by Brian DeChesare Comments (30)

From Nuclear Submarines to Investment Banking: How to Make the Leap from the Military to Finance

From Nuclear Submarines to Investment BankingCan you get into finance coming from a military background?

Just how many bankers each year break in from the Army, Navy, and Air Force?

I get a lot of questions on these topics, but up until now haven’t had solid answers beyond “yes” and “quite a few.”

But that changes today with an interview from a reader who broke into investment banking from a military background – keep reading to find out how he did it and how you can do the same.

Plus, advice on part-time vs. full-time MBA programs and starting in a location that isn’t New York.

Nuclear Submarines & Business School: Perfect Match?

Q: Tell us about your background and how you got started operating nuclear submarines.

A: Sure. I accepted a Navy ROTC scholarship right before attending college, because my priority at the time was to serve my country.

At school I picked a highly technical engineering track, but ended up taking a lot of financial math classes on the side – that’s how I originally got interested in finance.

After graduation, I wanted to work in a high-impact environment and since I had a technical background, I figured that nuclear submarines would be a good fit for me.

The Navy has a rigorous selection process for this kind of role, but I passed and started operating nuclear reactors aboard submarines.

After a few years there, I decided to attend a top MBA program as my next move.

Q: I guess you had an easy time proving your “attention to detail” in interviews. Coming from that background, why did you decide to go to business school as your next move?

A: I got a lot out of the Navy in terms of leadership, teamwork, and meeting deadlines, but I wanted to hone my financial skills and learn more about business.

I knew that moving into finance directly would be challenging since my background was unrelated, so I decided to use business school as a steppingstone.

I still had a commitment to the Navy, so I decided to attend a part-time evening program at a well-known business school while finishing my obligation of service.

Q: Most people would say that it’s very tough to break into finance coming from a part-time evening program – why did you decide to go that route instead of waiting and applying for full-time programs?

A: I could have waited, but that might have cost me 1.5 – 2 years due to my Navy commitment. I figured that I would be more competitive if I made the move sooner rather than later, so I opted for the evening program instead.

If you have the option, though, I would strongly recommend full-time programs.

I had a unique set of circumstances, and I ended up transferring to the full-time program anyway to take part in recruiting – looking back on it, starting out there may have made more sense.

Transferring & Recruiting

Q: You mentioned switching to the full-time program for recruiting purposes. When did you decide to do this, and how did you make the move?

A: In the evening program I couldn’t even drop my resume for recruiting purposes – I could still go to events and network with bankers there, but I couldn’t formally apply for internships or full-time jobs.

Recruiters also viewed me with a lot more scrutiny coming from the evening program – they would ask, “Was he not able to get into the full-time program? Were his GPA or GMAT scores not up to par?” If you’re not in a full-time program, you need good answers to those questions.

So I realized early on that transferring would make recruiting much easier.

As for the actual process, I just applied through the school after going through all the core classes, earning good grades, and developing a competitive profile.

The key is that the school doesn’t want you to hurt their average GPA / GMAT scores – as long as you’re above the bar there, it’s doable.

That doesn’t mean it’s easy – only a handful of people do it each year – but it is possible.

I would also add that a couple of classmates stayed in the evening program and successfully landed investment banking internships, so switching is not absolutely mandatory.

Q: Right, that makes sense. What about your networking efforts? Once you made the leap to the full-time program, did you just rely on on-campus recruiting or did you also use alumni networking?

A: I used both – early on, I relied more heavily on networking with military alumni. I started months before the school year began, and began by searching for former naval officers who now worked in investment banking, via LinkedIn.

I got around a 40% response rate, and leveraged the responses into phone calls and in-person meetings during the weekend trips I took to New York and other financial centers.

As the school year approached, I widened my net and started going beyond naval officers to other “military alumni” and also went through the alumni at my business school.

I waited to speak with the alumni last because they were in the best position to get me first-round interviews. Additionally, they were bombarded with emails from all my classmates so I wanted to ensure that I always made a strong first impression.

Q: What about the networking process itself? What did you do, and how effective was it?

A: In my initial emails, I would usually ask for 30 minutes to speak on the phone – but as I moved further in, I took trips to New York and other financial centers and met with bankers in-person.

