by Brian DeChesare Comments (63)

Recruiting in a Down Market, Part 4: How to Weigh Your “Plan B” Options and Ensure That You Don’t End Up with “Plan Z” Instead

Recruiting in a Down Market, Part 4: How to Weigh Your Sure, it’s great if you can defy all odds and get into finance in the midst of a recession.

But let’s be honest: there’s always a chance that things may not work out, simply due to probability, bad luck, and the general lack of hiring.

So, if you don’t get into investment banking, private equity, hedge funds, or whatever else you’re after, what are your best alternatives?

In other words, how do you decide which “Plan B” option is best and which one you can actually leverage to move onto something better?

Rather than giving generic advice, we’ll go through a couple common “Plan B” options and look at the advantages, drawbacks, and key considerations for each one.

The Problem with “Plan B” Planning

There are 2 big problems when you consider any “Plan B” scenario:

  1. It’s really, really hard to time the market. Like, almost impossible.
  2. It can be very, very difficult to transition over to a front-office finance role later on.

These problems are lessened if you’re only resorting to Plan B for your internship. If you’re going to the fall-back plan for a full-time offer, you’ll encounter greater difficulties.

Whenever you’re consider your backup plan, you need to take into account the 2 problems above and consider how much your plan depends on timing the market, and how difficult it will be to transition over later on.

So let’s go through some of the more common options you might be considering, and look at each one through the lens of these 2 key points.

Business School

This is a popular one these days.

“I’m an accounting major and didn’t get into banking! Should I go to an MBA program right after graduation?”

“What about the Harvard 2+2 program? Will that get me in?”

The bottom-line is that business school is a bad idea if you only have minimal work experience.

Theoretically, a top MBA program allows you to re-brand yourself and break into new industries, but the reality is more complicated – especially when the economy is bad.

Business school is a terrible “Plan B” if you’re just out of undergraduate or you’re graduating soon – it’s a better move if you’ve already been working for 3-5 years and you’re looking to make a transition.

But even then, your success will depend greatly on the state of the hiring market – so it’s always a gamble.

Despite what new programs like HBS 2+2 may claim, banks are still heavily biased against anyone who lacks substantial experience.

Other Grad School (Master’s Programs and More)

Master’s programs are a better idea for anyone who didn’t break in during the first round and wants to have another chance at it.

But don’t expect that the degree itself will give you any advantages.

You go through such programs to give yourself more time to prepare for recruiting, to make a stronger impression, and to land more offers next time around.

But don’t expect to come in as an Associate after finishing a 1-year Master’s program – that’s just not the way it works.

The best reason to do one of these programs: if you got a lot of interviews but didn’t end up with offers, or you didn’t up with the right offers – and you’re at a school where you can take advantage of on-campus recruiting.

Corporate Finance / Strategy at Fortune 500/1000 Companies

Of the “non-school” options, going to a corporate finance or strategy position at a large company is the closest to front-office finance work that you’ll find outside the industry.

If you get this kind of offer, but have nothing else client-facing in finance/consulting, it’s probably in your best interest to take it.

But there are 2 problems you’ll face:

  1. You may not get to work on any acquisitions / partnership deals, so it will be more difficult to “spin” your experience into looking finance-related.
  2. You will still be at a disadvantage vs. anyone who has had a banking/private equity internship before.

You can’t do much about the second one; that’s just the way it goes. But for the first one, you should push to work in groups and teams that do more transaction-oriented work.

In other words, try to be involved with business development as opposed to internal strategy planning. You want to be valuing and evaluating acquisition, not dreaming up operational strategies.

You could also run into difficulties if you go to a smaller firm rather than a Fortune 500 / 1000 company, because the name is less credible and it won’t stand out – so try to work somewhere well-known if you go this route.

Middle / Back-Office Work

We covered this last year in one of the most controversial articles to be published on this site, “Holla Back, Office: 7 Reasons You Shouldn’t Work in the Back Office,” but just to re-cap: it’s really, really hard to transition over from middle or back-office work to client-facing work, especially if you’re working full-time.

