Saturday, June 23, 2007

Why do you want to be an investment banker?

Why do you want to be an investment banker? Explain how you arrived
at the decision to pursue an analyst position in investment banking.
If you only have enough time to prepare your response to one question outlined in this entire
guide, please make sure it’s this one. We’d be very surprised if you didn’t hear it in just about
every interview (in fact, we’d be inclined to think that you showed up at the wrong place if
you didn’t). One of the most popular variations of this question is, “Why don’t you take a
moment to briefly walk me through your resume and tell me how you arrived at the decision to
pursue an investment banking career.” As always, be sure to answer the question asked. If
you’re not asked to walk your interviewer through your resume, then you probably should dive
right into your reasons for pursuing an analyst or associate spot.
Bad Answers
Candidate 1: You know, I’ve always been interested in learning more about
the business world, and what better place to learn about business than on Wall
Street? I’ve always been fascinated by the world of finance, and I think that my
dynamic personality would really serve me well in such a fast-paced, highpressure
environment. I decided to pursue investment banking jobs because
I’m looking for a career where the learning curve is steep, with lots of opportunities
for personal and professional growth. Also, I’m hoping to start my
own business one day, and I really want to learn about how the world’s leading
companies run their businesses. In particular, I’m really interested in learning
about mergers, acquisitions, and the international aspects of business.
Here’s the problem: This answer is honest, enthusiastic, and well-intentioned, but it’s so incredibly
general. Remember: This question is one of the most important litmus tests of how serious
you really are. Use it as an opportunity to demonstrate that you genuinely understand the role of
an investment bank, the interrelationships among its various functions, and the specific requirements
of the particular job for which you are interviewing. Your answer should demonstrate not
Finding Your Way
only that you’ve given some serious thought to why you want to be a banker, but also how your
past experiences—professional, personal, and academic—have prepared you to thrive in this
unique professional environment.
Candidate 2: Well, throughout most of my college career, I figured I would go
to law school after graduation. But after I talked to a lot of my college friends
who were in law school (or who had just graduated), I realized that while a lot of
them loved law school, few of them actually enjoyed practicing law. I didn’t want
to spend 3 years in law school only to enter one of the most overpopulated
professions—not to mention a profession with one of the highest rates of career
dissatisfaction—unless I was really sure that I wanted to go. So I decided that I’d
postpone the application decision for 2 years or so. That way, I can gain a few
years of work experience and decide during that time whether law school is for
me. Or maybe I’ll decide to go to business school instead. In either event, I’ll
have the opportunity to save a little bit of money in the process and figure out
what I want to do next. I figure that if I had gone to law school, I would have
worked really long hours as a law school student. In fact, I know that I’m going
to work hard at whatever job I decide to take for the next 2 years, so I might as
well work hard at a firm where I’ll be assured a top-notch learning experience.
If this answer actually is swirling around in your head, we need to level with you: You’re not
alone. Every single investment bank will hire analysts with exactly this career path in mind:
2 years as an analyst, back to law school, and on with an exciting career in law armed with a
prestigious first job on Wall Street, more than a little business acumen and some cold hard
cash picked up along the way. But this is the interview stage, and you’d be better off keeping
this little agenda to yourself until after you get the job.
Let’s take a step back and review our advice from the first half of this guide. While there
are many solid, credible reasons for pursuing investment banking analyst positions, that
doesn’t mean that there aren’t just as many illegitimate reasons for doing so. Untenable
responses to this question include those suggesting that you somehow stumbled across banking
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and thought you’d give it a shot, responses that frame the analyst experience as a steppingstone
to bigger and better things, and answers that reference the amount of money that you’re
likely to make if you land a banking job. This candidate mentions all three. Additionally,
his response is vague and noncommittal, so he won’t win any points for being enthusiastic,
interested, or focused on the industry. He doesn’t seem to have a clear idea of what he’d hope
to get out of an analyst program. And believe it or not, there’s more: It’s never a good idea to
advertise that you see the analyst program as a 2-year commitment only. Although it’s true
that banks expect a fair amount of attrition after analysts’ second year, you never want to
make it sound as though you’ve checked out before you’ve even checked in! The interviewer has
probably given him a mental “ding” already and has now turned his attention to what he’d
like for lunch.
Good Answer
Candidate: Well, I think there are a lot of desirable things about this job, but
I’ve focused primarily on three things. First, and perhaps most important, I
want a job where I’m going to learn a ton. Everyone I know in this profession
has emphasized that the learning curve is essentially vertical and that after 2
years analysts have earned a fantastic education on corporate finance, valuation,
the capital markets, and business strategy. Whether I am fortunate enough to
have the opportunity to make my entire career in banking, or even if I eventually
pursue a career elsewhere in industry, I know that 2 years as an analyst
will provide an outstanding foundation. Second, I want a job where I’m going
to work with extremely bright, motivated people. I have always thrived in
situations where my co-workers, classmates or friends have challenged me to
perform at my highest level, and I expect that I’ll learn as much from my
colleagues at an investment bank as I will from the day-to-day analytical
