Overview Of The Investment Banking Analyst Recruiting Process

If you attend a “target school”

When banks recruit new analysts each year, they typically focus on a handful of target schools that they recruit at year after year.  These schools usually include the Ivy Leagues plus other Ivy equivalents such as Stanford, MIT and Northwestern and top public universities such as UC Berkeley, University of Virginia, UT Austin, and University of Michigan.  For these target schools, this is how the process works:

1. Students submit their resume through their school’s on-campus recruiting site (usually a custom portal hosted by online recruiting companies like Monster.com or Nacelink.com) during the beginning of the fall semester (deadlines are specific to each school)

2. Investment banks review these resumes and typically select anywhere from 10-50 students to interview on campus, depending on the specific firm and school.  The banks usually predetermine the number of interview slots they want to make available for each school

3. The investment banks travel to these schools to conduct the first 1 or 2 rounds of interviews on campus at each school’s career center or at a nearby hotel

4. If you get selected for an interview, you will usually have one 30-minute interview, which counts as your first round interview.  This interview is usually conducted by an associate or vice president.  Sometimes there will be 2 people interviewing you at the same time.  In this situation, it could be any combination of a vice president, associate, or current analyst interviewing you.  Before your first interview, some banks will also host a pre-interview dinner the night before.  This is basically the firm’s opportunity to get to know the candidates on a less formal basis as well as answer any questions the students may have.  This is actually a really important opportunity to make yourself stand out and impress the firm

5. Some firms will immediately conduct a second round interview on campus the next day as a way to further narrow down the pool of candidates

6. After you pass the on campus interview process (whether it’s 1 or 2 rounds), you will then be invited to the firm’s offices (firms will pay for your flight and hotel room) to participate in “Superday,” the final round of interviews.  During Superday, you will be at the firm’s offices, along with other top candidates, for a full day of interviews.  You will usually have 4 or 5 interviews lasting 30-45 minutes each.  The night before Superday, there is again, often a dinner where you’ll mingle with current investment bankers at the firm.  While this may be marketed as an opportunity to ask questions about the firm and the job before Superday, banks see it as an opportunity to determine if your personality fits within the culture of the firm.  In fact, at my firm, a lot of input about potential candidates comes from our interactions with students from the dinner the night before Superday.  The questions we’ll ask often include: Was he sociable?  Did he seem like a cool guy to work with?  Was he arrogant?  Is he presentable in front of a client?  He seemed a little shy and awkward didn’t he?  You get the point.  During all parts of the investment banking recruiting process, the banks are evaluating you and seeing how you’ll fit within the team

7. During Superday, you’ll likely meet a few people from each level (associate, vice president, director, managing director).  Some interviews may be one-on-ones, while others may be two-on-ones.  If there is time you might also have lunch with a current analyst.  While this isn’t informal, it’s also an important part of the interview process because current analysts have input in the new analyst selection process as well

8. If all goes well, you’ll then get a few congratulatory calls with an offer to join the firm.  Sounds pretty simple right?  Of course, it will be extremely competitive because at Superday you’re competing against other stellar candidates from other top schools

Overall, each firm does things slightly differently, but there are usually 2 to 3 rounds of interviews, including 1 Superday, which is almost always a full day of 4-5 interviews (sometimes more).  Some will have pre-interview networking dinners, some won’t.  This all depends on the specific person leading the recruiting effort at each school.  But in general, the process is quite standard and doesn’t vary all that much.  If you’re a student at one of these target schools, then great news for you.  The process is pretty straightforward and everything will be laid out for you.  If however, you come from a non-target school, then the process is VERY different (there’s actually no “process,” so you’ll have to create a process of your own). 

The number of people getting through each round depends completely on the number of analysts each firm is aiming to hire in any given year.  In good years, bulge bracket banks typically try to hire around 100 analysts each year.  In a recession, this number could be reduced to just 5 or 6.  Investment banking is an extremely cyclical industry.  If you don’t get a job during a down year, don’t be hard too hard on yourself.  In 2002 we were on a total hiring freeze.  In fact, many analysts got fired, so our net gain of analysts that year was actually negative. 

If you don’t attend a target school

For non-target schools, you will have to be a lot more creative and aggressive in your approach to landing a first-round interview.  If you want to work for a well-known bulge-bracket firm in NYC, it will be somewhat of an uphill battle.  If you are fine with working for a smaller bank, e.g. a middle market bank, boutique bank, or regional bank, then your chances of breaking into the industry will be higher.  Smaller banks are also much more flexible with their hiring processes. 

