How to Get Into Investment Banking? – Considering only footballers and celebrities get paid more than investment bankers, investment banking industry is a tough nut to crack. However, to crack every tough nut, there are some pre-requisites, steps, and protocols. In investment banking as well, you need to follow a step by step approach to getting in.
Let’s get right into it and see how to get into Investment Banking?
- #1 – Understanding how Investment Banks Recruits
- #2 – Entry points – Knowing where you can begin
- #3 – Preparing yourself – Setting up the strategy to get in
- #4 – Master Investment Banking Technical Skills
- #5 – Master Investment Banking Soft Skills
- #6 – Finally – Investment Banking 101
#1 – Understanding how Investment Banks Recruits
It’s imperative that you know the industry through and through.
To know your industry, you need to do some research (if you’re completely naïve). Go through the resources on Investment Banking to get an update about what’s going on in investment banking industry. And also know about the recruitment process (in detail).
Let’s dig in and see a brief overview of how investment banking industry works –
- Be ready for a strict recruitment process: Banks are pretty strict about their recruitment processes and that’s the reason it’s hard for a newbie to get through. So if you want to be part of investment banking industry, you need to be good (on the certificate and in the practical application of knowledge).
- Know that banks prefer newbies: Banks prefer fresh graduates who have no expectation or ideas about working hours. To work in investment banks, you need to work 100+ hours a week and hiring students who have no idea is always helpful.
- Top-notch university graduates are always ahead of the curve: Banks always prefer students from top-notch universities like Wharton, Harvard, Oxford, Stanford etc. So if you are planning to go into investment banking make sure that you are from first-tier universities; otherwise it would be difficult for you to break in. You can also take CFA Exam to better your chances of getting a shortlist.
- Banks prefer interns: If you are not part of a top-notch university, you can take a different route. You can land an internship with a top-notch bank. A couple of great internships can help you get into the holy grail of investment banking and you will also be able to experience the industry directly. These internships will get you the analyst role which is really the entry point into investment banking. Also, read How to get Investment Banking Internship
Here is the list of top Investment Banks –
- Top 10 Bulge Bracket Investment Banks
- Top 10 Middle Market Investment Banks List
- Top 10 Boutique Investment Banks
#2 – Entry points – Knowing where you can begin
There are primarily two entry level positions that you should aim for if you want to go for M&A profiles. You have other options as well in audit, accounting, sales and other options. But if you talk about a lucrative career in investment banking, it’s M&A. Let’s have a look at the two entry points of M&A profiles in investment banking –
This is the junior most position in investment banking. Normally undergraduate students or master degree holders are selected for this position directly. In few cases, banks also consider people who have 1-2 years of experience. Analysts are the hard workers of the industry. After working 3-4 years in the industry, they switch to private equity, hedge funds or other bigger banks.
Associates are selected from top-notch MBA universities in most cases. Sometimes they are selected from the talent pool of analysts. They supervise analysts and directly work with the big shots of the industry like partners, managing directors. Usually, associates don’t leave and switch within few years; they stay and aim for promotion in the long run. One of the reasons for which it becomes difficult for them to switch is barriers to entry in other domains. Do have a look at Investment Banking Associates
#3 – Preparing yourself – Setting up the strategy to get in
If you do what everyone does to get into investment banking, then maybe your application will end up in the heaps of rejected files! So, you need to make the effort to stand out from the crowd. Here’s what you should do to get into the investment banking –
- Plan ahead: If you ever dream of getting into investment banking, you need to act earlier. If you think of investment career after getting into employment elsewhere, it would be difficult for you to break in. So, plan early and take the following steps.
- Concentrate on the knowledge as well as marks: Only knowledge won’t count. You need to have proof of it. People who have great GPAs will easily impress the top banks and they will be the first preference for interviewers.
- Do an MBA from top-notch Institute: It is difficult to score high in investment banking without an MBA from a top notch institute. Top tier banks usually hire MBAs because of the following reasons –
- When you get into top-notch MBA Institute, a pre-screening is already done; otherwise, you wouldn’t have been chosen at the first place. It saves banks time to screen top class candidates from general ones.
- During your MBA days, you learn a lot about the complexities of financial models and you are always on your toes to submit project, write a detailed analytical report, & build toughest financial models. That saves banks the cost of training you.
- As after MBA, you directly join as an associate (in most of the cases), you are given a lot of responsibilities and you don’t need to do all the work (you can delegate the most to analysts under you). As a result, the attrition rate at banks gets reduced.
- Build networks: Online applications don’t work. How can online applications beat up face to face relationships? Instead of submitting applications, call up the top bankers directly and ask for advice or suggestion about how to get into investment banking. They will suggest you and help you understand how to get in. Moreover, you will have a relationship built up with them instantly. During your MBA as well, build a network as much as you can. Talk to people who have already passed out from the institute. Build rapport with the professors. And also with students who would have different backgrounds and different things to share. Building network will always triumph online applications.
