Career in Investment Banking
Discussion
My nephew is thinking about a career in IB. He's currently at University studying Economics and got all A's at A-level.
I was just wondering if any ph'ers had any advice / hints / tips for him. What should he be doing to increase his chances? What kind of skills / personality do the big IBs look for ? Should he be trying to get internships/ work experience etc ?
Thanks in advance
I was just wondering if any ph'ers had any advice / hints / tips for him. What should he be doing to increase his chances? What kind of skills / personality do the big IBs look for ? Should he be trying to get internships/ work experience etc ?
Thanks in advance
Countdown said:
He's a wannabe "Wolf of Wall Street" 
He's got it into his head that it's exciting and exceptionally well paid and that's his main reason for wanting to do it. As he's young free and single he might as well give it a go and see how it goes.
He wants to be a trader?He's got it into his head that it's exciting and exceptionally well paid and that's his main reason for wanting to do it. As he's young free and single he might as well give it a go and see how it goes.
It can be worth tapping up the smaller banks to see if they have any trainee jobs going.
Countdown said:
My nephew is thinking about a career in IB. He's currently at University studying Economics and got all A's at A-level.
I was just wondering if any ph'ers had any advice / hints / tips for him. What should he be doing to increase his chances? What kind of skills / personality do the big IBs look for ? Should he be trying to get internships/ work experience etc ?
Thanks in advance
I think the first thing he needs to do is to understand what IBs do and which particular area he wants to work in - there are a massive range of roles and vastly different skills required to excel in those different roles.I was just wondering if any ph'ers had any advice / hints / tips for him. What should he be doing to increase his chances? What kind of skills / personality do the big IBs look for ? Should he be trying to get internships/ work experience etc ?
Thanks in advance
The best way to start is to very much via an internship, but he needs to be aware that an internship isn't a fun few weeks, it's extremely hard work which only gets harder once you start as an analyst etc. Yes they can be very well paid, but (based on my experience 10 years ago) they work unbelievably hard and you need to be extremely capable to succeed.
You will always get a few d
heads in any industry, and the IB workplace is very competitive, but generally people are rewarded for good work and those that can't cut the mustard are soon shipped out (or leave voluntarily).Worth seeking out an internship to see if it's the sort of thing he really wants to do - the money doesn't come that easily.
He needs to figure out which part of "Investment Banking" he's most interested in / likely to succeed at, and target that. Most of the internships are in the IBD business - mergers and acquisitions, that type of thing. Sales and Trading is a different ball game altogether. If he doesn't make it in through the front door, I have seen have very successful Head of European Equities start work as a graduate trainee in the IT department. He pushed hard to get assigned to Trade Floor Support, was very keen, worked hard and got taken on by the Business as a desk assistant. This was his plan from the very beginning - he was focused and made it work. It's not easy to get on to an IT graddy scheme, but it's easier than an IBD graddy scheme.
I was like him at his age - same A Levels and Economics at uni. Wanted nothing more than to be banker - traded in my spare time, senior member at the university trading society etc.
Then I interned at a top investment bank during the summer of my second year at uni and hated it. Boring office job, psychopath characters and just not the sexy job it appears to be in the media. Couple that with job insecurity and pay nowhere near the levels of < 2007 and it's just not that attractive. So I became a software developer instead (not in banking).
He needs to get an internship sorted out to see if he really likes it - I have many friends who work in banking now so it can't be that unbearable. Applications open in October/November for next summer's intake so he needs to time it well. Personally things have worked out very well for me and that stage of your life is really about working out what you enjoy and what you might want to do for the next 40 years.
Then I interned at a top investment bank during the summer of my second year at uni and hated it. Boring office job, psychopath characters and just not the sexy job it appears to be in the media. Couple that with job insecurity and pay nowhere near the levels of < 2007 and it's just not that attractive. So I became a software developer instead (not in banking).
He needs to get an internship sorted out to see if he really likes it - I have many friends who work in banking now so it can't be that unbearable. Applications open in October/November for next summer's intake so he needs to time it well. Personally things have worked out very well for me and that stage of your life is really about working out what you enjoy and what you might want to do for the next 40 years.
My place is a T3 IB, I'm the other side of the wall but as a grad he needs to be prepared to put the hours in!