Here are some strategies that I’d suggest you focus on:

A. Network as much as possible: Ask your friends who are in investment banking, friends of friends, alums from your school who are in the industry, your uncle’s tennis partner, or anyone else you can get in touch with through whatever means, for help and advice.  When you get in touch with people in the investment banking industry that have a connection to you, they’ll generally be more willing to give you the inside scoop on the industry.  Sometimes, if you impress them on the phone or if they’re nice, they’ll even offer to make sure your resume gets reviewed or even grant you a first-round interview (this would likely be a phone interview if you attend a non-target school).  Many times, people will even introduce you to other people to speak to, including other investment bankers who may be more actively hiring, human resource managers, etc.  Remember, when you can get a direct introduction to another person in the industry, it will increase your chances of finding a job significantly (versus submitting your resume online to a faceless computer system or cold-calling a complete stranger).  Again, use your network.  Be polite and grateful when you get in touch with someone who is willing to speak with you.  Investment bankers are busy people.  They don’t want to feel like they’re helping someone who isn’t genuinely interested in the industry or who just comes off as completely clueless or unprepared.  In many ways, these informal networking conversations are interviews themselves.  So while you’re being polite and grateful, have a specific agenda in mind when you speak to different people in the industry.  Think about the 2 or 3 things you want to achieve in a conversation and structure your questions accordingly.  Networking is particularly important for people from non-target schools who want to land a job at a bulge-bracket bank.  This is because bulge-bracket rarely stray from their standard target school on-campus recruiting process.  The best way to bypass this process is to leverage a referral or personal relationship. 

B. Knock on their doors: Investment banks love aggressive job seekers.  Being aggressive demonstrates initiative and hunger for success.  If you can get the names of any associates or vice presidents (through some clever searching on the Internet, e.g. Linkedin.com, Doostang.com, etc.) at these firms, send them an approach e-mail (effectively an electronic version of the good old “cold call”).  While it’s difficult to predict who and how many people would respond, if you write a thoughtful e-mail, most investment bankers will at least help put you on the right track.  Some you may even impress with your initiative and offer to speak with you on the phone live or accept your resume directly.  Because the likely response rate for this strategy is low, e-mail a lot of people.  Very few candidates try this strategy actually because no one ever believes anyone will respond.  But, because few people use this strategy, it’s actually a premium avenue for getting these investment banks’ attention.  Compare this: would you rather be 1 of 600 resumes being reviewed for a first-round interview opportunity, or would you rather e-mail 20 people and try and catch 1 person’s attention who can help you skip the initial screening process?  As a former venture capitalist, I used to write a lot of approach e-mails and make a ton of cold calls a day, averaging 30 e-mails and 30 calls a day, to build relationships with CEOs of companies that we were interested in getting to know better so we could invest in them.  If you want to pursue this strategy, which I believe can be very effective, draw up a plan first.  There are many nuances to this strategy, from the way you write your e-mails, who to target, frequency of e-mails, and general sales etiquette that could make you either very effective or a huge annoyance to the people you are e-mailing.  If there is enough interest in this specific topic, I may dedicate a special post to this topic. 

C. Use a headhunter: Headhunters can also be a good way to get your resume submitted to an investment bank.  Often times headhunters have strong relationships with folks at banks at all different levels.  The advantage to using a headhunter is that when a bank receives a resume from a headhunter on behalf of you, they’ll always read it.  The challenge is that headhunters screen candidates themselves.  If you can’t convince a headhunter that you have a good likelihood of getting hired by an investment bank, then they likely won’t want to waste their time trying to get a job for you let alone taint their reputation by referring a poor-quality candidate.

D. Contact human resources: Human resources folks can be helpful in terms of passing your resume to the right folks.  However, in general, they have very little power within the organization.  There is no incentive for them to push your candidacy unless say you’re the brother of a human resources manager.  This is a strategy I’d leave toward the end if nothing seems to be working.

E. Apply directly online: Many firms list job openings directly on their websites.  In many cases, you can actually just submit your resume directly to them.  I’d also recommend this as sort of a last resort strategy as your resume will likely end up in a bottomless abyss and you’ll never hear back from the firm. 

F. Get an MBA: If you’re not a student and you’ve already been working for a few years (in a non-finance related field), another route is to get an MBA, because an MBA helps you start with a clean state, although of course getting an MBA is no guarantee for a ticket into the field.  You’ll have to compete with other MBA students, but at least an MBA degree will help you prove interest and competence in finance to companies as well as perhaps lessen the weighting of any previous work experience that is non-finance related.