#4 – Master Investment Banking Technical Skills
According to a research, it takes 6 seconds for a recruiter to slide through a resume before she selects or rejects a resume. For investment bankers, it would take even lesser time. So take the time to build a resume that will help you stand out in the crowd. Make the resume shorter and also make sure that you answer this question in your resume – “why you’re the best person for analysts/associate position in investment banking?” The resume should easily be scanned under 10 seconds.
As mentioned earlier you need to be the best of the best to crack the job in M&A profiles in investment banking. You should have the ability to work harder than anyone in the room plus you need to be top-notch in your skills e.g. financial modeling, accounting, valuation, Excel, writing skills.
- Be proficient in Financial Statement Analysis – The key word here is Financial Statement Analysis.This means you are expected to be proficient in vertical analysis, horizontal analysis, ratio analysis, cash conversion cycles, ROEs, ROCE etc.
- Master Valuation Skills. Equity Valuation is the process of estimating the potential market value of a financial asset or liability. Valuations are required in many contexts including investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation.
- Become a financial modeling ninja – Financial modeling means forecasting the future of the company or an asset by way of an Excel Model that is easy to understand and perform scenario analysis. What if your boss calls you at 1:00 a.m. in the morning and asks you to come to the office for building a complex model? Can you do it? Financial Modeling ninjas can do it. And you need to aim for that level if you want to get promotion pretty fast. You should be so good in financial modeling that no matter what mental state you are in, you can craft out a complex financial model without much hassle. Also, have a look at this Top 20 Financial Modeling Interview Questions
- Become awesome in Excel – Investment Banking Analyst spends around 10-12-14-16 hours each day working on excel doing financial modeling, valuations, making pitch books and financial statement analysis. Make sure to become an Excel expert.
#5 – Master Investment Banking Soft Skills
- Start with this checklist: Investment banking is not something that everyone is made of. With just 20,000 entry level jobs globally, it would be impossible for you to get in if you don’t tick “yes” for most of the following checklist –
- You know the field through and through.
- You are the hardest worker in the room (read 100 hours a week).
- You are a person who has the gift of connecting with people personally.
- You are always presentable and very well dressed.
- You ask very good questions during a conversation.
- You are a voracious reader and always try to improve your knowledge base.
- You are a great salesman.
- Become a great salesman: Most candidates neglect this skill. But if you choose to earn havoc in investment banking, this is the most important skill. On a regular basis, you will handle deals from small to big, but one thing is always common – it is your ability to make the sales. Better you’re in your ability to sell, better would be your compensation at the end of the month.
- Work on your communication: Of course, when you are aiming for investment banking profiles, you must be a great communicator. But we are talking about extraordinary communicator who can deliver great presentation whenever required and who can make sales call so very well that the customer feels he is the best guy to buy from. If you’re great that won’t cut. You need to be the best communicator among all.
#6 – Finally – Investment Banking 101
By now, you know what you need to do to get into investment banking. If you follow the above steps and build the skills, you will certainly get into the analyst role. But the hard part is taking action. Here are few tips to help you get started right away –
- Structure your story: You need to tell a story that sells. And for that, you need to be proactive. Structure your story in the following manner –
- First, create a beginning. Talk about where you are from, what you did, and how you have come here.
- Next, talk about your financial intelligence. You need to tell briefly how you got to know about M&A advisory in investment banking.
- Then, talk about how you grew your interest in investment banking. Talk about your internships (if any) plus any professional training that you took. You may enroll for Investment Banking Course and demonstrate your IB Skills.
- Finally, talk about what future you hold before your eyes, the deals you want to close, the funds you want to work on, the value you want to add.
- Share your story everywhere: Whenever you’re networking or cold calling a banker, make sure that you are sharing your story. The story will highlight all your strong points (and why you should be the most preferred candidate for M&A advisory) and make it as brief as you can.
- Gather contacts and cold call them: Go to social media websites and investment banking networking events where you can network and gather contacts. Then sort out all the contacts and cold call them. Cold calling will help you get an internship (if not a position of the analyst) in an investment bank.
- Prepare for interview questions: Preparing for interviews in advance will help you ace more interviews. So, look at different interview questions that are asked in investment banking and prepare them in your own way. Better preparation always yields better results.
- Remember three things: First, when work is there, there’s no time to sleep. Second, don’t make mistakes; don’t ever. Third, the greed of better pay, compensation, salary, profit, bonus, benefits is good. If you don’t have these or don’t want to develop these three traits, investment banking career is not for you.
How to Get Into Investment Banking – Conclusion
Finally, Investment banking profiles are not for everybody. Earning $100,000 to $150,000 per annum plus bonus is not for everybody. You need to work 100+ hours per week which will leave you only 68 hours to take care of your family, health, do your chores and fix other things. You need to prioritize to put your work first before anything else. You need to make the trade-off if you really want to get into investment banking.
If you want to get into investment banking, don’t think; take the first step right away.