Wall St. 102: If, Why, and How to get a job?Jun 19 '01 (Updated Jul 13 '01) Write an essay on this topic.
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The Bottom Line They make ridiculous sums of money on Wall St. If, Why, and How to get in on the action!
Why get a Wall St. job? They make ridiculous sums of money in a highly exciting environment. If you survive ten years in an investment bank, you could easily be making money on the order of the mid to high six figures, if not seven. Why not get such a job? The operative phrase in the last sentence, “if you survive.” It is a ruthless world, and in order to get ahead, you have to work your butt off. With 80 hour a week (stop to consider what that means), it means getting to work by 6:45am, and often leaving after midnight. It means being on call over the weekends, it means giving your life to the business. It means 80 hours of mind-numbing work. Still interested? When thinking about your first job, you have a dizzying array of choices out there. The market is not quite as nice as it was two years ago when the job market was as tight as it has been for the past 50 years, but there are still plenty of opportunities available. So, if you really want to get on the track to ridiculous wealth and excitement or just curious what all the fuss is about, read on: This is the second in a two-part installment. In this installment, I describe life from the inside, and why, how, and if to get a job for yourself. If you are like I was when I was still in college, and have no idea what an investment bank does, you may want to read the first part entitled: Wall St. 101: What is an investment bank anyway? Part 1: see http://www.epinions.com/content_1702600836 Part 2: This document (I originally wrote this for the Education section, but it grew so big, I broke it into two parts (one on defining what an investment bank (a.k.a. a brokerage house) is, and the second on getting a job. The more I wrote, I felt that everybody, not just students, could benefit from figuring out what Investment Banking is all about. While this category is intended to answer the question “What is a Retail Brokerage?” I felt people would be interested in knowing how the big boys play, and I answer instead the question as posed “What is a Brokerage?” Companies like Morgan Stanley and Meryll Lynch and others act as brokers to the average Joe, but they also act as brokers to billion dollar companies. It is this latter role than I answer here.) Before I start, what qualifies me to speak on this you may ask? I have worked in one of the top names in the industry for one year, and I am now getting out. In addition to having just gone through the tortuous process of getting a job here two years ago, I also helped recruit and hire this year’s new crop of applicants. So having recently seen the process from both sides, I will now share what I have learned with you. The Finance Industry: an Insider’s View So alright, I am not much of an insider, I’ve only been in one of these so called bulge-bracket investment banks and only for one year, but given that I am targeting people who are looking for their first job, my experience is fairly representative of what you will be getting into. Also, I have lots of friends in lots of these banks. It seems that a large portion of people I know who are my age live in New York, and a large portion of those work in an investment bank. These are our collective experiences. (There are actually multiple job tracks in an investment bank. I am describing the main one for so called financial professionals that go: Undergraduate (4-years) -> Analyst (2-3 Years) -> MBA (optional) -> Associate (3-5 years)-> Vice President (?)-> Principal (?) -> Managing Director (?). Once you have managed to hit the VP position, you are making insane amounts of money. There are other job tracks at banks, such as through the IT (Information Technology department) or Operations. Many people who don’t get a job on the main track try one of these, hoping to switch into the main one later.) There are literally billions of dollars moving across a given desk every single day. Traders and salesman sit at desks in front of glowing computers in a trading floor that spans the size of a football field. A constant din of excitement buzzes from the opening bell until closing. People treat clients to lavish dinners and floor seats at basketball games. A car waits to take home any employee who works past nine, so that they will be safely home to wake up and be back in the office by 6:45 the next morning. Somehow, all this justifies the lavish bonuses they all collect at the end of the year (so long as the market behaves anyway). These are all true images of the typical investment bank, that you might expect, if you saw the movie Wall Street starring Charlie Sheen and Michael Douglas, or reading tell-alls such as Liar’s Poker or FIASCO. However, the images they present of white men and greedy capitalists aren’t quit right. First of all, looking across the trading floor, you will see mostly white men in matching suits. However, things are clearly changing. Of the people hired to be Analysts this year, more than half were women, and less than half were white. Many divisions are headed by women, and as the current crop of analysts move up, the role of women and minorities will become more and more prominent. Oh, and as a result of the dot-com revolution, almost all banks have gone business casual as of last year. Second, it is also no longer the cutthroat winner take all mentality. The most important thing you learn in training is that it’s not what you know, but who you know. Before you start in your own particular division, your training is with the people from across the firm, the best and the brightest, and you get to them all well. Later, when you are at your particular desk, you are no more than a shout away from anyone else on the