Most “target schools” have a pretty regimented process for MBAs, and I used recruiting events to make a better impression on bankers in a social setting. That’s a huge advantage of target schools – these investment banking information sessions are the key to receiving first-round interviews.

Because I was aggressive with networking and made a good impression on the recruiting teams, I managed to win first-round interviews with most major banks.

How to Convince Them You’re a Financier

Q: So it sounds like you had a lot of practice with interviews, whether they were official interviews or unofficial informational interviews. What were the key challenges you faced coming from a military background?

A: The advantage of a military background is that you can sell your management experience, leadership, and teamwork skills more easily than, say, an accountant looking to break into investment banking.

And since I had operated a nuclear reactor, it wasn’t hard to convince bankers of my attention to detail. The same goes for unpredictable hours – going out to sea on a whim’s notice or being extended during a deployment were routine in the submarine force.

But there are a couple problems you’ll face coming from a military background:

  1. There’s the perception that ex-military guys don’t know finance.
  2. We also have a reputation for being overly blunt and trying to exert too much control over a situation.

Q: So how did you overcome these problems?

A: For the first one, I pointed to my high GPA and GMAT score as evidence that I could do quantitative work.

I know you’ve criticized it before, but I also enrolled in and passed Level I of the CFA – which at least showed them that I knew something about finance. Plus, I had all my finance classes from undergraduate.

On the second point – about being overly blunt – you just need examples of how you’ve compromised and worked successfully in a team without being overbearing.

A lot of this also comes across in your tone and presentation – if you’re a direct person, sometimes you have to take it down a few notches.

Regional vs. NYC Offices

Q: You ended up accepting an offer in a regional office rather than in New York – how did you think about this one, and why did you decide to start there instead?

A: Most people tell you that New York is the end-all when it comes to finance, at least in the US – but I’m not completely convinced of this.

For one, lots of regional offices actually do full deal execution themselves – SF is a hotbed for tech and biotech, LA for media and gaming, Houston for energy, Chicago for industrials, and so on.

If you already have an industry you’re interested in, going somewhere other than New York could be a good move.

Also, the cost of living is much less in other regions, the lifestyle is not much worse, and the deal teams are leaner which means more experience for junior bankers.

The main disadvantages of not starting in New York:

  1. You do miss out on networking opportunities by being around fewer bankers / financiers.
  2. You’re more limited in terms of moving to different regions / groups.

If you’re just out of university and you’re not sure exactly what you want to do, New York could be a better bet – but if you’re older, you have a family, or you have a good idea of what industry you want to work in, there are considerable advantages to starting outside of New York.

Q: Right, I agree completely. The obsession with New York in the US is similar to the obsession with exit opportunities. Thanks for your time – you have a very interesting story, and I learned a lot.

A: My pleasure.

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 (385)

Can You Renege On Your Investment Banking Job Offer Without Being Blacklisted for Life?

Can You Renege On Your Investment Banking Job Offer Without Being Blacklisted for Life?

Interview season is finished.

You got 30 first round interviews, made it to 5 Superdays, and came away with an offer at a middle-market bank – which you quickly accepted.

But 5 minutes ago, you just received a call from your recruiter at a bulge-bracket bank: “another spot opened up” and they’re extending a summer internship offer to you.

So you renege on the middle-market offer and go to the better bank, right?

Should You Renege?

If you look around online and ask your friends, you’ll see that there’s no consensus on the “ethics” of reneging and whether you should do it.

There are 2 main schools of thought:

#1: Bankers Are Vengeful and Want to Kill You

This one is more common among senior bankers who spend time recruiting you – they’ve seen cases where someone reneges on an offer and then ends up losing his other offer(s) as a result of angry phone calls from bankers.

The industry is very small, everyone knows each other, and any banker can quickly find out about your move if he wanted to do so.

They would also point out that the upside when reneging is usually much less than you expect.

#2: The Labor Market Works Both Ways – Look Out for Yourself

In camp #2 are many current Analysts and Associates, who point out that everyone is replaceable and that banks have a habit of rescinding or downgrading offers without notice.

The world’s not a nice place, and you have to do what it takes to get ahead – if you get a better offer, you need to accept it and renege on the other one because no one else is looking out for you.

They would point out that in a week from now, no one will even remember what you did.

So, Who’s Right?

Neither side is “right” or “wrong” here because reneging on job offers can go either way.

But my own view is this: the potential downside of reneging on a job offer usually far outweighs the potential upside.