Start with baby steps

One very effective strategy I haven’t spent much time on yet, is targeting smaller investment banks (middle-market banks, boutique firms, industry-specific banks, and regional banks).  First, working at non bulge-bracket bank isn’t necessarily a bad thing at all.  In fact, there are many advantages to working at a smaller investment bank.  I’ll discuss this in a separate topic at a later date (Bulge-Brackets vs. The Others), but from personal experience, having worked at both a boutique bank as well as a bulge-bracket, I can honestly say, if I were in your position, looking for my first investment banking job, it’s not that clear-cut of a choice.

In any event, the primary advantages of finding a job with a smaller investment bank include:

A. It’s easier to get a job: Smaller banks have a more flexible recruiting process.  They don’t limit themselves to a set list of target schools and they’re much more flexible with not only who they recruit, but also when they recruit, i.e. it takes less effort to get their attention noticed if you don’t have a 3.9 GPA from Princeton with an investment banking internship under your belt already.  Also, smaller banks are more likely to accept resumes year-round if you happen to be looking for a job during off-peak months.  Because smaller banks have less hierarchy, if you e-mail some of the senior bankers at these firms (most have Managing Directors’ and Senior Vice Presidents’ names listed on their web sites) directly with a thoughtful e-mail (you can just use trial and error and guess their e-mail addresses using standard corporate e-mail name handles with the company’s domain name), there’s a much higher chance someone will respond to your e-mail.

B. Good stepping stone to break into a bulge-bracket: If your ultimate goal is still to work for Goldman Sachs, fear not, once you have shown you can excel in investment banking, even through a stint at a smaller bank, bulge-brackets will be much more receptive to your candidacy.  In fact, I personally know 8 or 9 associates currently at bulge brackets who used to work at small investment banks that are virtually unheard of.  This observation just confirms that breaking into the industry is the hardest step.  Once you get a job in the industry, with whichever firm, you’ll be in the “club.”

C. Good exit opportunities / a differentiated experience: Despite popular belief that only the top analysts from the top banks get the best private equity and venture capital jobs after a 2-3 year stint in investment banking, an experience at a boutique bank can be equally if not more valuable.  Well, it’s hard to say that 2 years at a smaller bank is more valuable, because the Goldman Sachs or Morgan Stanley brand is admittedly very powerful on a resume, but it can be valuable in a different way, primarily because at a smaller investment bank you tend not only to have more responsibility but you also develop greater expertise in a specific industry.  The experience that you get at a smaller investment bank gives you many more interesting stories to tell in any interview.  Most analysts at Goldman Sachs or Morgan Stanley tend to have pretty identical experiences and their responsibilities are very low-level.  It’s not their fault, it’s just that at a big bank, hierarchy dictates a more defined separation of responsibilities.

In fact, a few years ago when I was interviewing with venture capital firms, I very clearly remember a partner at one of the most famous venture capital firms in the country telling me that they categorically would never hire anyone from a bulge bracket bank.  This partner’s reasoning was that analysts at bulge bracket banks tend to be more reactive because works just gets fed down to them from above and they don’t need to be particularly creative, take leadership, or have self-initiative.  On the other hand, analysts at smaller banks tend to be scrappier and have to step out of their traditional analyst roles and take leadership to take deals to the finish line.  So, keep this in mind as you think about which investment banks to apply to.  Personally I think the extra value in brand you get from a bulge-bracket is an equal trade off with the better experience / more responsibility you get at a smaller bank (with the caveat that if you want a career in investment banking outside of the U.S., like in Asia, brand is most definitely disproportionally important).

I hope this helps.  At the end of the day, TRY EVERYTHING POSSIBLE.  Be aggressive.  E-mail people, cold call people, talk to as many people as you can to continually expand your network.  Investment banks love to hire people who demonstrate a hunger to succeed and show tremendous self-initiative.  A lot of times, people from non-target schools are great investment banking candidates because they are hungry to prove that they’re more capable than Ivy League students (and often times true!). 

The outline above also applies to investment banking internships, though everything will be a bit easier.  If you’re just looking for an internship, firms will be more forgiving of candidates who don’t have prior finance experience.  Typically, you also won’t have to go through as many interviews (maybe 2 or 3 instead of 6 to 7 interviews).