trading floor, and with the friendships that developed, it is easy to find someone to talk to about any business the firm is engaged. Third, the financial markets are not just places for the rich to gamble. Finance is mostly about eliminating risks. Sure, people take huge risks from time to time, but most of the time, the risks are highly educated, and great care is made to minimize the risks as much as possible. Mathematical models and computer simulations are combined with economic forecasts and intuition to make sure risks are well justified. (These computer simulations and mathematical models are typically done in Microsoft Excel. For the computer savvy, it is always amusing how many trillions of dollars of the world economy depend on calculations made on Billy G’s little spreadsheet.) Finally, it is not necessarily an easy life. Ok, so CSFB recently announced a belt-tightening move that would limit employees to only spend $10,000 for dinner! And where lots of people measure their annual income in millions. And where even the lowliest analyst is entitled to take a car home when working late. But, working late is the operative word there. Analysts are expected to work 80+ hours a week. Stop to consider what that means. In by 6:45am, often at work until midnights, quite possibly on call all weekend. Your pay is contingent on your performance and company performance, and given one bad decision, can often deflate to very little. Stress is an integral part of life. Many people burn out. Still Interested? Why join as an analyst? The potential for huge amounts of money. Constant excitement. Chance to work with very smart, driven people. Perqs like car service and expensed dinners when working late. Connection to what’s happening in the world around you. Constant engagement. Snap decisions. Chance to make an impact right away. The potential for huge amounts of money. Why not? The pay is small to start. Ridiculously long hours. No life outside work. The work is mind-numbing and tedious, especially to start. Constant pressure. Constant stress. Income depends on performance and on the market. Nothing is assured. The analyst is the lowest rung of the pecking order. Starting out as an analyst, you are overworked and underpaid. Things aren’t as bad as they used to be, when analysts were asked to make photocopies and fetch coffee. However, expect to spend time making power point presentations pretty or downloading data off the web or making pretty charts. The good news is that after a few months of demonstrated competence and even excellence in the mundane, you start to get real responsibilities. Real responsibilities mean millions of dollars on the line, and often times the ears of very important people (a friend working on an analysis of Marvel Comics, got to talk to the CEO of Marvel to discuss the X-men movie and the future of Marvel). Working with people is an integral part of the job. Training gives you a good opportunity to become good friends with people across the firm, and you quickly learn that the best way to solve most problems is to find out whom to ask. Working with smart driven diverse people every day is perhaps the best part of the experience. If this appeals to you, then you may also want to think about which division to apply to. You may apply to more than one, but on resumes/cover letters/interviews, you should sound like you know exactly where you want to work. Choosing a division The descriptions of these divisions are in Part 1. Here is how life differs. Sales and Trading: Equities Life is hectic. Risks are larger. You get to work at 6:45 to prepare for the trading day, and you are on your toes until the market closes at 4:30. Earnings reports, market news, financial models, dominate your life. Once you have put a few years in, you may get the chance to leave before 7:00 on most days. Sales and Trading: Fixed Income Like Equities, but more mathematical. Bonds are more complex. Derivatives are especially so. These groups tend to attract the “rocket scientists.” Research Tends to have similar hours to sales and trading, so they are ready to answer the traders’ questions. Days spent mostly tracking news and drafting reports and articles. Less tense, but perhaps longer hours, because those in research can work even when the markets are closed. Investment Banking Life for an analyst tends to be dominated by presentations. Perhaps the chance to travel. The hours here are the longest. People don’t get in until 8:30 or 9:00, but often stay very late and are on call over the weekend. Long periods of inaction punctuated with flurries of intense work to meet a deadline. At some point, you may get to aid in structuring the contracts for a deal. They tend to get paid slightly more, because of the longer hours, and less regular life style. ”Ok, I’m in, what do I do now?” Résumé Ideally you are just finishing your sophomore year. The first step is to do stuff that makes your resume look good. If your GPA is decent (3.5 or above) put it on your resume. It is not necessary, but it helps. You don’t need to be a finance major though it helps. (I personally think majoring in finance is a waste since you learn everything you need on the job anyway. I suggest economics instead.) Definitely at least take a few finance courses and make note of that on your resume. Most importantly, get a relevant summer job. You have two goals on your résumé, show that you are reasonably smart and active, and show that you are dedicated to finance. Leadership roles in clubs and sports teams also help. And finally, anything that make you distinctive, volunteered in Africa, manager for Duke’s basketball team, Whitehouse intern, are all nice (these all describe people I know). Résumés should be sent along with cover letters in the fall of your senior year. The process is pushed earlier and earlier every year, and typically completed by November though they