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Module 3: Interviews
Why Investment Banking
Are you doing banking for the right reasons? Here’s THE question bankers will ask to find out in an instant…
1. Showing bankers extreme passion for banking will differentiate you from all the other equally talented and experienced students. In ‘edge’ cases they will make hire-no-hire decisions based on which candidates ‘want it’ bad enough.
2. Most students completely f**k this question up because they give generic boring answers rehashed from some 1998 Vault guide to interviews OR they give selfish reasons for wanting to do IB, eg resume building, OR they fail to back up their reasons with proof (and thus end up sounding like they’re full of shit).
3. Bankers will be most impressed if you can backup your reasons for wanting to do IB by showing them how you’ve wanted to do banking for many years, including examples of actual things you’ve done to this end, eg people you’ve talked to, classes you’ve taken, books you’ve read etc. The more specific your examples the more believable your story.
After all, you guys need to be able to explain why you want to do investment banking when your past decisions don’t suggest anything of the kind.
How do you give a 10/10 answer to the why investment banking interview question?
There’s a huge selection of points you could make, but keep it short and sharp. Generally a good answer will contain 3-5 solid reasons why you’re interested in IB.
Typical examples like world class education, skills development, type of work, the challenge, real responsibility in billion dollar transactions etc. are all acceptable. But try not to trot out the same BS as everyone else. Importantly, avoid reasons that are self-centered in a ‘bad’ way.
Let me explain. As a banker interviewing you I’d be ok if you mentioned investment banking attracts you because of the learning opportunities, as this is a selfish reason that also, and ironically, benefits the bank – passionate 24 year olds put in 100-hour work weeks with ease after all.
But if I heard you wanted to do IB simply in order to ‘build your resume’ and/or to secure an exit opportunity I would – in my mind at least – throw you out the freaking door and then proceed to lay a BlackBerry beat down on your ass! Being made to feel like a halfway house for financial vagrants, a mere stepping-stone, is not my idea of good times you see. So even though everyone knows investment banking is attractive for the resume & exit opps don’t say it!
What can help you avoid a BlackBerry Beat Down?
Well, you would get me extremely interested if you answered the why investment banking interview question by talking about how you have older friends in banking who have over the years shared with you what it’s really like to be a banker – both the good and the bad. And then how that’s made you realize 3 specific things about banking which make it stand out above any other graduate job.
Not only will I believe you still love banking despite the war stories, but that you’ve actually given it some thought beyond “I need a salary of Blankfein proportions if I’m ever going to pay off these student debts”. What I’m trying to say is that a great answer will list unique and specific reasons ‘why investment banking’ and it will connect them to the sources you learned them from whether they be friends, professors, books etc.
Want 6 specific reasons ‘Why investment banking’ that are sure to work?
Try talking about how you love the…
Cornerstone role investment banks play in deals and/or the role they play more broadly within the world of business – IBs are to business what the White House is to the world…central hub HQ! And this is why bankers are called masters of the universe. So bring up this point, albeit laced in more formal language and without ever mentioning ‘masters of the universe’!!
Coalface exposure to industry and financial markets, which is unique to IB – there’s not a graduate job on the planet that puts you closer to the action than banking.
Results-driven deal-oriented approach – this point distinguishes banking from so many other professions like law, consulting etc, where players often get paid for simply ‘doing’, as opposed to ‘achieving’. And by specifically mentioning this point you will show bankers that you’ve got the right mentality and that you’re not an increment-fiend like lawyers. PS Once again be sure to phrase this in a more professional kinda way!
Type of people that work in banking – talk about this from both a learning and enjoyment point of view, and most importantly reference people you know in banking (particularly at that bank) to avoid looking like you’re simply shining shoes and kissing ass!
Nature of the work – analyzing, problem solving, real-world focused. If you are going to talk about this then make sure you bring up a handful of examples in passing; eg 10k analysis, spreading comps, deal structuring etc. We’ll take you through the 39 most common tasks investment banking interns do later, which should help.
The specific industry/product group you are interviewing with – this is a must! By talking about why IB through the lens of that specific group, you’ll really narrow the reasons down to specific, tangible, relatable ones – and that means bankers are more likely to believe you and like you.
eg If you say to TMT that you want to do investment banking because you find the business/investing side of the tech industry fascinating after working as an unpaid intern at a social media start up over summer, then you’ll hit the why investment banking question out of the park! Whatever you choose, be sure you can talk intelligently about it if probed by the bankers.
If you have work experience in accounting, consulting etc. then tell the bankers that whilst your time at KPMG or BCG or wherever you worked was a terrific experience, it didn’t offer…[reasons why you love IB].
This is a hidden opportunity to further explain your story, point out why you want to change into banking now and assure them again that IB is what you truly want above all else. Any comparison you make should be delivered subtly though. Not because your interviewer might have worked at KPMG or BCG, but simply because it looks unprofessional to blatantly badmouth others.
