needed one, midway through season 3.

And even when he “signed” it, he didn’t use his real name and then broke the contract to leave and start his own firm anyway.

The role of contracts in investment banking is similar: they’re just a formality.

You could be fired at any time, or you could quit as soon as you find a better offer elsewhere – so have fun playing the field.

5. Take 4-Hour, 3-Martini Lunches

Has Don ever not gotten a hotel room with his mistress-of-the-moment after a 3-martini lunch?

You think you have to be available for clients and senior bankers 24/7, and that’s usually true…

…except for when you get that buy-side offer and are on your way out the door anyway.

Remember that no one cares about you at a bank: especially when you’re about to move on anyway, do the bare minimum to get paid and slack off as much as possible.

4 hours may seem like a long time for lunch, but if you’re leaving anyway and all the senior bankers are gone, who would notice?

6. If Conrad Hilton Calls You at 11 PM, Do Whatever He Says

And no, not just because his great-granddaughter is Paris Hilton.

If you have a high-maintenance client who’s worth millions of dollars and demands to speak to you 24/7, you better do whatever he says.

That includes getting his dry cleaning, dressing up as a clown at his kid’s birthday party, redecorating his house, and meeting him in the middle of the night just because he’s bored.

Remember, clients and work come before everything else – even if your wife is about to divorce you and your kids don’t remember who you are.

7. Exploit Loopholes for Personal Gain

So you just found out that your own firm is being acquired by a much larger company and you’d never want to work there.

Simple solution: just do what Don did and gather up everyone important and fire yourselves before the transaction goes through.

If your bank is actually getting acquired, the acquiring bank is smart enough to prevent that specific scenario with the reps and warranties in the definitive agreement

…But there are always other loopholes you can exploit.

Send out emails late at night to feign busyness, work hard during your first and last month and slack off the rest of the time – do whatever it takes to get top-tier bonus.

8. Keep Stacks of Alcohol in Your Cubicle

Bankers may not drink alcohol out in the open anymore like advertising guys did in the 60s, but if you work 100 hours a week you’re going to need alcohol and drugs – ideally cocaine – at some point.

Rather than running out to buy overpriced bottles constantly, keep a stash hidden away in your cubicle.

Once the support staff and senior bankers are gone, you have free reign to do whatever you want.

So if it’s 3 AM and your balance sheet isn’t balancing, just pull out your Jack, take a swig, and hope for a moment of clarity.

9. Don’t Lie on Background Check Forms

Don gets away with assuming someone else’s identity for years, but it finally catches up with him in season 4 as North American Aviation, a new client, demands background checks on everyone so they can receive security clearances.

And if you’ve been lying about your identity for years, background checks are the last thing you want to think about – so Don forces his company to drop the client.

You might think that’s bad – but if you lie on your own background check forms, something much worse will happen: you’ll get your offer rescinded and you might even have your career destroyed with the right chain reaction of forwarded emails.

10. Think on Your Feet

So the government has started telling everyone that cigarettes kill you – and your top client is Lucky Strike.

They put you on the spot in front of everyone else and ask you how to address these claims and market the product.

Simple solution: avoid the issue altogether. “It’s toasted.” – everyone else’s tobacco is poisonous, but yours is special.

Remember that investment banking is a sales job: it’s less about analysis and more about selling, relationships, and thinking quickly.

Even as an analyst you’ll be put on the spot all the time when your MD or VP ask about your work or for specific numbers – so you better be prepared.

11. If You Get Arrested for Drunk Driving, Get Your Most Trusted Friend to Bail You Out

After indulging in alcohol yet again, Don finds himself in a wrecked car and in police custody along with his “female companion” of the moment.

So he does what any reasonable businessman would do: he calls Peggy, the one person he can trust to bail him out without telling anyone else at Sterling Cooper.

You should also have a “designated friend” to bail you out, because you’ll probably be arrested for drugs or alcohol at least a few times.

Just make sure it happens after you’ve already gone through background checks.

Got Don?

While you don’t want to follow everything Don does (e.g. sending a major announcement about your firm to the NY Times without consulting anyone else first), you can pick up a lot from him.

Advertising in the 1960s was just like finance in the 2000s: the most prestigious and highest-paying industry.

And if Don were in business today, he’d surely be a Partner at a bank or PE firm – so watch Mad Men and take notes the whole time.

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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by Jerry Chi Comments (101)

Sales & Trading vs. Investment Banking, Part 2: Lifestyle, Co-Workers, Pay & Exit Opportunities

Sales & Trading vs. Investment Banking, Part 2: Lifestyle, Co-Workers, Pay & Exit Opportunities
We wrap up our series on Sales & Trading vs. Investment Banking with this podcast, focusing on the lifestyle, your co-workers, pay, and exit opportunities.

Whereas Part 1 was all about recruiting, this one’s all about what happens when you actually get the job – and we go into subjects like pay and bonuses in both fields and what “models and bottles” means for traders.

Once again, Jerry’s the expert here so he’s the “interviewee.”

What You’ll Learn In This 50-Minute Interview

  • How you “learn” trading and why it’s completely different from learning financial modeling
  • A day in the life for both a trader and a salesperson, how much money you trade, and how you can take a bathroom break if you need to monitor the market all day
  • Whether or not trading floors resemble Liar’s Poker, how you interact with your co-workers, and what “going out” means
  • How you get paid in sales vs. trading at banks vs. prop trading firms vs. hedge funds
  • Exit opportunities and why we both left the finance industry

Listen to the interview right here:

[audio:http://podcasts-00.s3.amazonaws.com/S&T-Part-2-On-the-Job.mp3]

Training Programs & Group Assignments

  • 1:30: How the training process differs for trading, and why you might be working with Monopoly Money at first
  • 3:50: Junior traders vs. “real” traders and how you move up
  • 5:45: Picking a desk: fate vs. free will?

A Day in the Life of a Trader

  • 8:20: A day in the life of a trader – what time do you wake up, what time do you leave, and can you take any bathroom breaks?
  • 12:40: What happens when you need to take a trip to the dentist during market hours?
  • 13:25: How much money do you actually trade as a trader – banks vs. prop trading firms
  • 15:10: Average hours per day
  • 17:00: Relations with the sales force – pleasant or do they want to assassinate you?
  • 19:15: What salespeople do all day (hint: you better like the phone)

Co-Worker Interactions

  • 22:00: How much you actually talk to your fellow traders during the day, and why the hierarchy is flatter than the investment banking hierarchy
  • 24:50: How much does a trading floor resemble Boiler Room or Liar’s Poker?
  • 26:00: Models and bottles for traders. Sorry, you know we had to say it at least once…
  • 29:15: Interests outside of work? What, really?!
  • 30:30: Is sales & trading overly male-dominated? What to do if you’re female?

Exit Opportunities & Pay

  • 34:00: Sales & trading exit opportunities
  • 36:30: The bottom-line: Pay in investment banking vs. trading
  • 40:00: How to earn a $100 million bonus (only works at Citi) and how much you’ll receive as a % of your P&L
  • 41:30: Payouts at prop trading firms and hedge funds
  • 42:20: Pay structure for sales people and how much you can make in sales
  • 44:00: Bonuses in sales: the sky’s the limit, but it’s a different sky
  • 45:30: Why we both left our respective industries – investment banking and trading

Sales & Trading vs. Investment Banking Podcast Series:

About the Author

Jerry Chi graduated from Stanford, worked in equity research and trading in Japan, and then started and sold his own prop trading firm in China. He earned his MBA from Wharton, and then worked at Google and Supercell in Japan.

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