occasionally make exceptions. Check each company’s website or your school’s career center for details. For campus recruiting (when the company’s come to your school), a good rule of thumb is that you need to send out enough resumes (20 or more) to get at least eight interviews. One in four interviews get to the second round, and one in two of those who get to the second round get job offers. The Interview Do your homework ahead of time. Again, you don’t have to be a finance major, but you should know the contents of these two epinions I am writing. Research the company you are applying to. Read their website extensively. Know about current events in finance, try to at least watch CNBC if not read the Wall Street Journal (the bible to those in the biz). There are six categories of questions: Resume: Anything you put on your resume is fair game. Just be aware of that, and be able to say a bit about the summer job you mentioned or the award you won. Behavioral: The heart of the interview. These are all BS questions like “Describe a time when you were in a group project and how you solved the problem.” Or “Describe a time when you were in a leadership position.” Or “What was the most difficult situation you faced in college and how did you deal with it.” The best way to deal with these questions is practice, because pretty much they all ask the same thing. After about the 15th interview, I was reciting the answers from memory. Finance: They want to see how much research you have done for the job. They might ask simple questions like what is a bond. They may ask if you own stock and if you trade a portfolio. They may ask your view of the economy for the next year. Not critical if you are not an expert, but it doesn’t hurt. Why do you want to work for –blank-?: Every interviewer at every company will ask you this. Make sure you do your research! I didn’t, but got good at faking it. I would not suggest this strategy. Logic: They like asking logic questions. These suck and are often hit or miss, but oh well. For example, “You are sitting in your office on the first floor of the World Trade Center (which is about 100 stories tall). Outside, someone is stacking pennies one on top of another. Pretty soon, there is a stack of pennies as tall as the building itself. You wonder if they would fit in your office. Yes or No and Why?” You can find other examples of these questions online. The anti-question: “Do you have any questions for me?” This question is very important. Here is where you show how much you care. Don’t ask questions that you can easily find out from the website. Ideally ask questions to show off your knowledge “I heard you did this merger recently. Did you work on it?” Questions like “Tell me about what you work on,” “What is your relationship with the people that work for you,” “Do you have time for your family,” “How does your culture differ from your competitors” are all appropriate. There is typically a first round interview on your campus that lasts about half an hour to an hour with one or two people. Then, if they like you, they fly you down for a second round in their offices. This is nice. You get a free trip to New York (most likely) in a nice hotel. But the interview can be exhausting. Superdays they are called, entail a full day, often about 4 or more hours of interviews, where you meet with a different person in a division in half hour shifts. The trick is to get at least one person to really like you. That means be smart, personable, aggressive and ambitious (but not arrogant), directed, independent, etc. When deciding who to hire, all you need is one interviewer to fight for you. Make sure you send a thank you note (e-mail is perhaps fine for this) for interviews. This gets your name in their mind. And don’t stress too much. It is a random process often, and you will get rejected many many times. Choosing an offer After you get an offer, the company will offer to fly you in for a sell-day. Here, you get to meet informally with people in various divisions. This is a good chance to ask real questions, not just ones to make yourself look good. Pay is amusingly identical in nearly every bank of equal caliber. Last summer, our analyst class nearly revolted when our peer banks gave their analysts a raise. As a result, we all got a raise before we finished training. Interestingly enough, for these positions, the best banks pay the least since less prestigious banks have to pay more to attract good candidates. Culture is important. I have learned that when comparing notes with peers in other companies. Some of the tripe they feed you about company culture really is true. If all you care about is rankings, (i.e. you picked your undergraduate school by looking at the US News list and picked the highest rated one) a rough rough order might be: 1. Morgan Stanley 1. Goldman Sachs 3. Meryll Lynch 4. J.P. Morgan Chase 5. CSFB 5. UBS Warburg Other sources of rankings come from Institutional Investor. Also see http://www.TheVault.com for more information about company culture, etc. In the end, it’s the people that count. Go where you meet people you feel you can work with. You are going to be spending a lot of time with them. The verdict So should you get a wall st job? I don’t know. I am quitting for a few years, but I may come back. The payoff is awesome (in the literal meaning of the word) but you kill yourself to get there. The environment is exciting, stimulating, etc. You work with great people and live and act like a member of the elite. If that’s right for you, that’s your call. One final perq, New York is an awesome city. But that is the subject of another review. REFERENCES “Part I: Wall St. 101: What is an investment bank anyway?” http://www.epinions.com/content_1702600836 “How to get a PhD: Applying to Grad School” http://benho.epinions.com/content_1336254596  |
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