How difficult is it to land a job at an investment bank?

December 15, 2010 2:30 PM

How difficult is it to land a job at an investment bank?

After recently reading an article about the size of bonuses this year at Goldman Sacs I came to the conclusion that I am working in the wrong sector of the economy. Obviously, it would be very difficult to land a good spot at Goldman Sacs, but does anyone have knowledge/experience as to how difficult it is to get a decent position at any respectable investment bank? Is it all in who you know? If so, how exactly would I get to meet these individuals? Do you only get the chance of employment after a long internship process? I have an undergraduate in Business/Psychology and am currently seeking an MBA. I have a good understanding of investments and finance, but I am average at higher math. I have been working in the legal sector, primarily in marketing for the past 6 years. Do I have a shot of making it at an investment bank or should I aim lower and forever kiss the dream of a six figure yearly bonus goodbye? Thank you for your time and insight. Have a great day.



http://www.guardian.co.uk/business/2010/jan/21/goldman-sachs-bonus-cut

posted by gibbsjd77 to Work & Money (25 answers total)

It's very difficult. And it all starts with who you know and where you come from. Memail me if you want to discuss it relatively offline.

P.S. Remember that all that jack comes at a price, a very big one.
posted by cool breeze at 2:35 PM on December 15, 2010

Very very difficult. It's quite clubby--people tend to come in right out of top schools (Harvard, Sloan, Wharton, Stern, whatever) and then bounce around. Unless you're coming from a school that feeds into the system, I really don't think it's going to happen. But if you are, then hooray! But don't do this.

But heed cool breeze's words. These are tough, competitive, stressful jobs. You definitely pay a price to get that bonus.
posted by Admiral Haddock at 2:50 PM on December 15, 2010

There is also something of a fairly defined career path; you might be too old to get started in it. My brother works in investment banking, people generally start getting pushed out by the younger up and comers around the age of 33 unless you are on the management track.
posted by dobie at 2:53 PM on December 15, 2010

It's difficult but there are ways to make money in I banking without going to the big boys. Perhaps a PIPE shop? That should be much easier.
posted by josher71 at 2:54 PM on December 15, 2010

It is difficult if you went to the right schools (meaning the ones Admiral Haddock listed above). If you didn't go to those schools, I would say it's damn near impossible without having contacts.

Also, the big problem my friends who work at investment banks have is that sure, they are making bank, but they also have literally no time to spend that money. They often work 100+ hour work weeks every week, and think nothing of working weekends and 15+ hour days.
posted by CharlieSue at 2:55 PM on December 15, 2010

Er, ignore the "every week" part of the "often work.... every week".
posted by CharlieSue at 2:56 PM on December 15, 2010

My brother just did this. I don't know the details, but it sounded very difficult.

You don't only get a chance of employment after going through the internship process - my brother didn't - but if you don't you have to network like mad and basically prove yourself to be as good as or better than the kids they already knew as interns.
posted by Xany at 2:59 PM on December 15, 2010

I have a friend who got hired on by Goldman Sachs. He didn't go to a prestigious school, and he didn't have any connections (we were rooming together when this happened). However, he is from a foreign country, did extremely well academically, and had an excellent international business background. They jumped all over him.

So it seems there are exceptions, but making 100,000/yr. by becoming an investment banker is one of the more difficult ways to make 100,000/yr. if you do not have the right background.

Looking at your current background: If you enjoy marketing work at all, you could look at becoming an entrepreneur, starting your own marketing firm or marketing services business. You could be making six figures within 10 years easily, assuming any latent talent for doing business. If that option sounds interesting, have a talk with a business coach.
posted by circular at 3:24 PM on December 15, 2010

What do you mean seeking an MBA? Are you already in school, or just thinking about it? Where you get your MBA is all-important in you case. A top 10, preferably top 5, program gives you a good shot.
posted by mullacc at 3:32 PM on December 15, 2010

And something else to keep in mind is that the salaries in ibanking are comparatively low, and the payoff is in the bonus, so build that risk into the equation.