demands of the job. Finally, I want a job where I’ll be able to take a great deal
of responsibility right off the bat. I don’t mind working extremely hard if I
know that I’m making a significant, valuable contribution to a project that is of
critical importance to one of our clients. From everything I’ve heard about
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banking, analysts are part of two- or three-person teams who essentially run the
deal from start to finish. With that few people handling that much responsibility,
I know I’ll be in a position where I’ll be given as much responsibility as I
demonstrate I can handle, and that really excites me.
In the course of this answer, this analyst has identified not only three great reasons to join
this profession, but also a number of personal qualities likely to endear himself to the
interviewer and to his future senior colleagues at the bank. He demonstrates true humility in
his desire to learn and his recognition that his colleagues will be smarter and more experienced
than he. Yet he also demonstrates the ambition and hunger that characterize the very best
On his fourth consecutive all-nighter, Red Bull and Mountain Dew coursing through his
veins, this analyst will be thinking not only about his desperate need for some sleep but also
about the importance of this upcoming presentation and about the potential payoff of
working on a live transaction of critical importance to the client. We’re not kidding—all of
that is conveyed in the answer above.
That said, a number of recruiting professionals shared with us that while there are right and
wrong answers to this famous question, it isn’t just about spitting out a robotic “right answer”
that you’ve memorized and rehearsed. At its core, you need passion, hunger, and determination
to be a good analyst; these should all come out in your interview, and particularly when
you answer this question. So whatever you say in response to this question, this is one
situation where you will be expected to look your interviewer in the eye and speak from the
heart. Even if your response is completely different (e.g., “I am absolutely passionate about
learning how the markets value companies,” or “I want to spend the rest of my career helping
companies execute transactions that will improve shareholder value”), it needs to be an honest
assessment of why you’re ready to jump into this demanding, challenging, and often-rewarding
Now, just in case you gave the exact answer above, it would also behoove you to prepare for
this little curveball . . .
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Interviewer: Those are all good reasons, but you can get all of those things
from a management consulting position, or even a career within a company.
What is it about banking specifically that appeals to you?
Candidate: Hmm . . . well, let me take those separately. I imagine you can get
many of the same experiences above in consulting, but I understand that
consultants tend to be more generalists in their interactions with clients, analyzing
big-picture strategic questions or very specific operational or IT-related
challenges. While I’m interested in business strategy, fundamentally, I do want
to work in finance, and I want to acquire a serious toolkit for financial analysis.
I don’t want to emerge from 2 years as a consultant with only a cursory understanding
of how to analyze financial statements, or how companies are valued.
And while I suppose a career in the finance arm of a company in industry
could provide such skills, my understanding is that the learning curve is just
much steeper in banking.
Good answer. Remember our point earlier that bankers (bless their hearts) tend to have big
egos. Ergo, finance = good, while consulting = bad. Also note the things this analyst didn’t
mention, such as the money you can make on Wall Street, the desire not to travel as much as
consultants, and so on. This follow-up answer dovetails perfectly with the initial response to
the question.
Interviewer: So in addition to that analytical toolkit, what specific things do
you think you’ll take away from the program?
Candidate: I think the next 2 or 3 years will allow me to fulfill very specific
personal and professional goals. While in the process of learning how to
analyze and value companies, I think a great side-benefit would be a unique and
first-hand exposure to the capital markets. My understanding is that when
bankers work on debt or equity offerings, they learn a great deal about what
drives the financial markets, and that’s something of real interest to me. In
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addition, I imagine the group I end up joining within the investment banking
division will shape my learning experience. If I were in an industry group, I
would probably learn a lot about different strategies and business models within
that sector. Or, if I end up in a product group like mergers and acquisitions, I
would probably get a first-hand education in some of the negotiating and deal
structuring skills involved in completing a deal. Finally, while I have no grand
expectations of flying on jets with CEOs, I do think it would be personally
rewarding and fascinating to work closely with the senior management of your
clients on occasion. I think it would contribute to my own professional maturity
and development to have to speak intelligently with a senior executive on the
technical aspects of the deal we’re working on together. I imagine that once
you’ve done that, it would be big boost to your self-confidence—nothing much
would scare you after that!
Again, remember that it’s about more than just the candidate’s particular reasons for pursuing
this career that make him stand out: the specificity, sincerity, and the well-informed job
expectations driving his response collectively make this an A+ answer.
We probably don’t have to tell you this, but we don’t recommend that you simply memorize
the “good” answer outlined here. There should be more than a kernel of truth and sincerity
behind your answer; the bigger the kernel, the more convincing you’ll be. If you can bolster the
credibility of your answer by personalizing it with the specific experiences that sparked your
interest in the first place, so much the better. There are lots of good reasons for wanting a
career in the industry; don’t feel compelled to limit your response to the ideas we’ve included in
our sample answer.


kinshuk said...

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