So there are some cases where it might make sense to renege – but most of the time, you’re taking a big risk by doing so.

The Potential Upside

It’s the same as when you move from one bank to a “better” one: you may get a better experience, more deal/client exposure, and better access to recruiters.

This upside is significantly better if you’re reneging on an offer in a different industry (e.g., Big 4 accounting) or you’re reneging on a back office offer and moving to the front office.

The upside is also much better if you’re reneging on one full-time offer and taking another one – you’ll probably be there for at least a year or two, whereas with internships there are no guarantees.

The Potential Downside

The worst-case scenario: your would-have-been-employer calls around and finds out where you accepted, then they notify that bank and you instantly lose both your offers.

Oh, and of course you won’t be able to recruit again at the bank you reneged on.

If you relied on on-campus recruiting and the bank you reneged on notifies your school (they will), they may cut off your access to the alumni network, on-campus recruiting, and anything else career-related.

Which is especially bad news if you’re reneging on a summer internship offer and taking another one.

The Blacklist?

So what about the legendary “Blacklist” that banks maintain to tell them who reneged on offers?

Individual banks may have such a list, but rumors about a universal list are heavily exaggerated.

It’s not because bankers are “nice” or because they “forgive” you – it’s because banks and HR departments tend to be poorly organized.

There is some risk of reneging on an offer following you around for awhile but most of the potential downside will be in the near-term.

Will Any of This Happen to You?

That’s the fun part about reneging on an offer: you have no way of knowing.

Maybe you’ll tell a VP when he’s already having a bad day, and he’ll take out his anger on you; or maybe you’ll catch an MD in a good mood and he won’t sink your career with a few phone calls.

The risk of bad things happening is reduced if you’re reneging on an offer in a different industry or from a significantly different firm (e.g. tiny 2-person boutique vs. bulge bracket).

But there’s always some risk, no matter what type of move you’re making.

When NOT to Renege

Since the downside is so high and so difficult to predict, there are many cases where reneging makes no sense:

  • Bulge Bracket to Bulge Bracket – This is just stupid, even if one is “more prestigious.”
  • Middle Market / Boutique to Middle Market / Boutique – See above.
  • Internship Offers – Bad idea because you’re not guaranteed a full-time offer and you could be destroying your FT recruiting chances.
  • Larger Firm to Smaller Firm – This really makes no sense and will make you look silly to everyone involved.

When You Might Consider Reneging

There are some cases where it makes more sense:

  • Boutique / Middle Market to Bulge Bracket – This one is actually still quite risky, especially if they’re in the same location – but it does make more sense than the other possibilities above.
  • Completely Different Industry to Banking – There’s a big step-up if you’re going from Big 4 accounting to a bulge bracket bank, and not as many people know each other across industries.
  • Back Office to Front Office: This one can be risky as well, but moving from IT to PE or IB is another big step up and it’s hard to make the move otherwise.

None of these is a “slam dunk” – each one is still risky, but they’re at least worth considering.

How to Do It

So you’ve decided to renege on your offer – how do you do it, when do you do it, who do you tell, and what do you say?

How to Say It

Keep it very brief and to the point – you’ve received an exciting opportunity elsewhere and have to take it or you’d be kicking yourself later.

Don’t lie, but don’t tell the whole truth either.

Do not tell them where you’ve accepted the other offer – if they ask, just say the industry it’s in (“finance”) and maybe the location.

If you’re really accepting an offer elsewhere, don’t lie and say you’re reneging for “personal reasons” – that will come back and make you look even worse.

Use the phone rather than email – email is just too impersonal and at least if you call, you may not completely burn your bridges.

You want to do this as soon as possible rather than waiting until 2 weeks before you start, unless you really want to make enemies.

Who to Tell

At the minimum, call the recruiter at the firm you’re reneging on and maybe speak briefly with other bankers you interviewed with there.

There’s no reason to tell your school or to tell all your friends – this is not something you want to openly advertise.

Should you tell the firm you’re accepting the offer with that you reneged elsewhere?

My view is that you should never accept an offer or even start interviewing without telling a firm you have accepted an offer elsewhere first.

This just reduces the potential downside: some firms will get really, really angry if they find out you reneged elsewhere, while other places don’t care.

