First day of classes is right around the corner, and for those who plan to embark upon a Wall Street career, you will need to hit the ground running from day one. The following is an excerpt from an article put out by my former employer, Goldman Sachs and provides helpful hints for how b-school students can prepare for and pursue an internship and ulimately, a full time job on the street. Hope it's helpful:
How to Get a Job on Wall Street
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Demystifying Investment Banking:
You do not need prior experience in investment banking in order to get a job in the field. As in other service industries, people are a firm's primary "asset"; investment banks look for the best talent they can find. Most companies have training programs that provide job-specific training. This allows them the flexibility to recruit from a broader pool of candidate: which includes not only those with banking experience, but also those who have developed their talents in other fields. The purpose of this book is to help demystify the investment banking industry for those who may be interested in the field but do not have prior experience. You have probably heard many myths about investment banking:
• You can't get a job in investment banking if you don't already have experience in the field.
• You will use intricate financial models that only an astrophysicist could understand.
• You will be surrounded by cut-throat colleagues out to sabotage you in order to get ahead.
• You will have to work 25 hours a day 8 days a week.
• You will have no social life at all.
One of our goals is to cast aside these myths and to offer you facts and realities. If you decide to pursue a career in investment banking, we also hope this book will help to guide you through the process.
What is investment banking? What do investment banks do?
The essential function of an investment bank is to act as an intermediary between potential investors and those who seek capital. Facilitating the flow of capital between those who have it and those who need it serves a critical role in developing and sustaining the world economy For many people, the excitement of being at the hub of the world's financial activities is what inspires them to succeed in this demanding field. Investors include individuals, mutual funds, and public and private institutions. Those who seek to raise capital include sovereign entities, municipalities, and various types of corporations. Most often, capital is raised through issuance of equity (ownership in the form of stock) or debt (bonds that essentially represent a loan), or through a merger or acquisition (buying or selling all or part of a company). The spectrum of transactions is broadening as the industry and its people become increasingly creative and sphoisticated in their approaches to solvining clients' problems. Investment banks may act in advisory roles, or they may actually execute transactions, with most activities involving a combination of these elements. investment banks often represent clients in these transactions, but at times they invest their own capital (principal investing). Entrepreneurialism is integral to all of these activities. Investment banks and commercial banks do different types of business with different client bases. Although the two types of institutions are increasingly involved in similar activities, commercial banks are still distinguished by their traditional functions of taking deposits and lending money whereas investment banks are distinguished by the activities outlined above.
Career Options in Investment Banking
What types of jobs exist in investment banks? Most jobs fall into one of two categories, although certain hybrid positions do exist:
Market-Related Positions: These positions appeal to those who love the drama of the financial markets and the energy of the trading floor. You will execute transactions such as issuing securities, distributing them to investors and selling and trading them in the secondary market. Many transactions are completed each day so you can see results immediately There is significant individual accountability and visibility even early in your career. You will usually sit on a trading floor where the atmosphere can be frenetic and often exciting. It may at first, seem chaotic, as there are many people, intense activity and a tremendous amount of information-flow in a tightly packed space. You need to be able to filter out stimuli without missing essential information. "Multi-tasking" ability is essential. The environment is fast-paced and rapidly changing; this requires the ability to stay calm under pressure, to make quick judgments, and, where necessary to make decisions based on incomplete information. The main product areas are Equities, Fixed Income, Currencies, and Commodities. Positions are as follows:
Asset Management: You will be responsible for managing the portfolios of institutional clients. In some positions, you will make investment decisions; in others, you will focus on marketing asset management services to potential investors.
Capital Markets: Positioned on the trading floor, you will closely monitor the markets in order to advise clients on issuance of securities and to market products to issuers. You will need the modeling, marketing, and negotiation skills of bankers, while enjoying the intensity of the trading floor environment.
Research: You will serve as a resource to traders, salespeople and clients. Activities vary among securities research, economic or financial modeling, generating trade ideas, educating or advising clients, and producing research publications.
Sales: You will market securities and other products to investors and maintain the firm's relationship with these clients. The latter often indudes active socializing. Through detailed familiarity with clients' investment needs, you will become an expert resource for them and for colleagues within your firm seeking enhanced knowledge of the client base.
