Engineers transition to IB

I think they're looking for the applicant to tie his background somehow to IB to make it believable and realistic.

I think you just need to be very clear in explaining why you want to go to IB and demonstrate a thorough understanding of the industry. I don't think it's an unrealistic career switch because as an engineer you will already have quantitative skills but you won't have the finance, accounting and business knowledge, and an MBA will give you that knowlede. If you get into a top 10 school, and if recruiting picks back up, its quite reasonable to expect that you would land an IB job. However, and this part is important, I think where the skeptisism comes from in the adcoms mind, especially for Indian engineering/IT applicants, is that they went to college in India and then exited into the most popular profession there (IT/engineering) and now they want to get an MBA and exit into the most popular post-MBA job. On the surface it seems to lack a lot of introspection and deep thought about what you want to do at any stage in your career. So, the key is to prove to them that this is not the case by clearly explaining your reasons for wanting to get into IB and demonstrating your thorough understanding of the industry in your goals essay.

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Agree with you guys ...
I worked in the technology divisions of top5 IBanks and some prestigious hedge funds ...
In my essays I explained how I developed an interest in finance over the years and how an MBA would help me achieve my career goals

That's much more realistic that somebody who provides IT tech support wanting to switch into M&A. Maybe the fact that adcoms see this goal so often from Indian IT guys makes them roll their eyes at first glance.

I think its also true that many people want to go into IB for 2 reasons:

1. It pays a ton
2. It's glamorous to say you work on Wall Street

Why the AdCom's role their collective eyes is that because of the high demand for those jobs, the bulge-bracket banks can pretty much pick and choose who they want. If you wore a black suit with a pink shirt to recruiting then you're done (banks prefer the traditional herd mentality in some areas, dress being one) because the banks have 10 more people just as qualified as you to take their place. Ask anyone who's done IB recruiting and they will tell you that everyone that interviews with Goldman and Lehman is qualified to do the job, the hard part is convincing them you're better than 10 other people with equal credentials. Indian IT is so common and overrepresented that AdCom's know those applicants will have a tough time selling themselves to the Goldman and Lehman's, and it will be impossible if they don't have an amazing reason why they want to do IB.

So with this being said... if you are IT with no prior exposure to finance, would you have to explain how where you got your exposure? or will demonstrating enough about the industry be enough?

There's a highly obvious answer to this, and it's something that I have observed first-hand. It seems that nobody wants to touch the subject, but I'm going to dive right in.

Strong analytical skills are important, but the true test of investment bank recruiting is the social test. I've set it time and again, but I'll say it one more time here. The most important factor in landing a competitive MBA job is attending a target school (this is true for banking as well as consulting and other frequent MBA recruiters). The second most important factor, at least in banking, is the ability to schmooze effectively. Nothing else is more important (for career switchers), not grades, or past activities, or GMAT scores, or anything. In fact, I would say that mistakes in schmoozing are harder to overcome than bad grades or anything else I can think of at the moment. You screw up, you lose. That's why I have suggested many times, in posts and PMs and in person, that people interested in banking should practice schmoozing. Really. Practice. Working a room, what types of drinks to order, dining, dressing, handshake, and on and on. It's a lot of stuff, and practice is the only way to get good at it.

Ok, so now back to the original question. The OP asked "why is it not believable when Indian IT/engineering folks want to target IB". The answer is that it's extremely difficult for them to get the schmoozing part right - and Adcoms know this. I know people are going to have trouble digesting this, but it's absolutely true from what I've observed; I think some examples and details are important.

The first detail is that the challenge is not unique to Indian students; other international students face similar challenges and it's most likely related to differences in culture and language. I'm going to be generalizing a lot here, so try not to take offense - international students of all backgrounds face challenges. Indian students have a terrible habit of moving around in packs and descending on firm representatives as a group. An Indian friend of mine actually observed this and pointed it out me. The challenge is that to your average white banker (generalizing again of course), foreign faces of a given culture tend to be hard to differentiate, and unusual names make matching names and faces impossible when talking to 50 or 100 people a night. I'm not sure if this propensity has cultural roots, but to a casual observer (they are watching you all the time at events) it shows a lack of ability to interact and work with others. If this is you, you need to keep it in mind and work on it - go out with friends every night to different social situations until you get it right. Another observation is that South Americans tend to get more excited when they speak and are quite demonstrative with their hands and bodies. This is really a negative at things like cocktail receptions, where things tend to be crowded and I've literally seen people step back away from people thrashing around as they speak. Not good. Dining customs are quite different in certain Asian cultures but it's just not OK to eat with your mouth open, talk with your mouth full and smack your lips as you eat. I understand that in some cultures eating noisily is an indication that you appreciate the meal, but that's an automatic ding. Some European students refuse to dress appropriately for business events. I don't care how sexy you look, but super-tight suits (especially pants) are just not appropriate, and people definitely need to learn how to tie a proper tie knot. A sloppily tied tie makes a horrible impression. So, these are just some generalizations that may or may not apply to individuals, but as a rule, you need to make sure during recruiting to meet the standards of business. This can vary around the world, but a lot of standards are taking hold worldwide - and if you're talking about schools within the US, there is just one standard, even if you're looking at international positions.

