How I Broke into the Buyside - The Interview Process

The season for internships is upon us. Those fortunate few who have their summers charted are looking forward to smooth seas and clear sailing until the start of the summer. Others meanwhile are scrambling for sight of land, for that one phone call which will clear away the clouds of uncertainty and allow the sun to shine through. Having sailed these same seas before, and having navigated with many other fellow monkeys, I can offer you a few tales and some words of advice.

I graduated recently with a full-time offer to work as an investment analyst. I will be working in the Asset Management division of a large financial services firm. More than anything else I think, what got me the offer was my capability to explain genuinely my desire to work on the buyside.

The final round consisted of two main interviews and an hour and a half ‘airport test’. I had talked to alumni at the firm beforehand and had been told that the airport test was crucial. It consisted of an information session on steroids, where the interviewees were required to socialize with the top management of the firm and the current class of analysts.

Interviewees often send the wrong impressions by appearing too confident or cocky. Particularly on the buyside, firms are looking for candidates who come in prepared to learn and aware of how little they know. As they saying goes, ‘Be humble or the market will humble you’.

During the information session, I kept emphasizing how prepared and eager I was to learn. I was able to demonstrate this by talking about a blog I had been working on all summer, something a few of the MDs at the firm had actually checked out when going through my CV earlier.

Body language is also an important thing to keep in mind, both during the interviews and the airport test. Having gone through dozens of information sessions and the like, I was fairly well prepared for this part. What I was under-prepared for, and could not possibly have prepared for, was the technical interview which was to follow.

The Technical Part of Interview

The technical interview was about 45-minutes long with the questions ranging in difficulty from easy to ridiculously hard. I was expected to get the easy questions right and then try to work through the difficult questions. There is no way to bullshit this part. You won’t get very far with just memorization as your answers will be probed. You need to have a good understanding of what you are talking about, and be able to walk through your answers step by step.

I was asked the standard DCF and other valuation questions. I was then asked to apply my valuation methodology to TSLA, and on how I would come up with a decision on whether to invest or not. As a side note, one of my interviewers was equities focused and the other was fixed-income focused, so I was prepared for questions from both sides of the aisle. After the equities part was covered we moved on to bond questions, during which I was asked to explain what ‘reverse convexity’ was. This was the one question which caught me completely off-guard.

I said I didn’t know and then tried to work through it. The interviewers helped guide me and then explained how and when reverse convexity comes into play. Having done the CFA that summer, I had gone into the technical naively confident. Again, memorization will not work (in most cases). You need to have your concepts a hundred percent down.

To summarize, here are the important points from my post:

1. It is very important to show your humility throughout the process. Don’t be the cocky know-it-all.
2. For the buyside you need to clearly demonstrate your passion for the market. The more you can stand out, the better. Write a blog, publish research in student journals, attend competitions etc.
3. Body language, smiling, and other appearance-related things are very important. Appear your best and most receptive.
4. Be able to handle the stress. Do as many mock interviews as possible. Enlist your friends, your advisors, your mentors, or really anyone you can find to sit down with you for an hour.
5. This goes without saying, but know your finance hands down. If something you are not prepared for comes up, work it out through what you know already.

I hope you find this useful. Please share your interview experiences too and go ahead and ask any other interview-related questions you have. Cheers!