Trading: You will buy and sell securities in a specific sector and will have your own daily profit/loss statement. You will learn to judge, with a high degree of accuracy how the products you trade will be affected by the entire spectrum of macro- and micro-economic events. These positions are more product-oriented than client-oriented.
Finance Positions: You will advise corporate clients, financial institutions and government entities. Your essential purpose will be to develop a capital-raising strategy best suited to each client's particular circumstances. You will help them achieve their goals through mergers, divestitures, issuance or debt or equity, or other types of transactions. Your advisorv work will involve considering all relevant factors, from credit ratings to geopolitics, placing a premium on original and incisive thinking. You will work on important, often complex transactions. In some cases, such as an IPO or a merger, you may well be participating in a once-in-a- lifetime event for your client. You will fulfill a diverse and action-oriented set of responsibilities as part of a "deal team." You will have significant client contact, induding marketing, structuring and negotiations. You will also build and use financial models to understand your client's options. Modeling requires good analytical thinking and the ability to conceptualize and to quantify relationships between various factors; however it does not require you to be a "rocket scientist." As compared with market-related positions, you will work on transactions with a longer time horizon to completion. You will have time to analyze an issue from all angles, to be more thorough in your preparation and to be more considered in your actions. Your work will be demanding and fast-paced but less frenzied than that on the trading floor; your physical environment will be calmer, and you will have more space to yourself.
Although the myths about investment bankers' hours are exaggerated, it is true that bankers work long hours. Yet bankers love the work enough to make the commitment; they are drawn by the excitement of working on projects and transactions that help to shape companies, industries, and markets. And, as is also true with market-related positions, the financial rewards of the field are such that, when bankers are not working hard, they are usually playing hard. Finance areas include:
• Asset-Backed Finance
• Capital Markets (see also the Market Related section)
• Corporate Finance
• Loan Syndication
• Merchant Banking / Principal Investing
• Mergers and Acquisitions
• Municipal Finance
• Real Estate
Deciding What Type of Position to Pursue: Assess your own talents and skills, and consider where you will fit best. There are certain qualities that are essential to all positions throughout the industry. In any position, you will need to be entrepreneurial and creative, and you will be expected to demonstrate keen analytic thinking and articulateness. Other qualities are important throughout the industry, but there are slight variations in emphasis among different positions. In trading, decisiveness is paramount. In sales and finance, the ability to maintain relationships is crucial. Sales and finance also require more "closing" ability than do many trading positions. Perseverance is required in all positions, but it can take different forms. Finance positions require the ability to persevere over a long period of time to bring a project to fruition. Market-related positions require the ability to persevere in an environment where you will inevitably see not only results but also setbacks on a daily basis. The best way to understand what strengths will be called upon by each career path is to talk with people who work (or have worked) in the industry - your classmates, your finance professors, and alumni from your school. Ask them about investment banking and about where they think you would fit. Possible questions:
• How would you define or describe investment banking?
• What are the different types of jobs in the industry? What do you do, and why?
• What do you like most and least about your job?
• What skills and abilities are most important for your job?
• What are the day-to-day responsibilities in the early years?
• What are the medium- and long-term opportunities for career development?
• What are the lifestyle differences between jobs?
• Where do you think my skills would fit?
The Recruiting Process: In investment Banking, the process starts very early. Get yourself into the pipeline as quickly as possible. In many ways, the recruiting process is as involved and as demanding as your classes. Employers look for goal-oriented individuals and want to see you keeping your ultimate career goals in sight. Employers also want to see that you are able to juggle several priorities. Don't underestimate the usefulness of recruiting functions and other social events. Self-presentation is often as important as accomplishments, and these social events are a way to hone your self-presentation skills. Potential employers will begin to recognize your name. Build a collection of business cards from people you meet at these functions, as they will come in handy during the job search process. Summer internships are key. Most firms look first to their summer associates when they begin hiring for full-time positions. Of course, this is also an ideal way to gain experience in finance if you have not worked previously in the industry. On the other hand, don't lock yourself into a full-time position with your summer employer without considering other options. Resist the temptation - or pressure - to make a quick decision. Find out how specific each company wants you to be in your career focus. At some firms, there is a centralized recruiting process, while at others, different divisions recruit separately. Some firms permit interviewing with only one division or region, while others encourage you to interview in as many areas as you wish. Be sure to find out how the firms that interest you handle the interview sign-up process.
