Somewhat out of season here, but perhaps it's best to address these things early. Every time I appear at a networking event ready to meet young men and women who are interested in banking, I'm astonished by how little they seem to know about the actual operation of the business. More accurately, it's not as if I ask them, "please tell me what investment bankers do" and they get it wrong. To be honest, most eager recruits would get that question right. Just to be clear, I'm talking about M&A here.
What really betrays their poor level of understanding is the topics they bring up during conversations. They always seem want to talk about macroeconomics or "investing" or their proficiency in higher math. To me, that's sort of like talking to a fireman about the toaster industry. Sure toasters are hot, maybe they cause fires now and again, but what firemen do is put out fires. Toasters have nothing to do with their day to day lives. Investment bankers are not economists, not investors, not mathemeticians.
For me, I can never understand the finance Ph.D. candidates that come to networking events wanting to talk about joining up. They seem to think they've come to the right place, but don't understand that they may as well have gotten a Ph.D. in Russian poetry. Seems that "I need to be a math genius" or even "investment banking is mainly quantitative" are the biggest misconceptions out there. Perhaps others in banking now can talk about what puzzles them about the thought processes of new candidates. Maybe that will be a helpful discussion for the kiddies to hear.
I'd think that finance PhD candidates would not go the networking events for the M&A side of banking.
Thanks for taking the time to write about this, since you go to networking events for banking could you give some general pointers for people who are looking into IB? perhaps some recommended books to read? As a non finance major i have to admit that i get confused about the different areas in IB etc. and what interests me so I can imagine saying something irrelevant (at this point) to a person during a networking event. So any pointers would be super useful.
http://www.wallstreetoasis.com/forums/ib-prep
To my point, look at the course listing in this recent post.
Interviewer: “So what course do you think has especially prepared you for working in IB?” street monkey: “Most definitely my differential equations class.” Interviewer: “Really…please explain.” street monkey: “Well, if you are given an equation that describes how a system changes, you can actually find out what the system is.” Interviewer: “So if I gave you such an equation, you could tell me the system it is describing?” street monkey: “Oh yes sir, absolutely.” Interviewer: “Ok, here’s the equation. Z is a function of X and Y, where X is you packing up your shit and leaving and Y is defined by the question why the fuck are you wasting my time. What system did I just describe?” street monkey: “Sir I don’t understand the question.” Interviewer: “Get the fuck out of my office.”
Good one lol
^ LOL OMG
M&A and corporate finance is a people business. Elementary math is requisite, but it is nowhere near the most important skill set you can bring.
Besides, are you really sure you want to join corp fin/M&A?:
http://epicureandealmaker.blogspot.com/2010/03/corporate-finance-bestia…
Many go to the networking events with no clue about the industry other than it has good pay; In terms of attaching quant abilities to M&A: I think the misconception comes from all the recent mainstream news coverage about Wall Street during the past few years - most lay people now think of Wall Street "bankers" as math wizards who created weapons of mass destruction (i.e. structured products and derivatives), rather than as the traditional M&A advisors and corporate financiers.
Jhoratio: I think you have a point. But I think its best that you do correct them and provide that service so if they do have interviews... they actually know whats up. I feel like Networking events are the best place to clear up any misconceptions. If they did it in an interview... then they should not be there.
Biggest misconceptions:
banking is about the money banking is difficult banking is the cure-all to your life problems
How the hell would you know if it's difficult or not?
b/c I'm head MD of Chiang Chiang Pipernancial Technology Partners you idiot
Info session at target school. Elite boutique presentation. One of the students asked MD, "What's restructuring?"
This is a perfectly valid question. From the word itself, how would one know what it entailed? You're missing the point. Questions are good. Even silly questions. Because at least I know the dude is curious, wants to learn, and doesn't give a fuck who knows it. What I was talking about are the lunatics who come into a session all hyped up and acting like they know even 1% of what investment banking is, droning on about the markets or derivative pricing. I'll take the kid who wants to know what restructuring is, thanks very much.
MD of elite boutique.... He ended up giving a 15 min speech about restructuring 101 and none of the other 3 students who were with him learned anything new. The student could've asked any of the analysts this question, yet he picked a motherfucking MD.
DING!
"what do investment bankers invest in?"
I think investment banks keep what they do purposefully elusive.
The truth is, though they take the best because they can, I'm sure most compitent university graduates with a good work ethic could do it easily - its not technically that difficult.
Come on. Undergrads def have to feel out what's out there. There is not a class that describes the differences between sales and trading, IBD, buy side, private wealth management etc. I remember that the info sessions were a learning and experiencing, as were some of the interviews.
If you went to those sessions knowing everything, then I can def say you were a tool. The coolest people are those that know how to crunch the numbers, close a big deal and still have some fun.
Some undergrads do pre-wallstreet courses and it surely gives them some idea about the real world.
how about shit we learn on textbook?
talking to all these kids a year or two below me, most ppl tend to believe this pricing model, efficient market theory works perfectly in real life...
Banking's Biggest Myth? (Originally Posted: 06/15/2012)
There have been a lot of threads about the best lesson people have learned/tips etc. But with all the advice being thrown around by people, many of whom are just repeating what others have said/pulling facts out of there arse, I thought it could be helpful to ask the more experienced users of this forum:
What is the dumbest myth that you have heard (on WSO or elsewhere) about IB that is generally accepted?
As soon as the MDs are out of the door, everyone's desk becomes a scene from the movie Blow
bankers (ex-analyst) are smart.
That you will be professional, and drink in moderation at the Christmas Party.
models & bottles
Another myth is that banking will set you up for any career path. In reality, banking only sets you up for a career in finance. If you're thinking about going to med school, joining teach for america, peace corps or even creating a startup then you're learning very few relevant skills during your analyst program. The only thing that people outside of banking appreciate is that you worked long hours. There's other ways to prove that and most people outside of banking don't think it's relevant anyways.
Asking what restructuring is certainly is not proper at a networking event. I'm glad the kid wants to know but I personally think there are very few, if any, excuses why you would have to ask a question like that when the internet exists.
It's not my intention to be critical or anything, as I haven't been able to break into the industry, but its frustrating to seem my "competition" asking questions with answers that are readily available through a Google search. In my mind someone asking questions shows they have an interest in the industry but the person who shows up and has taken the time to learn about the industry has placed himself far ahead in the recruiting process. I certainly don't mean that he needs to know how to work a restructuring deal or anything technical, but to know what the intent and purpose of restructuring is...you could deduce that from looking at one restructuring firm's website.
And to the OP topic, I do think you are right. There is a misconception that banking is rocket science (some of it is pretty close to a lay person), but like any type of business its about people skills and networking. Ultimately I think the misconception comes from the recruiting process because there is such a tremendous focus on the quantitative portion of the interviews that people just assume that is all you are going to do. Not to mention that at a junior level that is primarily your focus.
Regards
Yeah, I agree that it's best to do the minimum amount of digging on your own and self-educate to certain degree, but even if you have done that, best not to go strutting around like you know everything. My point is not that being a blank slate is preferred, just that it's way better than pretending you know something you don't. Most people are scared as shit to look like the former, but only too happy to come off as the latter.
tech questions shouldn't be asked at a networking event - you go, you pretend you know enough, then you go back home, get on the internet (or on WSO) and find out what you need to know..
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