But as long as they know what you’ve done before they give you an offer or before they even start interviewing you, there isn’t much to be angry about.

Special Cases

There are a few special cases here worth addressing:

Deferred or “Downgraded” Offers

Is it “better” if you renege on a deferred offer (e.g. you start 2 years from now rather than next year) or a downgraded offer (you interviewed for the front office but were transferred to the back office)?

No, not really, because most of the downside is in the near-term.

The risk may be slightly reduced here, but it’s not that much different.

Cultural Differences

The advice above applies to recruiting practices in the US, but not every country in the world does it the same way.

In some regions it’s more common to go around interviewing even when you have offers lined up or accepted.

So you need to ask people at your school and anyone you know in the industry and see what common practice is where you live.

Actual Personal Reasons

Maybe you have actual, legitimate personal or family circumstances that have led you into reneging on an offer… they can’t get annoyed at that, right?

No, sorry – once again it doesn’t matter what your reasoning is.

But in this case you do have another option: instead of reneging on the offer, just push for a deferred offer instead. That lets you keep your hard-earned offer and keeps you from burning bridges.

Banking to Completely Different Industry

If you decide to join the Peace Corps at the last-minute, no banker will call the organization to sink your career and prevent you from saving the world.

In this case it’s less about ruining your entire career and more about limiting your options if you ever want to go back into finance in the future.

To Renege?

The problem with reneging on an offer is that the downside outweighs the upside and there’s no way you can predict how bad the downside will be.

There are some cases where it makes sense to consider, but 90% of the email I get on this topic is of the “Should I renege on my offer at one bulge bracket to move to another one?” variety, and that just doesn’t make sense.

So if you have a dramatically better offer and you need to renege to accept it, proceed with caution.

But don’t say I didn’t warn you.

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 (105)

The Secret Experiment I Just Performed On You – and Why You (Still) Shouldn’t Overestimate the Competition

secret_experimentBack when I was deciding on what bonuses to give away with the Investment Banking Networking Toolkit, I was stuck.

I had been so busy creating new videos and products that I didn’t have anything new to give away beyond what was already available.

So I had the idea to give away a few free networking consulting sessions.

The only problem: I couldn’t give away that many, so I decided to limit it to 5 and make it random.

But not completely random – anyone who emailed me would have a higher chance of winning.

Subtle Clues

Rather than making a big announcement “FREE CONSULTING RIGHT HERE SAVE HUNDREDS OF DOLLARS!” I want to make it more subtle for two reasons:

  1. Giving away free, random copies of the new interview guide was fine, because it wouldn’t take up my personal time – but there’s no way I could have done 20-30 of these free consulting sessions.
  2. I wanted to speak with the readers who were the most serious and who had specific, actionable questions developed from actually playing the field.

So I just put a quick note about it in the course outline.

Kevin actually thought this was a bad idea and figured that dozens of people would reply. I bet that the response would be much lower than that.

The Results

So, guess how many of those who signed up for the Networking course actually emailed me to win one of the 5 free consultations?

Five.

Some of them had fantastic, 3-page long stories while others just wrote a few quick sentences.

But since only 5 readers emailed me, each one of them won one of the free sessions.

If you had sent me a 1-sentence email in broken English, you would have had an 83% chance of winning a free consultation.

There were no rules about how much you had to say, how detailed your story had to be, or even that you had to have a good reason to speak with me.

Why?

I’m sure there were plenty of reasons that the hundreds of other readers who signed up in the first week didn’t bother to email me: they were too busy, they were scared to talk to me, or maybe they didn’t have any burning questions that needed answering.

But I would bet that most of it came down to something simple: they overestimated the competition and believed that their chances of winning would be 0% since this site has thousands of readers.

But actually, their chances were more like 83%.

But It’s Not Just This Bonus

Let’s forget about this specific case for now, because this phenomenon goes way beyond this site.

Remember that free trip around the world you missed out on at Princeton because you also overestimated the competition there?

And here’s one of my most common questions:

“At a career fair, how many people actually contact you afterward once you give out your business card?”

One… two… three.

In several years of going to career fairs and information sessions at some of the “top” schools in the US (Stanford, Berkeley, UCLA), I can count on a single hand the number of students who actually followed up with me afterward.

And that number is out of hundreds of business card giveaways, so the follow-up percentage was less than 1%.