Preparing for the Process: There are many ways to meet the challenge of getting a job in the industry. There are many steps you can take right away to begin educating yourself and building a network of contacts. Read regularly The Wall Street Journal (at a minimum: the front page, the Lead articles, and the Money and Investing section); Financial Times; Barron's. Prospective employers will expect you to be abreast of any important news delivered in these publications. Join relevant clubs at your school - Investment Banking, Sales and Trading, etc. This is a way to meet people who have been in investment banking previously and who can serve as resources for you. Visit your school's career planning and placement office, and make use their services. Find out the schedule of company presentations, read company literature, etc. Use the Internet to research investment banks. Most companies havetheir recruiting literature, annual reviews, media clippings, and research reports on the internet. The Goldman Sachs home page address is www.gs.com
. Attend as many on-campus presentations and "day-on-the-job" events you can fit into your schedule. You can learn a lot about the cultures of various firms by how they conduct their events. Attend career fairs, particularly if firms that interest you do not come to your school. Career fairs are often staffed by junior people whose primary purpose is to market the firm and who have little input into the hiring process. To make the most of this situation, your main goal, even more than making an impression, should be preparing for interviews by learning as much as possible about the firm and its hiring criteria. Select your classes according to your interests, if you have the flexibility. If you are interested in corporate finance, take Financial Statement analysis; if you are interested in Fixed income, take an Options class. Contact alumni from your school who work at investment banks. These people are likely to be receptive to you because they have a personal stake in bringing quality alumni from their alma mater into the industry. Request informational interviews or visits. However each company may want you to follow a specific process, which should be respected. Do identify anyone who can advise you and advocate for you as you go through the regular process; but don't try to circumvent that process. If a certain industry or product interests you, follow that industry or market closely. Find out if you can obtain relevant research publications from companies that interest you. You can capitalize on experience from another industry by following it from the perspective of the financial markets. If you are interested in a market-oriented position, consider starting a mock investment portfolio. It is often possible to set this up through your internet provider. Follow economic news that can potentially move markets, such as monthly employment, retail sales and inflation reports. Try to formulate your own opinions about the markets and predictions of future trends in the economy and in the industries that interest you. If you are interested in finance, stay abreast of market events and performance, including noteworthy transactions, and try to understand them by asking yourself some of the following questions about each one:
• Why was it done?
• How was it financed?
• Do you feel this was the best way to finance the deal?
• Who executed the deal, and why?
• How is the company's balance sheet affected?
• How has the company's position in the industry been affected?
• How will the industry be affected?
• Would you have done this deal? Or do you think it should have been done differently?
• Do you agree with the pricing and timing?
• Can you anticipate future moves by the company or the industry?
The Resume and Cover Letter: You should be absolutely certain that both your resume and cover letter are free of spelling, grammatical and typographical errors. Be especially careful to spell employers' names correctly since misspelled names are most egregious, yet least likely to be caught by your spell-checker. If such mistakes are not corrected, the interviewing process is likely to end before it starts.
The Resume: Quantify your achievements wherever possible in your resume - e.g., "exceeded sales goals by 20%." An important question is whether to include your CPA and standardized test scores on your resume. Interviewers consider your grades and scores an important, although not the only, factor in assessing your abilities. If you are worried about your grades and scores, do not eliminate yourself from the competition, particularly if you have stronger achievements in other areas. If you feel this information will further your cause, you should definitely include it. If you omit some or all of your grades and scores from your resume, be prepared to answer questions about them in your interviews. The way to handle this in an interview is to be direct and candid in a non- defensive way, and then move on quickly to the other points you feel better demonstrate your skills and abilities.
The Cover Letter: Be sure to address your cover letter to the appropriate individual within an organization (and be sure that each letter gets into the right envelope!). Cover letters should be short and concise. You do not need to recap your resume. Three paragraphs, of two to three sentences each, should suffice. In the first, you should say what school you attend, what degree you are getting, and when you will graduate. You should also state specifically what job you are seeking or which interview schedule you would like to be on. In the second paragraph, you should briefly highlight one or two resume items or personal abilities that pertain to the position you seek. The final paragraph should include your phone number and a statement that you will follow up (if appropriate) or that you hope to see the addressee on campus. If you say you will follow up, be sure to do so!
