Tuesday, 29 January 2013

Breaking Into Investment Banking


Now that you are sufficiently educated in what investment banking is, the question arises as to how to actually break into this industry. This is gonna be a long one, but I'm gonna make it worth your while. Read on to find out why.

 A select world:

The usual advice prospective monkeys get is to work hard, prepare for interviews, so on and so forth. No one ever tells how to get that interview in the first place. Because make no mistake, landing an interview in IB in India itself is no small matter.




The investment banking world is a comparatively very small, very select community. In the developed markets alone, over 90% of the resumes get thrown out at the preliminary screening stage itself. Now considering that India is still at an infantile stage in IBanking, the recruitment requirements here are even smaller.

I'm not being a naysayer. But I'm not gonna paint a rosy picture either. If you're looking for someone to tell you that as long as you study well, get good grades and are a goody two-shoes then you're gonna get that IB job... you're gonna be disappointed.

Why IB is a select world:

Apart from the requirement of top-notch technical knowledge and great personality, there is the requirement of being able to cope with the hours. Bankers frequently work 12 hours or more in a day, or 70-80 hours a week. A standard job is generally about 50 hours a week. In other words, if you think getting into IB is tough, mark my words - staying in IB is even tougher.

Breaking into the select world:

Since this is the first post in this series, for now I am gonna talk about what you need to start doing months before you can land that elusive interview. The following is a compilation of some of the most useful, most practical suggestions that I have come across; and which I have never heard from anyone in India.


1)      Network, network, network:

This is unarguably the best advice I have ever received in my career. It is also an advice which I have never received from anyone in India. The importance of networking is something that hasn’t been discovered in India yet. Or at least is never emphasized by school, colleges or even mentors.

I’m going to dedicate an entire post on how to network later on, so for now I’m limiting this point to why networking is necessary.

Qualified people like CA’s believe that they deserve a job just by virtue of having these two letters before their name. And indeed, the demand for CA’s is so huge that they are actually justified – to an extent. The buck stops when it comes to finance. I repeat what has been said here before - no qualification is sufficient in itself when it comes to getting a job in finance. And yes, this applies even to Ivy League business schools. Let me explain why.

In India, the world of high finance is still in an infantile stage. That means, the opportunities for working in IB and PE are extremely limited. Consequently, the market is already saturated with qualified, experienced people trying to get into IB; leaving little or no room for the capable but inexperienced.

Furthermore, a very large number of jobs in finance are not advertised on job portals so you cannot rely on traditional job hunting strategies. This is where having a network of people working in finance brings in the biggest dividends – they can inform you of vacancies which others might not even be aware of.

Oh by the way, please note that “network” is extremely different from “approach”. We Indians have a tendency to rely on the latter.


2)      Start practicing Financial Modeling – now:

Until about a year ago, I didn’t even know what financial modeling is. It was much later that I learned that modeling (not modelling) is the bread and butter of entry level analysts.

In layman terms, financial modeling refers to building spreadsheets in MS Excel with the ultimate goal of, among others, valuing a company. Such a spreadsheet is called a “financial model”, or simply “model” of the company. You take data from the Financial Statements of the company as inputs, subject it to certain adjustments as required, and get the projected value of the company, asset, portfolio or whatever. I should point out here that this explanation is simplified to an extreme extent for the sake of clarity.
 
So when can you start practicing modeling? I believe that a second year B.Com. or a CA Final student has sufficient understanding of the required accounting and financial concepts to grasp some basic modeling. I’m keeping the bar high at 2nd year/post-inter so that by the time you complete graduation/CA, you can be in a position to crack the technical interviews easily.

There are numerous Financial Modeling courses available online and a few institutes in India also provide in-person classes, which you can look into.

It is worth pointing out that no matter what your background is – whether you are a CA rank holder or a software engineer – you are expected to have at least a basic grasp of financial modeling and concepts involved therein. Indeed, most PE firms have Excel modeling tests in their hiring process, usually as the 2nd or 3rd round.