My side as standard is a 60 hour week (6:30-6:30), sales traders & market makers have it very easy hours wise in comparison (6:45 - 5:00) but corporate (proper investment banking/corp finance) it's horrendous for grads - 7:30-12am is. It unheard of when a project/deal is hitting up.
Our grads do a rotation around all departments, helping to understand how each part relates and inputs to the whole - allowing specialisation after.
We take 5 grads a year (given size) but starting salaries are ~£35k - don't pass regs exams/CFA level 1 at first sitting and your out...
Apply for all of the schemes but look at lower level banks as you'll often get more experience and can move on to big corporates later without being pidgeon holed and beaten down by process/compliance before you've had a chance. Schemes all open now, deadlines usually February so work on the applications.
That being said, don't rule out going to one of the funds/asset managers. Henderson, Aberdeen, fidelity etc all have grad schemes and it's far better to be on that side of the deal given the current political risks, process/job automation and declining margins.
Accountancy is a very good shout also, an ACA from a top 4 (especially in corp finance etc) opens up most doors but crucially above dogsbody level...
My side as standard is a 60 hour week (6:30-6:30), sales traders & market makers have it very easy hours wise in comparison (6:45 - 5:00) but corporate (proper investment banking/corp finance) it's horrendous for grads - 7:30-12am is. It unheard of when a project/deal is hitting up.
Our grads do a rotation around all departments, helping to understand how each part relates and inputs to the whole - allowing specialisation after.
We take 5 grads a year (given size) but starting salaries are ~£35k - don't pass regs exams/CFA level 1 at first sitting and your out...
Apply for all of the schemes but look at lower level banks as you'll often get more experience and can move on to big corporates later without being pidgeon holed and beaten down by process/compliance before you've had a chance. Schemes all open now, deadlines usually February so work on the applications.
That being said, don't rule out going to one of the funds/asset managers. Henderson, Aberdeen, fidelity etc all have grad schemes and it's far better to be on that side of the deal given the current political risks, process/job automation and declining margins.
Accountancy is a very good shout also, an ACA from a top 4 (especially in corp finance etc) opens up most doors but crucially above dogsbody level...
I spent about 15 years in banking then the Last 12 in fund services, supporting asset managers. The trading floors at the IBs have shrunk significantly and the asset managers and funds are probably the way to go. I have been an accountant in support roles but still done well out of it so consider accounting / management consultant as well.
Countdown said:
Thanks Keith
If hee wants to apply for an internship how does he find out which banks to apply to? How does the process work? any decent websites out there?
Thanks again
It's an hours and numbers game unfortunately.If hee wants to apply for an internship how does he find out which banks to apply to? How does the process work? any decent websites out there?
Thanks again
We get hundreds of applications for what amounts to 4-5 positions, hardly anybody has heard of our company as we're only fairly small (PM me if you want more).
If interested he needs to get a list of every investment bank in the market, almost all will then have a careers and grad site to look at detailing application process, scheme specialism and closing dates - make a spreadsheet and make sure you miss none and are thorough with all.
Beyond this other aspects are to keep up with current events, market moves and trends to talk about at interview/if necessary to give examples (be specific but don't go OTT). Beyond this skill up, financial modelling/excel will be paramount (in my specialism anyway) but is a very good skill to have.
As said above, don't rule out the asset/fund managers - was approached for a job at one earlier this year and kick myself for not taking it....
What year is he in and at which university?
The 'easiest' way in is to do a summer internship in his penultimate year and get it converted to an offer. However, getting the internship is also incredibly competitive. 100s if not 1000s of applications per role. All of the banks have target schools (basically the top 5-10 universities in the UK plus a handful in Europe). If he isn't studying there, it will be incredibly tough. They also look for lots of extracurricular activities, particularly captains of sports teams, chairman of an investment/finance club.
Www.efinancialcareers.co.uk used to be an excellent resource.
The 'easiest' way in is to do a summer internship in his penultimate year and get it converted to an offer. However, getting the internship is also incredibly competitive. 100s if not 1000s of applications per role. All of the banks have target schools (basically the top 5-10 universities in the UK plus a handful in Europe). If he isn't studying there, it will be incredibly tough. They also look for lots of extracurricular activities, particularly captains of sports teams, chairman of an investment/finance club.
Www.efinancialcareers.co.uk used to be an excellent resource.
Countdown said:
Thanks Keith
If he wants to apply for an internship how does he find out which banks to apply to? How does the process work? any decent websites out there?
