This is one of the most common questions in investment banking interviews, and it is more important than you think.
Candidates may do great in the behavioral questions (you know what investment bankers do and are prepared to make sacrifices) and technical questions before being surprised that they do not pick up an offer.
Having served as a recruiting captain across several full-time, co-op and summer hiring cycles, I can tell you that an incorrect answer to this question and its many forms means you are out of the process.
To explain why, we must first look at what investment banks are looking to avoid.
Investment Banking Exploding Offers and Accelerated Processes
Investment banks spend large sums of money in organizing their recruiting cycles throughout the year. HR is extremely involved and there are multiple hiring committees across the investment banking division where senior and junior staff who are super busy ensure that they are positioned for a strong candidate pipeline.
Also, only a certain amount of offers are approved by human resources every year, which means that every offer handed out means one less spot available for promising candidates.
As HR and the main feeder schools have relationships, schools are loathe to stop Prisoner’s Dilemma net negative actions by investment banks that jump the gun and try to hire earlier and earlier.
Likewise, they also stop investment banks from assailing star candidates with “exploding offers” that expire in a short period of time so they cannot make it to their Goldman Sachs interview a week later (Goldman does not accelerate hiring processes), leading to buyer’s remorse. For the good of all students, the career centre will set a day where all offers expire so that they can have time to find the job that is right for them.
As you may surmise, the leverage goes from the investment banks to the students.
Shopping Your Investment Banking Offer
When I was in school, friends would get an offer from RBC which they would shop around to get a better offer. There were a few egregious examples such as the following:
Bank A: We’re happy to extend you an offer.
Student: I’m at a loss for words! I’m so happy! It’s like winning the Stanley Cup! Thanks, let me get back to you as soon as possible.
– Student calls slightly more prestigious Bank B –
Student: I really want to work for you guys, but I have an offer on the table from Bank A – I will have to accept if you guys cannot accelerate your process
Bank B: We’re happy to extend you an offer.
– Student calls Goldman Sachs –
Student: I really want to work for you guys, but I have an offer on the table from Bank B.
Nothing like someone who is popular – offer dynamics mirror social dynamics quite closely.
Banks obviously hate these shenanigans, because during the waiting period, other highly ranked candidates accept other offers because there are no open spots available. When they finally see that the candidates have rejected the offers, they are left with a far weaker candidate pool.
To the extent that you can do this, you should.
Do not feel bad for banks – Investment banks have to adjust to this paradigm. And they do.
Some banks are overkill on this measure – I know of one bank that loved students with a GPA above 80% or A- but would not interview anyone with 85% or above because they assumed that they would just shop offers and aim for Morgan Stanley.
How to Answer “Why Citi”?
In order for bankers to gain comfort that you would pick them as one of your top choices, the most convincing thing is a thorough understanding of the firm and its strengths.
The more research you do, the more dedicated you are. Logically, a candidate that is interviewing everywhere has to juggle studies, midterms, interview prep and reviewing the banks they are most interested in joining. This is an extensive time commitment. People are going to spend less time reading about less desired banks.
At RBC, I knew a guy who frequently asked about a recent acquisition RBC had consummated. Candidates would immediately list what they read on Bloomberg 15 minutes prior and a print out from their friend’s Mergermarket account.
Anyone who could not name City National Bank was chucked out of the process.
Great firm, great culture, buddies who work here – somewhat of a B.S. answer – no bank is going to admit to having a bad culture (and some of them have terrible cultures). It is an answer that could also apply to any bank.
Why do you want to work for JP Morgan Healthcare?
Top tier investment banking franchise ranked #1 LTM in M&A and equity raises for [industry group], get to work with top tier MDs in xxxx industry group, full service product suite with exposure to multiple corporate finance concepts, strong management from Jamie Dimon down supportive of investment & corporate banking and growing the franchise in multiple directions, truly global franchise.
Would you buy Morgan Stanley stock?
James Gorman (CEO) has been quality, market is reacting well to his leadership – very prestigious brand as an independent investment bank with major inroads in wealth. Opportunity to leverage the brand is high, especially for high growth emerging markets such as China.
If you want to work there: know the bank.
Most banks are publicly traded – read their financial reports, their investor presentations and the earnings calls to get a grasp of strategy and who the key players are. Read the latest news releases in their investor relations webpage.
You need all of this to know for sure.
For Goldman Sachs and Morgan Stanley, these are top brand names and they generally do not see people rejecting them in favor of other institutions (often anyway) so they do not spend as much time asking this question.
There is a phrase I hear often –
Ride cow, seek horse.
Banks do not want to be leveraged for the benefit of their competitors – banks want to be the horse. I never handed out an offer that was rejected because I knew the candidates cared owing to the research that they conducted.
This entire dynamic does not apply for off-cycle hires. It is a stupid question to ask why RBC during such a process because the real answer is…
“Because you guys are hiring.”
|Investment Banking Fit Questions|