So, culture is a problem for the Indian IT person, but that's not the only thing. IT and engineers just aren't known for their schmoozing skills (remember, the most important thing once you get into a target school). If I had to just give a gut reaction knowing nothing else other that work history, here are the professions that naturally have the best schmoozers (just my opinion, don't get your panties in a bunch): people in sales and marketing (particularly sales), consultants, bankers (they made it through the schmoozing gauntlet once already) and entrepreneurs (kind of like sales people). There are others, and everyone is an individual of course, but people with these backgrounds tend to do well. Additionally, people with fraternity/sorority backgrounds and those that were highly involved in social activities are well prepared as well. If I had to create the opposite list of naturally good schmoozers, engineers and people in IT would be near the bottom of the list, behind med students but ahead of people going into hard sciences (again, just my opinion). The stereotypes tend to play out in IB recruiting as well, as consultants seem to have no problem adapting to IB schmoozing, while many IT folks have a terrible time making the transition. I'm going to say it again, you schmoozing skills will be a heck of a lot more important than your analytical skills when trying to land interviews and jobs.

So, these are not things that are impossible to overcome, but people vastly underestimate how much effort they need to put into learning how to schmooze. Think of it this way, someone who worked in sales or as recruitment chair for their fraternity has spent literally hundreds of hours in cocktail party type situations and have struck up thousands of conversations from scratch. They have learned how to speak in memorable sound bites so people will remember them after just a few minutes (which is all you will have). They already know how to work a room, and avoid mistakes in dress, dining, etc. If you don't have this type of experience, it's going to take more than one etiquette dinner to learn and hone these skills. Adcoms know this, and they know that students with the background in question have a very difficult time making the transition.

totally agree with Pelihu..if anything you really dont need quant skills as you move up the chain, you need these skills when you are an analyst. As i have progressed in my career, the more i had to rely on relationship-skills than analytical or quant skills..oddly my boss and i were just discussing the other day, both of us have engineering degrees but none of us do math above a 5th graders level..

our work heavily relies on understanding the clients problems, engaging the right-resource and presenting the analysis in a very concise and simple way.. the other part is just scheduling time for lunch and disucssing issues at a very high-level..

When are kudos coming back? I feel like pelihu is missing out on 5-10 kudos a day with posts like these.

Awesome stuff pelihu! I think that's another post that needs to go into the vault.

You need to write a book or something! Not how to get into business school (there are a ton of those out already), but what to do once you're in. Great stuff.



This part made me laugh as my background is in a hard science. But it's also VERY true.

During my first campus visit to Tuck I was simply amazed at the personalities of the students and of some of the other prospective students visiting at the same time. The best way I can describe it is friendly, confident, approachable and at ease. These are people who like to talk to other people. Even if they have to fake it, it comes across as genuine (I don't think many fake it).

I compare that to a majority of my co-workers who give me a blank stare when I say "good morning". Once you get past the awkward exterior they are good people, but there isn't time for that in a business environment.

I think personality counts for a lot in adcoms minds because it counts for a lot in business life. I've had job interviews where I was aggressively courted afterward, not because my technical skills were outstanding but because my future co-workers thought I'd be a great person to work with.

RF

As far as salespeople - it is obvious that they have an excellent schmoozing personality. But honestly, how are they looked at? What if they are in a less prestigous sales role where they are basically dialing for dollars (insurance, mortgages, printers/office supplies, etc.) that many state school kids end up in? Is it questionable whether they can handle the quantitative side of things? Is it questioned whether they have the class and social graces to be put in front of the C-suite of a client?

Peli - great post, by the way.

Well, the obvious first step is to be at a target school. Are there many state-school kids with pedestrian work backgrounds at the top schools? No, not really; and the few that do make it probably have to prove their academic competence in traditional ways (high GPAs, honors, high GMAT). Remember, ability to schmooze is the most important thing after you are at a target school (for banking, and probably consulting). If you're not at a target school, you'll need to prove your competence before you'll even have the chance to schmooze.

Hi guys,

Than you so much for this interesting post!!