Thanks again
He needs to think long and hard about whether he really wants to do this. The serious money doesn't come straight away but the long hours do. There will be kids who have done a lot of research and done internships at every opportunity and it sounds from your post above that he doesn't really know very much about it...If he wants to apply for an internship how does he find out which banks to apply to? How does the process work? any decent websites out there?
Thanks again
Countdown said:
If hee wants to apply for an internship how does he find out which banks to apply to? How does the process work? any decent websites out there?
He needs to apply to all of them, big and small, each bank will have their own careers section on the website. Getting an internship is a numbers game. But first of all he needs to figure out which department within an investment bank he wants to be in. M&A is a bit different to HR.I did a couple of internships during uni, they're the best way to get into the industry. Either that or do an ACA/CFA at a Big 4 or elsewhere and then come in at a slightly higher level.
Being a "wannabe wolf of wall street" is NOT the image you want to portray duing an interview. Yes he needs to be confident but also down to earth and well rounded. Showing genuine interest in the industry helps, so get him to read the FT every day, create a virtual trading portfolio etc.
As said above, he needs to consider what he wants to do exactly as roles vary greatly.
Assuming he wants to be in a front office position, choices usually are:
1) IBD/Banking, where you advise institutions in a given sector (Financial Institutions, Retail, Tech Media Telecoms, Natural Resources, Leveraged Finance/PEs etc). It splits into 3 main divisions:
1a. M&A: as a Grad, you sit all day updating presentations you give to clients in your sector and it's all about valuations (DCF, Sum of the parts, multiples etc.), market intelligence etc. If you get mandated on a deal (not that often, 10 deals a year max I would say) things get more interesting but at that level you can still expect little client interaction and a lot of Excel/Powerpoint. Hours tend to be the worst of all roles (60hrs a week in general as a minimum) and expect to sacrifice some of your weekends, especially if working on a live deal. This role requires a lot of stamina and patience as it will often feel boring, repetitive, inefficient and undervalued. The upside is that when you get to VP level (5-6 years in) you will be looking at ~£300k total comp and it goes up from there. Also provides a good segway into Private Equity (big big bucks!)
1b. Debt Capital Markets/Financing and Syndicate: You advise clients on debt issues, which there are many of and therefore the work tends to be more dynamic and less repetitive, and more rewarding if you're not the kind of person that is happy working on a project for 2 months for it to potentially fall through at the end, as above. You can be on the structuring side (DCM) or execution side (Syndicate) where you will interact with your Markets (Sales & Trading) colleagues more and look after bookbuilding. Financing is usually tied in with DCM and is all about Corporate Loans, pretty vanilla stuff. Hours in this kind of role are easier (around 60 a week) and you shouldn't work weekends. Good earning potential but if the ultimate goal is Private Equity, this is not the best road.
1c. Equity Capital Markets: Pretty much same as above, only that you work on IPOs/rights issues rather than debt deals
2) Markets/Sales & Trading, where you specialise in a given asset class covered (Equities, Rates, Credit, FX, Prime ):
2a. Sales: You cover institutions (hedge funds, asset managers, insurance companies, pension funds, central banks) who have a bunch of cash to invest in your asset class. You start before markets open (6-6.30am in Equities, 7/7.30am in the others) and your day is usually finished by 6pm. Your role here is to call or chat to clients with market colour, trades you have seen that they may be interested in, push some piece of research your colleagues have produced (particularly in Equities) and, most importantly, take orders. A client will call asking a price (usually 2-way also known as bid/offer or bid/ask) in a specific instrument (a bond, a stock, a currency pair, an interest swap, an equity index option, a cds etc), you will then shout over to the relevant trader who will give you a price, you report that back to the client and if it's good enough you have a deal, otherwise they will trade away. You will do this via phone or bloomberg chat usually. As a sales guy, you are expected to build a rapport with your clients, understand what their investment strategy is, and be their advocate i.e. try and get the best price for them from your traders, or the best allocation from your syndicate desk on a new issue/IPO.
2b. Traders: Traders manage a book or "inventory" of instruments/trades (e.g. Euro government bonds) that they own and that sits on the bank's balance sheet. They churn that book of instruments by selling to and buying from clients via Sales people (i.e. provide liquidity) and they get rewarded by charging a spread on each trade. Overall, they manage their entire book so that they are positioned in a way that will make the book rise in value, in that sense they are called risk takers. Let's say they believe that Italian government bond prices are going to improve relative to German bunds, then they will position their book to be short bunds and long italian bonds, meaning they will be happy to buy Italian bonds from their clients but less so to sell italian bonds to them, and their spread will reflect that.