Behind the Closed Doors of Recruiting

I’ve written before about how random the interview selection process is – but here’s a quick reminder in case you’ve forgotten how it works:

  1. 75% of interviewees will be selected because one of the Analysts or Associates reviewing resumes knows them from school or elsewhere.
  2. 25% of the rest have impressive resumes or accomplishments and happen to catch someone’s attention.

It’s like rushing a frat or sorority, except you have more control because fewer than 100% are picked based on who likes whom.

When picking who gets interviews and who doesn’t, a lot of conversations go like this:

Analyst 1: Do you know him?
Analyst 2: Yeah, he was in my frat / in my section / in my club. He’s pretty cool.
Analyst 1: Ok, let’s give him an interview.”

Analyst 1: What about her?
Analyst 2: Don’t know her, but she contacted me last week and emailed me a few questions.
Analyst 1: Ok, interview her?
Analyst 2: Yeah, might as well – it took some effort to do that and no one else contacted me.”

So yes, it’s better if you know the person reviewing resumes beforehand – but that’s not the point here.

The point is that if you do something as simple as emailing someone a few questions you can often make up for not knowing them or not having spectacular accomplishments.

If It’s So Easy, Why Don’t More People Do It?

Because it’s easy to stay in your “comfort zone” and continue to overestimate the competition, despite all the evidence that “the competition” sucks and that you’re better off being less comfortable.

I travel alone 99% of the time because it forces me to meet new people and make it up when I get there. Sure, it could suck… and sometimes it does. Sure, things could go wrong… and sometimes they do. But lots of cool stuff also happens that I would never see if I traveled with a group of 10 friends arguing about who has the best car or who has the most prestigious job.

And it’s the same with recruiting: something bad could always happen. You might offend someone. Maybe you’ll sound silly when you call or email them.

But most of the time there is close to 0 risk and unlimited upside.

Fear-Setting and Worst-Case Scenarios

Let’s say you meet someone at an information session and then you follow-up afterward but aren’t quite sure what to say.

What is the absolute worst thing that could happen?

You’ll look silly in front of the person and she may say, “Let’s not give him/her an interview, he/she made a huge mistake in this email.”

Unless you do something horrifically stupid – like forging emails, making up offers, or otherwise explicitly lying – there’s no way a simple networking email will get forwarded to other banks. You’re not that interesting.

And you know what? Even if you do say something silly in your email, it won’t necessarily hurt you. They don’t expect everyone to be a networking pro.

If they receive emails from no one else (extremely likely), then you’ll actually be ahead of everyone even if you screwed up.

Best-Case Outcome

You ask a few good questions and get considered for an interview simply because no one else did anything.

So the worst-case scenario might slightly hurt your chances at one firm, while the best-case outcome would almost certainly get you an interview there.

Mediocrity = Excellence

This is not just limited to finance or the job-search process, either.

Just go to a bar or a party and observe what everyone else does: 99% of people go in groups, stick to their friends the whole time, and only meet others if they get introduced.

Merely by approaching someone you don’t know and saying “Hello,” you’re already in the top 1%.

I get questions all the time from friends – “Wait, how did you get into that cool adventure? How did you meet that person? Why is your life so interesting and mine so boring?”

It has nothing to do with super-advanced ninja tactics: just by doing something simple (saying “hi” to new people) I put myself in situations where good things can happen.

Most of the time, mediocrity is enough to put you in the top 1%:

  • 90% of prospective bankers will never take any action whatsoever beyond “applying online” (hint: your resume just goes into a bottomless pit).
  • Of the remaining 10%, 90% of those will contact someone once and then give up if they don’t get an immediate reply.
  • So as a result, exactly 1% get to the top – not by being extraordinary, gifted, or talented, but merely because they were ok at something and kept trying whereas everyone else never took action or gave up after trying once.

Oh, and if you don’t believe me, just look at dating on Craigslist.

So What Do You Do Now?

Think about all your avenues into recruiting, all the people you’ve met, and find what you’re most afraid of. Find the one, two, or three people whom you’re certain receive floods of inbound inquiries every day and will just ignore or laugh at you.

And then contact them anyway.

If you don’t do it, who will? “The competition”?

Nope. No one.

So it’s yours to lose.

Oh, and if I offer up any free prizes / consulting here again, I expect a lot more contest entries next 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.

Break Into Investment Banking

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