I would like to ask you some questions:

I work for a spanish bank, in its treasury, I'm not sales nor trader but I work in the front office although I'm engineer. And I can see a tend in which banks are hiring more and more engineers. Just to say that almost 50% of my mates during my degree are now working for european IB, as both traders and sales.

Does this tendency also appear in the states?

Another question is regarding CFA title. People with a business degree are asked to be CFA if they want work in the FO. That makes me think if it's better to be CFA insted to have a MBA to work in IB. My experience says that it's better to be CFA, however I'm not very sure of this because almost everyone thinks the opposite

Above all, I agree with the idea that for working in IB it's a must to have the schmoozing skill.

Cheers

JohnLewis, you are confusing some of your terms. The big banks divide up their operations into Investment Banking and Sales and Trading. The Investment Banking side is sometimes called corporate finance (different than corporate finance at a corporation), and includes M&A, leveraged finance and all coverage banking and advisory. Sales and Trading is a separate part of the bank, and at some banks is grouped under the Capital Markets arm. Another tricky point is that Debt Capital Markets and Equity Capital Markets are generally grouped with Investment Banking, though they may sit with the people on the trading floor.

So, it's conceivable that engineers would be better candidates for Sales and Trading. A good friend of mine joined the S&T Division as a trader for the summer at the same firm where I was with the Investment Banking Division. I would always joke with him about how they would find him a nice desk facing a brick wall in the basement. He'd always say "c'mon, I'm not that bad" but you get the point.

So, when talking about IB or Investment Banking, we're generally talking specifically about the Investment Banking (AKA corporate finance at some places) Division. While most big Investment Banks do have Sales and Trading Divisions, it's normal to specifically say Sales and Trading if that's what you're talking about.

CFA has zero value for investment banking. In fact, it can almost be argue that a CFA has negative value for investment banking because many banks will call into question whether you are serious about banking. If you're mostly interested in banking, I'd suggest removing the CFA from your resume. A CFA has slightly more value with S&T, however the value is still pretty close to nil. Hard-core traders have a reputation for being suspicious of too much education. A CFA is very valuable for investment management, or what people sometimes like to refer to as buy-side. Now, buy-side and sell-side are misnomers to an extent, because every banking transaction has a buy-side and a sell-side. What people are really talking about is managing money or portfolios, and in those cases a CFA is very valuable - though I have noticed that most of the top firms do not require a CFA for people that they hire, but rather expect that their investment managers will obtain the CFA after getting hired.

That was good info,Pelihu.

I am pretty naive to IB.Can I know people of what background are normally employed as traders?

pelihu, thank you so much for your explanation, but I'm afraid I'm still confusing since I'm not able to identify what you say in the bank I work for

Corporate finance? close to me there is the corporates sales desk, which sell financial products to corporates (i.e. big companies). Generally, those financial products allow such corporates to hedge their risk. For example, FX risk will be hedged with FX derivates (including options, swaps, etc.). Airlines will hedge their risk on oil price with specific oil derivatives, and so on. This is what I understand as corporate finance.

Also, there is another sales desk which recommend investors some equities to invest money. Generally, this equities are spanish equitites, and these sales make fundamental analysis (i.e. analyze the Cash Flows of the company and compute some specific ratios like EBITDA, etc.) in order to determine if the share of this equity is cheap or expensive. Is this Corporate Finance?

However, what you say is IB (controlling M&A, leveraged finance and all coverage banking and advisory) is what I understand as Strategy consulting.

But, don't get me wrong, I'm very far to be an expert on this point, so I'm not trying to argue with you. These are just some doubts I have.

I find very boring S&T tasks, all day in front of 5 o 6 screens managing positions... this is not for me. However, I find very interesting advisory task as you mentioned!

@ sonibubu, apologies if I've modified the original topic of the thread.

Cheers

This is exactly what you described, Corporate Sales. The banks are selling companies financial ideas and products. IB or Corporate Finance is purely advisory (although they do interact with the S&T groups when the do a large debt or equity offering). Managing Directors at the major banks call on company CEOs to pitch them ideas (M&A Transactions, Capital Reorgs, IPOs, etc.). Then they act as the advisor and expert in the process. Think of this process as a very high end real estate deal where the IB department acts as the broker and the client company acts as the buyer or seller. Investment Bankers can represent either side of the deal, either the sellers agent, (ex. running an auction process), or maybe the buyers agent (ex. representing a PE firm looking for a consumer product company). Think of the sales department as Home Depot trying to sell you a bunch of financial crap for the home (company). Sales deals more with the CFO or Finance department while the IB deals with the CEO.


This is the retail sales broker that tries to sell investmnet ideas to the high net worth individual investor. They could also be pitching sales ideas to institutional investors or people with a lot of cash lying around, i.e. insurance companies, college endowments, public pension portfolios, etc.