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How to get into an investment bank from a non-target school

Getting into banking from a non-target school

You're not a target student. Here's what to do about it

If you didn’t attend a ‘target school’ or university, you will struggle to get a job in an investment bank. This is the message from a newly published thesis from Derek Dedeker, an investment banking analyst in the financial institutions (FIG) Group at Citi in New York and former student in the department of finance at Texas Christian University (itself a non-target school).

Dedeker interviewed 14 people aged between 20 and 55 who are working for investment banks in New York City. They told him that anything from 80% to 60% of their colleagues were drawn from a narrow range of target universities.

If you don’t go to one of those universities (listed here), you’re therefore on the periphery of the game. “Targets have five to eight super days and non-targets only have about one to two super day days – you really have to shine when you have the chance,” one interviewee told Dedeker. It’s a numbers thing: when you’re at a non-target school, you’re all fighting for 20% of the available positions. “You have to actually prove yourself,” the interviewee complained. – If you’re at a target school, you just fill out a piece of paper and people come to you.

Nonetheless, you can get into banking from a non-target. Dedeker’s thesis offers some advice on how to go about. So do careers counselors and other non-target students who’ve overcome the disadvantage.

1. It’s all about preparation

One trader who, as a non-target students, achieved interviews at UBS, Barcap, Goldman Sachs and JP Morgan, wrote a seminal blog on getting into banking from a non-target several years ago. In it, he says preparation is the key. “You show you know the direction you want to go. If you like interest rates, say you’re looking to go into IR swaps trading,” he says. “- Make sure you have a well-researched path.”

Similarly, he says you need to put a lot of time into perfecting banks’ numerical tests – especially if you’re in Europe, where these are used as a first screening tool. “There are tons of practice tests. If you suck, then practice. If you still cannot pass then you should strongly rethink your ability. Do not just get somebody to take it for you, you will have to do another one if you get through to the interviews. As a non-target, you may only get 4-5 online tests, and if you fail 2, that’s almost half of your opportunities gone.”

And follow markets, but not just mindlessly: “The important thing is you don’t just read, but think about. Try to think about what will happen and then see if your predictions came true. Market awareness is not something you can pick up in a week, and once you follow the markets for a couple months you will see why.”

2. It’s all about networking 

Michelle Bucaria, head of experienced and campus recruiting at J.P. Morgan, says banks start assessing you well before you send in your CV/resume: a big part of J.P. Morgan’s assessment process comes at campus events and presentations, where you need to be visible and asking interesting questions (without dominating the conversation). When you’re at a non-target school, you’ll have far fewer events to go to and you’ll need to try even harder to get them right.

In the worst case scenario, no banks will come to your campus at all. In this case, you need to get inventive. “Got any relatives who know someone that works in a BB? Call them up and see if you can set up an informational meeting with them,” says the trader. “- Try to find alumni from your university to contact. This can be done through Facebook, Linkedin or even your school’s alumni database.” Don’t overdo it: ask a few questions every other week. Maybe learn Excel modelling: “I remember one equity research analyst saying if a kid sends him a full working Excel model to analyze a company he will pay attention and give him a second look.”

3. It’s all about pandering to prejudices 

Dedeker found that the bankers he interviewed actually preferred working with non-target students (this might be why they’re paid more). – They were seen as less entitled, more knowledgeable, more “relatable”, more humble, well-rounded and pleasant and with stronger technical skills.

Technical knowledge is all-important when you’re at a non-target school, says the trader: “For trading interviews, you want to be able to talk about anything that is going on in the financial news and have an opinion that you can defend. This is also the time for people who are really interested to shine. When I was going in for summer interviews I already knew how to price a Credit Default Swap with two different methods, the Black Scholes equation, and knew everything there was to know about options greeks (or at least as much as my brain could handle).”

Non-target students were also seen as having better people skills than students at target universities. “Target school candidates are often more “book smart” but not as good at translating that to the real world. They succeed more often in academic settings, but non-target kids often did better in group assignments or speaking roles,” said one of Dedeker’s interviewees. – If you’re from a non-target school, show that know the technical stuff and that you can get along with people (clients).