What's low? Maybe $60K or so--which to some may sound like a lot, but in NYC that goes about as far as $30,000 would elsewhere. Cite. So there you are, working, maybe 5,000 hours this year for the equivalent of $30,000, but you don't get the bonus (make a pass at the MD/MD's spouse at the Christmas party / fail to execute a trade timely / hitch your wagon to the wrong team). I had a friend who went in house at a bank for the bonus, but ended up getting stretched really thin supporting his wife and three (!) kids on the pittance of a salary while waiting for what passed for a bonus in 2008. I don't have the stomach for it.
posted by Admiral Haddock at 3:42 PM on December 15, 2010 [1 favorite]

I am a contrarian and think that getting hired is to some degree entirely dependent on who you know. Age, however, is a major factor, and if you are over 30 with no experience, your chances are probably slim with a major bank. There are second and third tier investment firms and if you serious about this, I'd start networking now to connect with someone who works at these firms.
posted by Xurando at 3:46 PM on December 15, 2010

Also, it's important to spell the company name correctly of the place you'd like to work.
posted by AwkwardPause at 4:13 PM on December 15, 2010 [10 favorites]

I knew a bunch of people who got hired by an investment bank (a big name) with no trouble at all, but they all had PhDs in maths or physics, a lot of background in statistical modeling, and it was 2000, when jobs were more easily come by. Plus they all hated it and dropped out within a few years.
posted by lollusc at 4:27 PM on December 15, 2010

As someone who has worked in the high-tech sector for 20 years, allow me to draw the parallel with stock options. Many people have become paper millionaires through stock options over the years. When I say "many" I mean probably less than 1% of people in the industry. Two scenarios are likey:
1. In larger companies it is only management or executives that get appreciable amount
2. Smaller comanies may grant generously to all pay grades, but are more likely to go bankrupt before ever turning a profit.

In short, the prospects of new/junior hires striking it rich with options or bonuses is something like 1% of 1%.
posted by markhu at 4:31 PM on December 15, 2010

contextual amendment: by "options" above, I mean "employee incentive options" and/or "employee stock purchase plans." I do not mean trading bond or stock equity option futures in the exchanges.
posted by markhu at 4:34 PM on December 15, 2010

It's very difficult to get hired, but not impossible. And yes, what you're seeing about bonus size at Goldman Sachs is misleading. Managing Directors and Partners get big bonuses. Vice Presidents and and Associates? Not really! I mean the base pay is fine but it's nothing to sneeze at, if you're talking about wanting to be rich. The actual real typical bonus size there is measured in the tens of thousands, not hundreds. (Whereas the "average" bonus size is much higher, and if you don't immediately know what I mean... well...)

I can pretty much say that it is highly unlikely that you will ever work there! That does not mean that people of diverse backgrounds do not end up at major financial institutions, or that you can't. You will need a resume that qualifies; you will most likely need exceptional personal introductions. That is how you get jobs in this world. Those are obtainable. You may then qualify for an informational interview. Which would be fun. And then that would be about it, most likely.

People I know that have been employed there went through literally *dozens* of rounds of interviews. The interviews are designed to weed out people through behavioral questioning. Younger people are brought in as analysts; they have exceptional math skills. Other people are brought in on particular skill sets. Apart from that, it is about smarts, working with others, teamwork and displaying organizational values. If you steep yourself in that stuff, and get to know people, it's possible you could work in that world. And after all that, you very well might hate it—and also still not be rich.
posted by RJ Reynolds at 4:54 PM on December 15, 2010

It depends on what you mean by "a job at an investment bank." There's investment banking, which I typically associate with preppy types from Ivy League schools (what most people in this thread seem to be writing about), and there's sales & trading, where you tend to see much more diverse backgrounds, with a tilt towards the quantitative side. The two sides are very different, and despite the name, have very little to do with "investing" in the way that most people think about the term.

Also keep in mind that besides the front office jobs there are a lot of roles in the support and control functions that can be very rewarding, both in compensation and careerwise. I work at an investment bank as a market risk manager, which isn't "front office", but the work is interesting and the pay is great. My hours are pretty sane (8-6 usually) and some of the traders work even less than that.
posted by pravit at 5:20 PM on December 15, 2010 [1 favorite]

Response by poster: "Also keep in mind that besides the front office jobs there are a lot of roles in the support and control functions that can be very rewarding, both in compensation and careerwise. I work at an investment bank as a market risk manager, which isn't "front office", but the work is interesting and the pay is great. My hours are pretty sane (8-6 usually) and some of the traders work even less than that."

How did you get your job?
posted by gibbsjd77 at 5:53 PM on December 15, 2010

Response by poster: "What do you mean seeking an MBA? Are you already in school, or just thinking about it? Where you get your MBA is all-important in you case. A top 10, preferably top 5, program gives you a good shot."