Traders work a little longer hours than sales people and arguably it is a much more stressful jobs, but the good ones can earn a lot very quickly (£300k after 3/4/5 years) and the best ones can end up in Hedge Funds as portfolio managers (big big bucks!).
3) Research: you focus on one asset class as per the above, and essentially go through companies' balance sheets and produce reports recommending or not a comapany's stock or debt. Or at a more macro level you can write research on FX, Economics etc.
Hours are longer than sales and trading, it is a more analytical job which still gives you client exposure as you are asked to get on calls or go to client meetings to deliver your content. Pay is somewhat less than in Sales I believe.
Your nephew should decide which 1/2 of the above areas works best for him, and ideally also identify a sector (for IBD/banking) or asset class (for Sales, Trading, Research) he wants to focus in.
Being focused on what he wants to do (and being able to spell out his motivations for picking that area) will be a big asset as most Grads/interns I meet just give you bullst rehearsed answers.
He should then attend all events where banks come and present at his university, try and network with as many bank colleagues as he can, get business cards, follow-up with those people in order to get an internship.
Failing that he should go on every single bank's website, most banks have a dedicated graduate scheme/internship page, and apply for internships (usually between year 2 and 3, but he could also apply for a spring introduction scheme that some banks do between year 1 and 2).
If he can get on a summer internship, and he does well (works his ass off, does networking, behaves impeccably etc.), he might get offered a Grad scheme place from the bank at the end of the internship meaning he would enter his 3rd and last year with a job already in the pocket.
These days a lot of CVs I see have all sort of extracurriculars like charity work, secretary of finance/investment society's etc, which can help when you are screening thousands of CVs to take to the next stage (assessment centres and interviews), but frankly they don't matter much (to me personally), and it all boils down to how impressive the person in front of me is.
A lot of Grads these days think they have to show they know it all and are experts already, and some even come off with an air of arrogance to them. Those people do not get there far.
Demonstrate that you have a real interest in the role you're pitching for, some aptitudes/competencies that will help you be successful at it, and be humble but personable!
Assuming he wants to be in a front office position, choices usually are:
1) IBD/Banking, where you advise institutions in a given sector (Financial Institutions, Retail, Tech Media Telecoms, Natural Resources, Leveraged Finance/PEs etc). It splits into 3 main divisions:
1a. M&A: as a Grad, you sit all day updating presentations you give to clients in your sector and it's all about valuations (DCF, Sum of the parts, multiples etc.), market intelligence etc. If you get mandated on a deal (not that often, 10 deals a year max I would say) things get more interesting but at that level you can still expect little client interaction and a lot of Excel/Powerpoint. Hours tend to be the worst of all roles (60hrs a week in general as a minimum) and expect to sacrifice some of your weekends, especially if working on a live deal. This role requires a lot of stamina and patience as it will often feel boring, repetitive, inefficient and undervalued. The upside is that when you get to VP level (5-6 years in) you will be looking at ~£300k total comp and it goes up from there. Also provides a good segway into Private Equity (big big bucks!)
1b. Debt Capital Markets/Financing and Syndicate: You advise clients on debt issues, which there are many of and therefore the work tends to be more dynamic and less repetitive, and more rewarding if you're not the kind of person that is happy working on a project for 2 months for it to potentially fall through at the end, as above. You can be on the structuring side (DCM) or execution side (Syndicate) where you will interact with your Markets (Sales & Trading) colleagues more and look after bookbuilding. Financing is usually tied in with DCM and is all about Corporate Loans, pretty vanilla stuff. Hours in this kind of role are easier (around 60 a week) and you shouldn't work weekends. Good earning potential but if the ultimate goal is Private Equity, this is not the best road.