It’s easier if you’re trying to move into prop trading or sales & trading, because the middle/back-office people there actually work with traders closely – but it’s much harder if you’re trying to make the move into banking or private equity.

I’d advise against this as a “Plan B” unless you truly have nothing else – even delaying graduation or taking time off to do something else is usually a better idea.

If you want to make the transition after working in the middle/back-office, keep in mind the following:

  1. It’s often easier to move to another firm rather than transferring internally.
  2. You will need to “build a buzz” about yourself in a front-office division by networking extensively and getting to know people there who will push for you.

This is an incredibly difficult transition to make in a poor economy – but hey, nothing’s impossible.

An Entirely Different Industry & Role

Maybe you’re thinking about going to a Big 4 firm, working in advertising at a big agency, or even doing volunteer work or going to a non-profit for a few years.

The big downside to doing anything like this is that you’ll almost certainly need to go to business school to re-brand yourself and have a chance at breaking in later on.

If you’re considering one of these as a summer internship option, it’s not necessarily the end of the world – though if it’s your final summer before graduation you’ll face a serious uphill battle against those with more business experience.

There’s another danger as well: you might be “over-qualified.” Some readers with finance experience actually had trouble going after accounting-type positions as back-up options, because they seem over-qualified on paper – and no one likes to be known as a “sure thing,” as Johnny Drama might say.

If you do end up doing one of these full-time, you’ll probably need to go through an MBA program to have a shot at breaking in.

Becoming a Ski Bum

Ah, yes, the fabled ski bum option.

The problem with becoming a ski bum is that your fate is tied almost 100% to what the market is doing. You’re not gaining any relevant experience or making any contacts, so you aren’t helping yourself too much if things don’t improve.

If the economy rebounds and hiring picks up, you might be able to pull this off… but if it stays bad, you’re in an even worse position.

Personal story: A few friends from top schools went to teach English in Asia following graduation, at the peak of the bubble.

When they got back, the recession was in full-swing and they had a hard time finding anything despite having Ivy League names on their resumes.

So you shouldn’t do this unless you’re not set on finance in the first place. There’s nothing wrong with taking time off, but it does put you at a big disadvantage unless the market happens to miraculously recover in short order (not likely).

Fellowships

Well-known fellowships and other scholarly programs could be an interesting option these days, especially if they’re finance-focused. You’re not technically “working,” but you’re also not sitting on the beach.

But you’ll need to make whatever you did look finance/business-related – oh, and a lot of these programs are extremely competitive, sometimes more so than getting into finance in the first place.

This type of plan is still better than doing something middle/back-office related or in a completely different industry if you lack better alternatives.

The main downside to fellowships vs. staying in school or delaying graduation is that you can no longer use on-campus recruiting – so you’ll really need to become a networking ninja.

The good news is that many of the well-known programs have strong alumni networks that you can leverage, so it’s not as difficult as pounding the pavement and breaking in from ski bum-land.

Treasury / Government Work

This is a relatively new option for most prospective bankers, but it just might be the most interesting one on the list.

These days, governments around the world own stakes in almost every financial services company because of all the bailout activity – and they need fresh blood to help manage all these new “portfolio companies.”

It’s sort of like working in private equity, except you’re more concerned with saving the economy rather than earning a high return.

This is also one of the few finance-related areas that’s actually growing these days – and as the economy gets worse and more banks get bailed out, that need for fresh blood will only grow.

Especially if you’re going to school in the DC area (if you’re in the US), or in a major government capital elsewhere in the world, you should be strongly considering this one.

The only “better” options would be front-office finance work or doing business development at a large company.

Entrepreneurship… for a Summer?

A recession is the best time to start a company. Microsoft and Apple were both founded in the stagflation of the 70s, and many successful Internet companies today were founded in the aftermath of the dot-com bust.

Starting a company or organization shows initiative and leadership, both of which look good to banks – but the downside is that it also shows that you’re independent and free-spirited, which banks don’t like.

