Lloyd Blankfein knows a few things about life. The 61 year-old has been CEO of Goldman Sachs for ten years, the last financial crisis included. He’s raised three children and survived cancer. He’s come from a non-elite, non-middle class background to lead one of the world’s most prestigious investment banks. But this doesn’t mean that he knows what it’s like to be a student trying to get into banking now.
Blankfein’s address to this year’s intern class can be distilled into one word: chill. Don’t be too goal-oriented and impatient of success. You don’t have to study finance, you don’t have to study economics – you can study history because history will teach you about people who tried and tried and tried again before they succeeded. Similarly, you don’t have to assume that you’ve failed aged 19 if you haven’t founded a start-up or matched the achievements of your favourite celebrity. Loosen up.
This isn’t the first time LB has spread the wisdom. His ethos was first aired back in 2013 when he exhorted young people to experiment and said they were foolish to assume their careers would progress in a linear fashion. “To succeed, you have to be a complete person. In the early part of your life you should focus a lot on being a complete person.”
In a sense, LB is right: you will be probably be a more complete person later in life if you don’t spend your early adult years studying crazily hard in order to achieve a job where you will work crazily hard in turn. There’s no need to feel like a failure if either side of that equation doesn’t come off. Plenty of people would agree with him on this, not least William Deresiewicz, a former professor at Yale University, who’s written a whole book about how graduates from top universities are not just smart, talented and driven, but anxious, lost and sheep-like.
On the other hand, however. Blankfein’s advice reflects who he is now: a member of the gilded elite whose name alone will open doors for himself and his family for years to come. His advice may hold true for students who can afford to make mistakes, but for others, it’s wrong. This is why.
1. Debt, debt and more debt
Household debt is high in the West. UK students who aren’t assisted by their families now run up debts of more than £50k ($66k) in pursuit of a first degree, which is more than students incur in the U.S. Burdened by debts, today’s young people are delaying having families and putting their lives on hold.
As a result, taking time out to explore, eschewing a plan for a meander through young adulthood, has become a luxury for students with a familial safety net. Who can afford to chill when rents are expensive and there are debts to pay? Unsurprisingly, this is one reason why banking – with its incredibly high starting pay – is so popular among millennials.
2. If you don’t have exceptional exam results, you almost certainly won’t get in
Your life won’t be over if you achieve a GPA of 3.0 or three Ds at A level, but your aspirations to work in investment banking probably are. All the indications we have are that banks only hire people with exceptional qualifications – Goldman Sachs included. So yes, you probably have failed to get into an investment bank aged 19 if you don’t score in the top 5% of your class.
As the British Academy notes, broader access to education in itself hasn’t done much to increase social mobility: it’s just raised the barrier to success. If you want a ‘good job’, you now need an excellent degree, and maybe a Masters. Competition is more intense than ever.
3. Most of the people who get jobs in banks now have been through a process that takes years and years
When Blankfein bemoans the goal-oriented behaviour of most would-be bankers, he’s also ignoring the new reality of getting an entry-level role in a bank. As we reported a few weeks ago, many of the students who land analyst jobs in London banks today have attended insight days and spring weeks in their first years, followed by summer internships in their second years, followed (in some cases) by off-cycle internships even after they graduate.
If you want to work in banking now, you therefore have to be very, very focused for a very long time. In 90% of cases, you can’t spend your young adulthood experimenting and finding yourself in Central America before suddenly applying to a bank aged 22 and seven months.
4. If you don’t have the right extra-curriculars, you won’t get in
Time was when elite universities used to be about hanging loose and pushing the personal boundaries in a way Blankfein might approve of. This might still apply to some students. However, it doesn’t apply to the students who get into banking or consulting. If you want to join one of these elite professions, you need to devote your time at university to joining clubs. In fact, not just to joining clubs but to running them.
John Craven, a former director of structured products and cross-asset solutions at Merrill Lynch and SocGen, who now helps non-middle class students get banking jobs, says plenty of the students he works with think it’s achievement enough just getting into a top university. It’s not. If you have a leadership position in a major university society, you’re more likely to get a banking internship in your second year, Craven says.
You need a plan. You cannot chill.
5. The late entry points are disappearing
Lastly, it used to be the case that you could take a roundabout route into banking. Blankfein himself did this after an early career in law. Increasingly, though, those late entry options are disappearing.
As Derek Walker, a former MBA recruiter for Barclays and Merrill Lynch, points out, it was once possible to get a sales or trading job in a bank after studying an MBA aged around 27. Nowadays, most banks don’t hire MBAs into sales and trading – they’re only interested in hiring university graduates and holding onto them throughout their careers. Alan Li, a former Goldman analyst-turned podcaster, agrees: “Investment banks have realized that the best associates – whom they used to hire out of MBA schools – are actually their current analysts, and that hiring and recruiting associates externally is more expensive than retaining the talent they’ve got.”
The upshot of this is that if you want to work in an investment bank you only really have two chances to get in: straight out of a bachelors degree or straight out of a Masters in Finance course. You can’t try something else for a few years and then go into banking like Lloyd did. Sorry.
This isn’t to dispute LB’s sentiment: no one wants a whole cohort of young people who are insecure and obsessed with their futures. It just sounds like wishful thinking in a world where there’s increasing competition for jobs that offer a good career. Then again, Blankfein was addressing the elite 1.8% of students who’d already succeeded in getting an internship at Goldman Sachs. If anyone can afford to chill, it is they. Their peers, not so much.