If you’re a non-target, you’ll also need to show that you’re special nonetheless. Banks like to hire people who are exceptional.  “Ensure you get a first class degree (summa cum laude in the US), write a relevant dissertation or thesis [like Dedeker!] and get involved with industry relevant coursework and projects that you can write about on your CV,” advises Victoria McLean, managing director of CV writing company, City CV.

4. It’s all about depth of knowledge 

If you’ve gone to a non-target school, you’ll probably get fewer interviews. And when you do get an interview, you need to show that you’re exceptional. To succeed you’ll need industry knowledge, market knowledge and technical knowledge, says the trader.

Dedeker’s interviewees echoed this: “I think non-target interns have more of a financial background,” said one. “Usually, non-targets have taken at least 3 or 4 finance or accounting classes whereas most target school interns (especially those that come from the Ivy League) don’t have any financial background at all.”

In practice, this means that you need to have opinions and you need to be able to defend them. If you’re going for an M&A interview, you need to know all about valuation methodologies and which you think is best – and why. If you’re going for a trading interview, you’ll need a defendable position on the direction of the market. “When I was going for summer analyst interviews, I knew how to use two different methods to price a Credit Default Swap,” says the trader. “I knew the Black Scholes equation, and knew everything there was to know about options greeks (or at least as much as my brain could handle).”

5. It’s about lowering your expectations 

You might not want to hear this, but the fact is that if you’re at a non-target school, you’ll find it easier to get into banking if you don’t insist on applying to everyone’s preferred banks In other words, avoid the likes of Goldman Sachs, J.P. Morgan and Morgan Stanley. “Competition is just too fierce,” says McLean, “Try to get a job in a smaller bank to gain experience. You can always move on later.”

For the same reason, McLean says you might not want to apply for a front office role in M&A or sales and trading: operations is a better bet. “Go for back or middle office jobs and then network like crazy internally and with clients with a view to moving once you have established a reputation for being excellent at what you do,” she says. – Although, be warned that escaping the back office is much harder than it used to be.

6. It’s about knowing your motivation 

Since the financial crisis, banks have put increasing emphasis on sorting out bad apples in the interview process. Jes Staley, CEO of Barclays’ investment bank says he’s not interested in hiring people who are in it for the money; he wants to hire people who genuinely want to make Barclays a better place.

You won’t have to be this gushing when you’re asked why you want to go into banking, but you will need a very good reason.

In a trading interview, you will be asked why you wan to be a trader. “There is a right answer to this question,” says the trader. “- It’s why you really want to go into trading. All there is to it. You need to come up with sincere and coherent reasons why this is what you want to do. Do not try to come up with something that you think they will like, but something that you can honestly look them in the eye with.”

7. It’s about getting in the zone

This comes back to preparation. You’ll need to practice mental maths: can you solve 36*48 in a few seconds?

Know which interview questions to expect.  If you’re interviewing for a trading role, you’ll need to be aware of what each of the following indexes has done over the past 6 months, past 2 weeks, and where it closed the day before the interview: FTSE, SP500, US Libor, UK Libor, CDX NA IG, CDX NA HY, iTraxx Europe, US yield curve, UK yield curve (dont have to know every yield), the major exchange rates, oil, gold.

“Come up with a list of the most recent developments (minimum 5), and then come up with trading ideas for all of them,” says the trader.  “Well thought out trading ideas, not just simple I think interest rates will rise so I will short this. Not something that is most likely in the mainstream media, you want something that shows you can look at the markets in a different way, and have numbers to support your claims.”

8. It’s about compromise 

And if you don’t get into a bank from a non-target school? You could always try the Big Four. “Plenty of newly qualified accountants move from the Big Four into M&A or equity research jobs in banking,” says McLean.

Photo credit: Missed the target... by malavoda  is licensed under CC BY 2.0.