3)      Internships:

This is as close as it gets to a sure-shot way of improving your chances of getting into IB. Yup, I’m still saying “improving your chances”, not “getting into”; because unfortunately, there’s no such guarantee for the latter.

College students here have the advantage over CA’s, because articleship of CA students is restricted to CA firms and approved organizations for industrial training. But college goers don’t have it easy either – getting a finance internship at undergraduate level in India is near impossible unless you are from a top tier college like SRCC.

Again, this is where networking comes in. If you have people are willing to vouch for you, you will be in a far better position to land summer internships at boutique banks or even PE firms.

In the end if you perform well, you may get a return offer from the place where you did your internship. Even if you don’t, an IB internship looks great on your resume.


So these were some of the things that can help you get a foot in the door to the world of finance. In the coming posts, I will talk about some ways to crack that IB interview, “bankifying” your resume and of course, how to network. All of these will be tips that you will usually not hear from your teachers or mentors in India. Like the Bateman Begins Facebook page now to receive updates of new posts!

8 comments :

  1. Yea i definitely second your suggestion. Good Practice in Financial Modeling is a must have minimum trait in a budding/aspiring Analyst. U cannot call one an 'Analyst' unless u have in depth and accurate knowledge about the subject matter - Finance being the case here. And again, internships are definitely advised by me personally, because a good experience can never be a disadvantage..

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  2. Glad to know we agree! However, I should point out that as an entry level analyst, you don't really need to have in-depth knowledge of, say, modeling. As long as you have some basic knowledge and your fundamentals are strong, you should be good.

    Although, of course, being extra-prepared never hurts!

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  3. Can you please suggest some courses for financial modelling? Also, can I get your contact info. I am a 22 yr old fresher looking for a place in this industry. Any kind of guidance will help. My email ID is sj.1802@gmail.com.

    Thanks,
    Sahil

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    1. Sahil, there are several online and offline financial modeling courses available in India. In the online version, you can check out M&I's 'Breaking Into Wall Street' course, as well as WSO's 'Wall Street Prep'. There are a host of other online courses, but these two are the best.

      As for offline, I believe there are several coaching institutes, but they're present in a limited number of cities. The arguably most well-known is Edupristine. You can google all of these and find out more about them.

      As a side note, as long as you have a decent commerce background, I believe you can learn modeling on your own without shelling out big bucks for these courses. I'm a Chartered Accountant and I learned modeling on my own simply by using google for everything. I'll do a detailed post on how to do the same very soon.

      In the meantime, if you have any queries that you would like to ask in private, you can contact me on ca.batemanbegins@gmail.com. Hope this helps!

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    2. This comment has been removed by the author.

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    3. Thank you mate for the reply. I got to know about Edu CBA Financial Modelling courses. Do you think these will help?
      And as far as my educational background is concerned, I am a CFA Level 3 candidate with a graduate degree in Economics. But my problem is that in Delhi, what we get in the name of finance is a KPO. That's a total no-no for me. What should I do in this regard?

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    4. As a CFA L3 candidate, you could give learning modeling on your own a shot (Google "free sample financial models", "free financial modeling resources", etc.). But if you're still interested in taking formal courses, of course, go ahead!

      CFA L-3 candidate is a strong background and will easily stand out at boutique banks/funds. These jobs are hardly ever advertised and even when they are, competition is extremely tough. So I'll have to repeat a word which seems to be the theme of this whole blog - network. Network hard, cold-call, cold-email, connect with people on linkedin. That's the only way a job in this industry, unless you get very, very lucky,

      For details on how to network, see my other posts on networking and cold-calling.

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  4. investment banking courses in India - Investment banking as a career option is very challenging, exciting and promising. It offers an accelerated career path for those who want to enter in the finance industry. The study options to pursue course in this field is available at graduation level and at post graduation level as well.

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