I have applied for Northeastern University's online MBA program. I'd like to start it early next year. They were one of the few online programs that were AACSB accredited. If I recall correctly, they ranked in the top hundred somewhere in the 80's.
posted by gibbsjd77 at 5:55 PM on December 15, 2010

Response by poster: "It's very difficult to get hired, but not impossible. And yes, what you're seeing about bonus size at Goldman Sachs is misleading. Managing Directors and Partners get big bonuses. Vice Presidents and and Associates? Not really! I mean the base pay is fine but it's nothing to sneeze at, if you're talking about wanting to be rich. The actual real typical bonus size there is measured in the tens of thousands, not hundreds. (Whereas the "average" bonus size is much higher, and if you don't immediately know what I mean... well...)"

I know what you mean. The job would only be the first step of a "potential" path to make an obscene amount of money. I'm sure that there are a hundred missteps along the way that could cause you to fizzle out. I have just always loved investments/finance ever since I was a kid and my grandfather taught me about stocks. If it would be possible to capitalize on that in a career and make a reasonably large amount of money along the way I'd be overjoyed.
posted by gibbsjd77 at 5:58 PM on December 15, 2010

Let me be bluntly honest: Not gonna happen. Online MBA from Northeastern? Not gonna happen. The front-office jobs that you seem to seek go to the most privileged of the privileged brats out there (ivy leaguers with stellar grades, connections, or both), so unless you have a secret math/physics/CS/stats phd you're not telling us about, I wouldn't hold my breath.
But one thing I can 110% promise you, that money does not buy happiness.
posted by ch1x0r at 6:35 PM on December 15, 2010 [1 favorite]

Let me be bluntly honest: Not gonna happen. Online MBA from Northeastern? Not gonna happen.

Agreed. If you're taking the MBA because this is your goal, you need to reconsider. How much is the MBA program going to cost you?
posted by ewiar at 8:18 PM on December 15, 2010

I'm pretty sure the guy who's seeking out the least math intensive MBA won't be sought out by Wall Street. Normal MBAs might not need calculus, but they're also not trying to beat the Black-Scholes option pricing model (warning: partial differential equations within).

On the plus side, at least you won't go bankrupt.
posted by pwnguin at 8:27 PM on December 15, 2010

It is very, very hard to get an investment banking job unless you go to a "target school". Not impossible, but very hard. The online MBA will not help, and may hurt.

If you are serious about this, start reading blogs and forums about this (wallstreetoasis, even managementconsulted, which is similar), read all of the Vault books, and be prepared to work very hard and to take a job at a boutique, not bulge bracket firm.

When there's a will, there's a way. You can do it if you want to, but it's going to take a LOT of time and energy and you may have to work your way there through a circuitous route.

You can probably make more money and have a better lifestyle another way (see the marketing career mentioned above). But if you're dead set on this, go for it.
posted by alternateuniverse at 9:07 PM on December 15, 2010

Best answer: Which part of Goldman are you interested in?

Goldman has three main parts: trading, investment management, investment banking. Looking at their last quarterly the revenues split was: 71% trading, 16% investment management, 13% investment banking. What this says to me is that since most of the revenue is being generated by trading (including prop) most of the bonuses and most of the hiring is going to be in that group.

But if we stick with Investment Banking since that was your original question, we can guess at how fierce the competition is going to be.

In a word: tough. Two words: very tough.

Finger in the air, I'm guessing you'd probably be competing for one of forty slots at goldman.

Here's how I came up with that number. Given that GS has 38,000 employees, ~50% of which are in the Americas. So lets say that 15,000 of the 19,000 Americas employees are in the USA. Assuming that the revenue split is representative of the firm's employee pool that means:
- 10,650 Trading Staff
- 2,400 Investment Management Staff
- 1,950 Investment Banking Staff

If we make a further assumption that the average tenure of a Goldman employee is 5 yrs, it would mean that 390 jobs in investment banking come up every year.

Now that seems like a lot, but recognize that only some of those jobs are actually banker career track -- there are probably many more employees in support staff. The question is what's the ratio of bankers:supporting staff? If we assume that it's similar to that of portfolio managers:supporting staff (28% according to ICI) -- we're talking ~109 jobs or so a year.

Sounds promising, but not all of those jobs are going to be for MBA level bankers. According to linked in, 38% of employees at Goldman have 5-10 years of experience. If we assume that the %s are the same for the investment banking group that leaves us with ~40 or so new MBA level investment bankers every year.

Now just because you can't go from your b-school program directly into the 2011 ibanking class at Goldman doesn't mean you can't get into investment banking. And it doesn't mean that you can't end up working for Goldman at some point in your career. What it means that you're going to be a great deal more creative than just taking the most straightforward route in.
posted by cheez-it at 3:57 PM on December 16, 2010 [4 favorites]