Actual quote overheard from a recruiter once:

“I don’t know if we should take him… he’s done a lot of creative ventures before, I’m not sure how well he would fit into a more structured environment.”

If you have this type of experience, you need to emphasize the leadership skills you developed and downplay your independence – usually the best strategy is to say you didn’t learn much because of the lack of structure, and that’s what appeals to you about i-banking.

Then there’s another paradox that you’ll encounter with entrepreneurship: if you’re successful, banks will wonder why you’d ever want to work 100 hours a week for someone else and make less money doing it – but if you’re not successful, it looks like you’re changing careers because you failed.

That can make it difficult to tell a good story, and in a lot of cases business school will be necessary if you want to make this type of transition.

One other note: private equity firms – especially smaller ones – are more impressed with entrepreneurial experience than banks are.

So if you’ve run a mid-sized import/export company before, that can be a strong-selling point if you’re applying to middle-market PE firms.

Plans C Through Plans Z

We’ve covered a lot of ground here with some common “Plan B” options you might be considering.

What else are you thinking about doing if you don’t get into finance in the near future?

Leave a comment here with some of your ideas and fall-back plans, and we’ll respond with thoughts and feedback.

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 (5)

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual Recruiting

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingYou’ve just arrived at the newest, hippest downtown bar.

Walking inside to meet your friends, your jaw drops in wonder. You notice that 70% of the crowd consists of attractive members of the opposite sex.

You sit down to get a drink, and you’re in for another shock: you start getting approached every few minutes. Before the night is over you have 20 phone numbers.

Sounds too good to be true, right?

Not if you had been recruiting back in 2004-2006, because that’s exactly what the hiring market was like back then: too good to be true.

“Check the Box” Recruiting

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingBack then, most students at top universities and business schools acted like you did when you walked into this imaginary bar: they sat back and waited for the opportunities to come to them. And professionals in related fields found themselves drawn into finance by the alluring calls of headhunters.

Being proactive helped – but it wasn’t a requirement. There were so many opportunities that even if you were a borderline candidate, you’d probably get something – just by submitting enough resumes and investment banking cover letters.

Actual Recruiting

As you’re probably aware, 70% of the crowd in a bar never consists of attractive members of the opposite sex approaching you all the time – unless you’re in Brazil.

If you went to an actual bar rather than an imaginary one, you’d need to be a lot more proactive.

You couldn’t just wait for opportunities to arise; you couldn’t get free drinks from everyone who came up to you; and you wouldn’t be leaving with 20 numbers.

And the same holds true of recruiting, both in “normal” times and in highly unusual times – like today. You need to move beyond submitting online applications and “hoping for the best” and start pounding the pavement until you get offers.

In other words, you need to move beyond “check the box” recruiting and into actual recruiting.

Shifting Mindsets

If you’re from a more unusual background or haven’t gone to an Ivy League school, none of the above is news to you. You’ve been contending with it for years.

It is news to a lot of surprised students at traditional “core” recruiting schools, who have suddenly found themselves without internships or full-time jobs.

It now requires significantly more effort to break in, which is one reason why applications have fallen at many places and why overall interest in finance is down.

Changing Your Recruiting Strategy

We identified 4 key ways you need to change your recruiting strategy in the midst of the worst hiring market in finance in… well, a long time. A lot of this echoes what we’ve said before on breaking in during a recession, but some things cannot be repeated enough.

1. If You’re Going Fishing, Cast a Wide Net

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingNo matter how many times both Kevin and I repeat the advice to consider firms beyond the bulge brackets in finance and outside of M/B/B in consulting, no one pays attention.

It’s just like applying to school: sure, go for HBS or LSE, but make sure you have a Plan B, C, D, and E as well.

How many banks should you apply to?

There’s no upward limit – I would apply to dozens of firms at a bare minimum.

And that doesn’t mean just sending your resume and cover letter to all these places – it means actually getting on the phone with them and getting to know people there.

Where do you get started looking for dozens of banks?