Negativity in any form doesn’t look good. PS for those of you who get this question in an investment banking analyst interview (ie not a summer internship interview), you’ll need to push your story of why IB even harder to convince bankers to take you on.
This is because bankers hate offering permanent spots to candidates who might quit the minute things get tough. Passion is a banker’s best insurance policy against this – so make sure you show it guys!! If
you want to go one step further and really impress the bankers with your answer, then tell them how you became interested in IB years ago and point to the real life things you’ve since done that have confirmed your passion; studies elected, college clubs joined, people met, friends talked to, books read, jobs taken. Showing a long and considered journey to get into investment banking is the idea here.
What’s the final secret to a magic answer here?
Recognize the downers of banking, not just the uppers.
Bankers you see, want to hire students who aren’t being drawn to banking based simply on Hollywood-hype or CNBC-glamor. They want to know you are realistic about the job, prepared to do grunt work, and yet still super passionate.
After all, the Jimmy Cramer fan club and the Gekko Wannabe students will never be able to hack it when they find out what investment banking really involves – and this sort of drop out costs the banks a bomb.
So with all that in mind, during your answer briefly mention how your friends in banking have clued you in on the realities of the job too – the long hours, sacrifice and other downers which we’ll talk candidly about in this course.
Of course, don’t end your question on a downer – meaning be sure to follow up any reality checking with your 3 main reasons why IB repeated in very very short form, kind of like “…but of course banking is an easy choice for me, because of…”.
“Investment banking has been my #1 career choice for a couple years now, because the type of work bankers do day to day fascinates me, even at a junior level, and I think one can learn more in 2 years doing banking than they could in a decade elsewhere.
Also, all the bankers I’ve met so far, including Paul Klein in Natural Resources here at Goldman Sachs, seem like they would make perfect mentors.
I guess it was about 5 years ago when I spoke with Chris, an old family friend who worked as an analyst at JP Morgan in M&A, that I realized all of this. He shared all the ins and outs of the job…the financial analysis side of things, the pitching and deal making side of it, and also the ‘random bits’ as he called it. He told me that no other graduate career opportunity offers interesting work and exposure to the markets quite like an analyst program in IB.
And having talked with dozens of other bankers over the last couple of years through my involvement with the Finance Club at Harvard, I’ve realized that it’s the people in banking that make coming to work every day so rewarding…everyone seems to know so much and operate on the same high level…results driven, hard working, team oriented.
I did consider management consulting and law 3 years ago, but after doing unpaid work for a local consulting firm and for an insolvency lawyer 2 summers ago, I decided they were not for me…the work flow, skill set and results I experienced didn’t seem to compare to what is on offer in banking. So yeah, banking is a bit of a no brainer for me.
And after doing unpaid work experience for a micro tech startup earlier this year – I helped with their forecasts and VC pitches – I’ve realized that TMT here at Goldman Sachs is certainly the best career opportunity for me.”
It is structured so clearly. It is told in story form. It is filled with specific examples to back up every claim. Most of all it shows a long and considered journey into banking. Here is a student that has been gunning for this career for years, not months. They’re frothing at the mouth to become a banker.
This kind of passion is going to make the student stand out from the crowd by a mile. Whilst everyone else is spitting out generic BS, this student is telling a unique story and it sounds so believable / authentic!
It gets even better when the student contrasts banking against the other career options they considered. This makes bankers confident the student is not trying to have a crack at multiple job opportunities and is instead focused on IB. They’re ‘exclusive’ with IB! And hey, they’ve even investigated the full gamut of job opps and decided IB rules them all.
But the best part of all is the finish.
Here the student goes beyond the question of why IB and delves deeply into why they specifically want to join the group they are interviewing with – which in this case is TMT. This is the icing on the cake. For the TMT bankers this final point is even more important than the general why IB points, because at the end of the day, which group you want to join is the final decision and groups will compete for quality students. So knowing this excites them.
Also, in terms of differentiating yourself from other candidates, knowing specifically what group you want to join and why, will put you ahead of most students, who have no f**king clue, or at least no legitimate reasons backed up with specific proof to explain their answer.
Enough loving. What didn’t we like?
One of the biggest things bankers worry about is whether the student they’re interviewing has realistic expectations of what banking will be and whether they can stand the pressure of banking once in.
ie whether they will revel in the long hours, often monotonous work and limited social life that comes with being a junior banker.
The student has gone some way to allaying these concerns by talking about all the reasons why they love banking.
But you know what would have taken this answer from an 8.5/10 to a 10/10?
If the student had mentioned how their family friend had shared war stories and the downers of being a banker – along with specific examples – and that despite this the student was still really excited about banking because of x, y, z. All of a sudden the student is demonstrating realistic expectations and all of a sudden any worries about the student not being able to cope with a gruelling ass role as junior Excel Monkey diminish dramatically.