Comments (9)

Comments
  1. Trying to get in a Bulge-Bracket from a non-target in this market…is like trying to win the lottery. There are 100’s if not 1000’s of straight A students from the Ivy Leage, with outstanding knowledge of the market and great achievements/experience to back it up. Said students will have outstanding networks and information flow through their alumni. They are also likely to be more “polished”, as many will come from affluent backgrounds.
    It is very hard for a non-target student to be better prepared than an applicant from a top school. Hence the options for compensating are incredibly limited. To be truly successful from a non-target, you need some kind of outstanding achievement(Champion in a sporting field,profitable day trader,set up own profitable company…etc).
    Better ways are :
    -Do a masters at a target and re-apply.
    -Train as a big4 monkey and try to switch post qualification.
    -Work in industry, get an MBA and apply to a relevant division.
    -Join a brokerage/prop trading firm, make a reputation and try to move up.

    Poker Pro/Trader Reply
     
  2. I agree with that forementioned…def a lot harder to get you foot in the door from non-target. But is critical remember that the city is littered with non-Oxbridge students, many of which are much more successfull and from my short careers at to BB, the one thing they all share is drive. I can’t talk about the interview process, but at my shop we see 30-40 grads a year hit the desks and the one or two that are not ”targets” my desk certainly is more receptive to. Never forget you have a diffrent angle, a diffrent background and can use this to add new diverse trading ideas. We hired a guy a few years ago that went to Open University, the completed all 3 levels of CFA before sending our MD a personnalised letter offering his service for free, last time I checked his P&L was one of the highest our desk has…..I guess to add my two cents; take a new angle and dont give up.

  3. Can we make sure next time when we “quote” comments it is value adding? Note – I don’t believe this one is.

    Investment Banker Reply
     
  4. I think you are over-exaggerating the chances of non target students. if you have a strong cover letter, strong cv and you pass the tests it is very likely you will get a first round interview and then you are level with everyone else who has applied, regardless of what uni they are at. Moreover, there are many organisations to try and bring non-typical ivy league students into the industry.

  5. Can anyone give us an idea of what percentage of those in Front Office Grad programmes come from Oxbridge?

  6. Anon:
    You are incorrect, the numbers speak for themselves. The overwhelming majority of front office roles will go to students from target schools. The ones from non-targets will typically have contacts that push them past auto-filters or help them get through interviews.
    People buy people, the majority of the front office are/or become elitist, hence want to hire elite students.
    I don’t disagree that a non-target student has a chance once they make it past the auto-filter and 1st round. However, they still need to “compensate” for the “non-Ivy League profile”, with outstanding achievements in other areas of their CV. On the other hand, given the 100s of applicants from top schools with outstanding achievements, it is almost impossible to reasonably compensate.
    John:
    I would say about 20-30% minimum, a better question would be what proportion are from Oxbridge/LSE/Imperial/UCL/Warwick which shoots the number up to about 80-90% for the UK intake only(excluding non-UK universities).

    By the way, I want to state that I am taling primarily about top investment banks(GS/MS/JPM/UBS/DB/Barcap/CITI etc etc). Not RBC/WestLB/RBS/MickeyMouseBank.

    Poker Pro/Trader Reply
     
  7. Students from solid degree courses at top universities deserve these types of top IB careers as their courses would be much more demanding and therefore the students will have much less time to spend on social life. So the students who manage to be ‘all rounder’, whilst at theses universities, would be naturally more able to cope with the stress of work and so would be in a better position to excel at their job.

  8. I tottaly agree with the author, even at the beggining I also had this idea of the candidates from ivy universitys had an edge, unti actually I was competing with them to a internship and realise many of them did not have a clue, so yes interest can give a good edge if you can be good at it!

  9. It’s not what you know, it’s who you know!!!

    To Poker Pro/Trader, Derivatives, Shut up.
    You are talking Bull.. You know nothing!!!!

    Banking is very much based on contacts. GS front office is mostly oxbridge and LSE..
    You may ask how i know this… I was at goldman a few months ago.

    dear Poker Pro/Trader, Derivatives please stop talking bull
    you know nothing about investment banking.

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