I would start with this thread on WallStreetOasis that lists boutiques by region:

Regional Boutiques

It doesn’t have the contact information for each place, but start there and then move into networking and use referrals to get additional names.

To focus your efforts, start with firms in your local geography or any companies that match your background (e.g. they’re Restructuring-focused and you come from a Distressed/Restructuring legal background).

2. Become Carman Sandiego

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingIf you could choose any city in the world to find a job in right now, where do you think you’d start?

I’m not sure, but I can tell you the 2 places I’d avoid at all costs: New York and London.

While everyone has been hit hard by the recession, New York and London have suffered disproportionately.

“But isn’t it better to start your career in New York / London?”

Well, yes – but these days it’s better to start in a less ‘prestigious’ location rather than watching TV in your parents’ basement for 7 months because you couldn’t find anything in New York.

If you’re in the US you need to look at other locations (Midwest, West Coast), and if you have any international connections / family / language skills you need to think about that angle as well.

With finance you are often “funneled” into a specific geography because of where you’re located or where you went to school – the best way to get around this is to develop a network in other locations.

In consulting you can actually gain an advantage if you give less “sexy” locations, like Chicago or Houston, as your preferences. Those offices are not used to getting floods of applicants like New York / San Francisco are, so they view it positively that you would prefer to work there.

The main obstacles you’ll face in going international:

  1. Lack of connections / network in the area.
  2. Lack of language skills.

For #1, start thinking about other places you’d consider working and develop your network there (more on this in detail soon); for #2, I would recommend learning as much as you can – sometimes even if you’re not native-speaker level you can get in anyway.

3. Stop Arguing Over Consulting vs. Banking and Take What You Can Get

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingLook, we all loved Leveraged Sellout’s infamous Consulting vs. Banking video. It was hilarious, it fit the theme of the book perfectly, and hey, even the timing was impeccable.

But if you’re still arguing with your friends over which one is “better,” you should stop and go play some Wii Tennis because that’s a better use of time.

The main downside to an adjacent field like corporate finance, strategy, business development, or even the US Treasury?

Making the transition back to consulting/finance is usually difficult.

But that’s not necessarily true in a bull market – last time around we saw recruits coming in from all sorts of corporate backgrounds, at the junior to mid-levels.

I hesitate to “rank” which options are “best”, but in general the closer you can get (in terms of working on transactions / working with clients and doing financial analysis), the better.

It would be easier to move from business development at a Fortune 500 company into an M&A group than it would be to move from marketing into an M&A group, for example.

In the worst case scenario, maybe you’ll have to go back to business school first to re-brand yourself.

Another thought – and I might be crazy for stating this publicly – but maybe you’ll find something that you like more than finance/consulting.

Most of my laid-off friends in banking have gone into finance/business development roles at normal companies – and have a much better lifestyle than they did before. With the way bonuses are tracking this year, they haven’t taken much of a pay cut either.

4. Turn Into a Human Rolodex

Recruiting in a Down Market, Part 2: Moving from “Check the Box” Recruiting to Actual RecruitingYou’ve probably noticed one common theme in each of these points: you can’t do anything without a great network.

“Networking” can be a nebulous concept, but it’s just a fairly simple process that involves doing a good amount of work on a consistent basis:

  1. Develop an initial set of contacts in the industry or related industries.
  2. Begin emailing them and setting up brief phone calls and/or in-person meetings.
  3. Stay in touch, develop the relationship, and request additional calls when appropriate.
  4. When appropriate, be more direct (but not too direct) with asking about opportunities.

We’ll dive into this point in more detail in the next article, but for now keep in mind that your networking efforts are the only way to set yourself apart from everyone else, at least at the junior and mid-levels.

From Checking the Boxes to Actually Recruiting

If you’ve just relied on submitting applications online and sending your resume and cover letter blindly to firms, you don’t have a recruiting strategy.

You’re using “check the box” recruiting rather than actual recruiting – and you don’t need to think for a second about which one is more effective.

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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