The two most common inquiries we get are:
“Am I too old for investment banking?”
“When should I give up on investment banking?”
We much prefer “what is a type curve?” but we appreciate a reader base that exceeds 3 people so we are going to take a stab at the aforementioned questions. Both questions are commonly asked by people who have already left school and have been in the work force for a few years.
Too Old for Investment Banking
In making hiring decisions, investment banks do not care about your exact age for analyst years if you look under 30 – being clean shaven helps. Around 1/3 of investment banking analysts are not 21/22 year old new graduates because they took an extra year or two to do exchange, joined the military, have a few years of relevant or not-so-relevant work experience or were mature students in university.
Recruiting for Investment Banking One Year Out of School
What investment banks do care about is how long it has been since graduation. If you missed the cut for investment banking during campus recruiting but are half a year in to an apprenticeship with PwC in audit, you are a prime candidate for Year 0/entry-level investment banking positions when the first crop of campus hires that did not know what they signed up for drop out or get cut before probation.
If you are in the corporate finance division of a Big 4 or corporate development at a Fortune 500, your chances are even better. After analysts drop out after receiving their first full bonuses for exits in private equity or just exits in general, there is another wave of hiring.
Basically, if you did not make the cut the first time around on-campus, provided that you have a decent job the next year is basically a new, less-structured recruiting season which you will have to keep abreast of because these entry-level positions are often not posted – you will have to aggressively seek coffee chats with each investment bank’s recruiting partners or members of their recruiting committee (usually a VP or Director). These coffee chats are basically first round screens and will include technical questions.
Recruiting for Investment Banking a Few Years Out of School
The longer you are out of school the harder it gets. Banks generally feel that you may have developed bad habits working at a corporate for so long and will not adjust well to the ramp up in hours and loss of lifestyle. Additionally, they are obligated to hire undergraduates and new grads to keep their relationships with schools, resulting in a much harder sell.
Interestingly enough at domestic banks, the further you are out of school, the more you will be favored if you are an internal candidate – even mid or back office despite plenty of chatter on the internet to the contrary. We have seen a lot of candidates in esoteric parts of the bank such as internal audit or risk management (or even candidates languishing in a rotational program) land in the investment bank due to diversity initiatives and pushes to hire internally – especially if there is a hiring freeze at the bank. In the scheme of things, analysts are cheap. Sticking around for 2+ years in a bad division is also seen as loyalty and will get you points, although we do not encourage this path.
This does not work at bulge bracket banks unless you are already in a front office capacity (corporate banking/sales & trading). Since they are at the top of the heap, they will fill in vacancies with analysts at mid-market banks.
Reinventing Yourself for Investment Banking With an MBA
Anyone who is past this grace period would be better served by getting an MBA. Upon getting an MBA and going to associate via campus recruiting is straightforward – investment banks recruit at target schools, so acing a harder interview than the analyst interview is a ticket in. The catch is that if you do not land an investment banking job off campus recruiting you are not competitive for off-cycle spots in investment banking because the pool of departing associates is much thinner than analysts where there is massive churn.
Off-cycle associate recruiting is usually filled by other investment banking associates at smaller shops, equity research associates with a CFA or corporate finance professionals with double the amount of experience than the position they are applying for (Deloitte Corporate Finance for 6 years to be an entry-level investment banking associate).
We would caveat this by saying that before going into certain MBA programs, your fate is already more or less decided. For world renowned MBA programs such as INSEAD, Columbia or Northwestern (Kellogg), the MBA program has already screened for quality in terms of maturity, work experience and academic prowess. However, for programs in largely domestic markets such as Canada, MBA programs are far easier to get into and you may not get what you paid for.
In this case, unless you have good work experience and excellent undergraduate grades, you are unlikely to land a position or even an interview regardless of which school you go to unless you are connected. Good work experience means 1) brand name firm on resume in a front office capacity, 2) a non-retail role in a bank with capital markets capabilities, 3) engineering of some sort.
If you have a low undergraduate GPA and worked in retail, you are throwing your money away if your goal is investment banking.
When Do I Give Up On Investment Banking?
This is where candidates have to be honest with themselves, and we or any other finance pseudo-help site will not be able to form a better opinion because we do not have all of the information.
This is a function of:
- How long you have been out of school – Are you a new grad or has it been more than 4 years?
- What is your current work experience – Are you working in corporate development or Foot Locker?
- What are your grades like – 3.8 and above or 3.4 and below?
- Are you working towards any designations – Have you passed level II of the CFA or do you have nothing?
- Are you socially capable?
- Do you have a wide network?
If you are a strong candidate, you should be networking as hard as you can. If you have a more mixed profile, even if you have good grades and CFA, you need to re-evaluate. If you have no business working in the industry, you should stop reaching out for coffees because you are wasting everyone’s time.
However, we would like to remind strong candidates to hedge their bets. We hear too many people tell us that they are holding out for investment banking so they have not applied for anything else even though they have no job. They think that this conveys a real passion for investment banking, but most people just see it as stupidity. Until you have a job, you cannot be calling the shots. Beggars cannot be choosers. Eventually, they figure out that they will not land an investment banking position and now no other company wants them. It is much easier to find a job when you have a job, and it is helpful from a sanity standpoint as well as from a monetary standpoint.