Doing Homework Before Your Interview: You should do as much preparation as possible before any contact with a company's representatives, whether it be an informal or informational event or a formal interview. Read all recruiting information provided by the company whether on hard copy or Internet. Read recent articles about the company. Read articles listed on the company's web page. Also look up recent mentions in The Wall Street Journal and The New York Times. Also check the "league tables" published quarterly in The Wall Street Journal. Try to know the company's position (e.g., market share, reputation, niche) in businesses that interest you. Be aware of any changes the company is making (e.g., expanding Asian presence, reorganizing Real Estate department, etc.). Try to understand why these changes are being made. Conversely, be aware if a company is not following industry-wide trends (e.g., mergers with retail brokerages or commercial banks), and try to understand why not.
Questions to Ask: When you meet representatives from various investment banks, you may want to ask questions such as:
• Tell me about your career and your current position.
• What do you like most and least about your job?
• What qualities/skills/talents do you think are most important for your job?
• How would you describe the culture at your company?
• How would you describe the differences between your company and other investment banks?
• What are the growth areas in your business and company?
• Follow up on some of the prep work you have done:
• How has the recent merger/IPO/etc. affected your company's businesses and culture?
• What factors led to your companies recent changes in its Asian presence / retail coverage / etc.?
• What is your company's hiring process?
• How broadly or narrowly do you want candidates to define their interests? (e.g. finance vs. sales and trading; sales vs. trading; equi- ties vs. fixed income vs. currencies, etc.)
• Who are the most appropriate people for me to contact at your company?
• What are the next steps I should take?
Interviews: Eahc investment banking filrm has a unique approach to interviewing. However, there are some common themes that prevail. Investment banks generally do not use case studies, as consulting firms do. Interviews are generally designed to understand your background, explore your career interests, and evaluate your qualifications.
Your interviewer's goal, essentially, is to learn the answers to the following questions:
• What do you want to do?
• Why do you want to do it? (Does your response reflect a realistic understanding of the job you seek?)
• What talents do you have that will make you good at it?
Have you established a track record of excellence in other endeavors that will translate into success in banking?
Are you someone the interviewer can work closely with on a daily basis?
Your goals in the interview should be:
• Telling your story
• Selling yourself
• Demonstrating that you understand the key criteria that guide potential employers in their hiring decisions.
In other words, as you formulate your answers to the interview questions, bear in mind thte employer's goals and the underlying questions, as listed above. You may be asked for your opinion about or forecasts regarding the markets, the economy, or an industry that you follow. Your interviewer is not looking for the "right" answer; rather, the goal is to get a sense of how you arrived at your opinon. This is an opportunity to demonstrate your interest in the industry and your reasoning skills. It is not uncommon to be interviewed by two people at the same time. This is not meant to intimidate you. It is simply a way to get more than one opinion regarding wether you should advance to the next stage in the process. This also affords you the opportunity to meet a cross-section of people at the company.
Generally, there are several rounds of interviews, which usually begin on campus and conclude at the company's headquarters. The elapsed time between the first interview and recieving an offer can vary. For a full-time position, the process frequently takes as long as six to eight weeks. However, for summer internships the process may be accomplished in as little as a few days.
Global Bankers by Roy Smith. Overview of how global banking operates in the major financial centers.
The Money Masters by John Train. Profiles of successful investors and speculators.
The Intelligent Investor by Benjamin Graham. Wisdom on the value approach to investing.
Market Wizards: Interviews with Top Traders by Jack D. Schwager. Successful trader profiles.
The Wall Street Journal Guide to Understanding Money and Investment by Kenneth Morris. Fundamentals in understanding Wall Street.
Understanding Wall Street by Jeffrey Little & Lucien Rhodes. A beginner's guide.
The following popular works are, of course, exaggerated depictions of the darker side of the industry. However, they do provide some of the flavor of life on "The Street."
Barbarians at the Gate by Bryan Burroughs and John Helyar.
Liar's Poker by Michael Lewis.
The Predator's Ball by Connie Bruck.
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