1c. Equity Capital Markets: Pretty much same as above, only that you work on IPOs/rights issues rather than debt deals
2) Markets/Sales & Trading, where you specialise in a given asset class covered (Equities, Rates, Credit, FX, Prime ):
2a. Sales: You cover institutions (hedge funds, asset managers, insurance companies, pension funds, central banks) who have a bunch of cash to invest in your asset class. You start before markets open (6-6.30am in Equities, 7/7.30am in the others) and your day is usually finished by 6pm. Your role here is to call or chat to clients with market colour, trades you have seen that they may be interested in, push some piece of research your colleagues have produced (particularly in Equities) and, most importantly, take orders. A client will call asking a price (usually 2-way also known as bid/offer or bid/ask) in a specific instrument (a bond, a stock, a currency pair, an interest swap, an equity index option, a cds etc), you will then shout over to the relevant trader who will give you a price, you report that back to the client and if it's good enough you have a deal, otherwise they will trade away. You will do this via phone or bloomberg chat usually. As a sales guy, you are expected to build a rapport with your clients, understand what their investment strategy is, and be their advocate i.e. try and get the best price for them from your traders, or the best allocation from your syndicate desk on a new issue/IPO.
2b. Traders: Traders manage a book or "inventory" of instruments/trades (e.g. Euro government bonds) that they own and that sits on the bank's balance sheet. They churn that book of instruments by selling to and buying from clients via Sales people (i.e. provide liquidity) and they get rewarded by charging a spread on each trade. Overall, they manage their entire book so that they are positioned in a way that will make the book rise in value, in that sense they are called risk takers. Let's say they believe that Italian government bond prices are going to improve relative to German bunds, then they will position their book to be short bunds and long italian bonds, meaning they will be happy to buy Italian bonds from their clients but less so to sell italian bonds to them, and their spread will reflect that.
Traders work a little longer hours than sales people and arguably it is a much more stressful jobs, but the good ones can earn a lot very quickly (£300k after 3/4/5 years) and the best ones can end up in Hedge Funds as portfolio managers (big big bucks!).
3) Research: you focus on one asset class as per the above, and essentially go through companies' balance sheets and produce reports recommending or not a comapany's stock or debt. Or at a more macro level you can write research on FX, Economics etc.
Hours are longer than sales and trading, it is a more analytical job which still gives you client exposure as you are asked to get on calls or go to client meetings to deliver your content. Pay is somewhat less than in Sales I believe.
Your nephew should decide which 1/2 of the above areas works best for him, and ideally also identify a sector (for IBD/banking) or asset class (for Sales, Trading, Research) he wants to focus in.
Being focused on what he wants to do (and being able to spell out his motivations for picking that area) will be a big asset as most Grads/interns I meet just give you bulls
t rehearsed answers.He should then attend all events where banks come and present at his university, try and network with as many bank colleagues as he can, get business cards, follow-up with those people in order to get an internship.
Failing that he should go on every single bank's website, most banks have a dedicated graduate scheme/internship page, and apply for internships (usually between year 2 and 3, but he could also apply for a spring introduction scheme that some banks do between year 1 and 2).
If he can get on a summer internship, and he does well (works his ass off, does networking, behaves impeccably etc.), he might get offered a Grad scheme place from the bank at the end of the internship meaning he would enter his 3rd and last year with a job already in the pocket.
These days a lot of CVs I see have all sort of extracurriculars like charity work, secretary of finance/investment society's etc, which can help when you are screening thousands of CVs to take to the next stage (assessment centres and interviews), but frankly they don't matter much (to me personally), and it all boils down to how impressive the person in front of me is.
A lot of Grads these days think they have to show they know it all and are experts already, and some even come off with an air of arrogance to them. Those people do not get there far.
Demonstrate that you have a real interest in the role you're pitching for, some aptitudes/competencies that will help you be successful at it, and be humble but personable!
Internships are key in IB. Most IB grads have done 2 or 3 summer internships and/or a 1-year internship. Extra curricular activities are important too, you often see grads that have run the university finance society or rowed for Oxford/Cambridge.
As people have already said, there are a variety of different areas, but in the true IB world (corporate finance/M&A) expect 15 hour days as a graduate.
Unfortunately it's a hugely oversubscribed industry for graduates, so you will be up against some of the smartest graduates in the world.
As people have already said, there are a variety of different areas, but in the true IB world (corporate finance/M&A) expect 15 hour days as a graduate.
Unfortunately it's a hugely oversubscribed industry for graduates, so you will be up against some of the smartest graduates in the world.
Take the "news" on this website with a pinch of salt, but this article shows the kind of people that get hired:
http://news.efinancialcareers.com/uk-en/253132/mee...
http://news.efinancialcareers.com/uk-en/253132/mee...
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