As summer recruiting continues, I am receiving a lot of emails for informational interviews and coffee chats. I know a junior banker who has gone on over 100 coffee chats since December has started (which may speak more to him or his group than anything else). For undergrads and masters, the 3rd year summer analyst position is extremely important in landing a full time position upon graduation. For MBAs, it is even more important as MBAs who are hired via a return offer constitute almost all the current year’s entry class across several banks.
With that in mind, I thought I would share a few observations that would be helpful in the recruiting process from what I perceive to be common pitfalls in the process.
Be prepared for a technical interview even though it’s a coffee chat
Nothing is more annoying than someone who spouts about how passionate they have always been about finance before stumbling through a DCF or not being able to explain what EBITDA is. I have come across several complaints from junior bankers who feel that the coffee chat counterparty is wasting their time – yes, coffee chats are conducted because of the culture in the industry to pay it forward, particularly for fellow alumni, but the banker is not here to get you there, you are there to display to the banker that you are a good candidate and give them confidence that they can stick their neck out and vouch for you.
Some banks have made it common practice that every coffee chat will involve some kind of technical probing – all the way to a full blown technical interview (have heard this across all banks, but BMO Capital Markets in particular has taken a shine to this approach). Consider an acceptance of a coffee chat to be a first screen and be prepared for any question, especially as it pertains to the particular group of the banker you are meeting. If you are meeting with an M&A banker, don’t even think about waltzing in without at least a rudimentary understanding of accretion/dilution. In fairness, investment banking is a subset of finance where you can somewhat fake it with rehearsed answers or if you are luckier yet, you are not asked any technical questions throughout the entire process (I have heard first hand from some successful candidates, who actually were technically savvy – usually girls). However, that is an unnecessary risk – and if you don’t know basic tenets of corporate finance, do you really want to do investment banking?
On the other hand, any sort of conversation with someone from the trading floor and you will be skewered fairly quickly if you are not prepared – the trading floor demands that you always have a view. Within 30 seconds, someone will figure out if your view is informed or if you have sufficient cognitive skills. Where is oil going in 3 months?
If you don’t know, don’t fake it
If you babble through an answer, you won’t fool anyone, you will just dig yourself into a bigger hole. Also annoying are aspiring bankers who fluff a technical question and say “well I haven’t prepared yet, but you can be certain I will know it if I get an actual interview.” So what happens if you don’t get an interview (you certainly won’t with the coffee chat host)?
No hubris – Investment bankers hate cockiness (from students)
Two things here – 1) you don’t have the job yet so you need the banker more than they need you; 2) even if you are qualified, remember the airport test – banking means a lot of time with your team. If you rub someone the wrong way, and they know that they will be working with the new hire probably more than they see their significant other, they are going to put a large emphasis on personality for the hiring. Look at it this way – technical knowledge is a minimum passing bar – the rest is all fit. That said, you may be unpleasantly surprised at where the bar is set. Also, you may read several financial publications on the regular and have a 95% average, but if you are put on the desk on day 1 and told to organize a conference call and run a few cross-currency interest rate swaps on Bloomberg, you will quickly find out that you have no skill that can add value for the bank – that is, making money. Let your host guide the conversation.
Dress for the job you want
If it’s just coffee, a suit and tie might be a bit much, but at the very least put on a collared shirt and khakis (I am not offering any advice for girls – I find girls have a better sense for these things). I’ve heard of hoodies, unprofessional accessories, aggressive hairstyles and tattoos (sorry, the corporate world isn’t quite ready for visible ink just yet). I haven’t heard of any callbacks for these candidates. Risk and reward is a big concept in finance – this may be an illustration that you are not that savvy on this front.