I’ve been wanting to ask this question for a while but have held back because I’m not sure how to pose it in a manner that doesn’t sound weird. But I’m safe in my anonymity here so I’ll just blurt it out. (keep in mind this is a serious question)
Why do investment bankers have to be so smart?
You want your neurosurgeon to be a pretty bright guy for pretty obvious reasons but I’m having a hard time pinning down the necessity for MENSA level intellect in banking.
I know bankers have to deal with people a lot and doing that effectively can be mentally challenging. But so far the bankers I’ve spoken to haven’t really given me the impression that they are capable of putting men on the moon. As a matter of fact some aspects of the job sound down right mindless (what IS this pitch book thingy I keep hearing about?).
Sometimes I think having your management team chocked full of Harvard and Yale grads is more of a marketing tactic than out of real necessity to have former Los Alamos employees on your rolls. It’s like, “Hire us. Look! We’ve got smart people (and they can prove it!)”.
I’ve also wondered if the high incomes are attracting droves of people and recruiting exclusively from the Ivy’s is simply a mechanism to staunch the avalanche of resumes pouring in.
Or is there really something about the job that requires that you be able to build models, interact with clients, AND develop the Grand Unified Theory all before lunch?
Why do investment bankers have to be so smart?
They don't. They have to be very driven.
I would guess that the avg. person at a top pharma company, top med school, and the best engineering groups, probably has a higher IQ than the avg banker.
I would tend to agree that all the Ivy League/top school requirements are just a mechanism to cut down on the total amount of resumes coming in.
But make no mistake, at the analyst level you don't have to be particularly intelligent to do any of the work. Attention to detail and being meticulous are way more important.
This starts to change as you move up. Not at the Associate level necessarily (they are often just glorified proofreaders), but as you move away from pure execution and into developing client relationships and actually making rain, you have to be fairy intelligent. More importantly, you also need a good network to make deals happen - something which going to one of those elite universities will give you, simply because so many of the other people from that university are also in finance.
They have to be smart so they can avoid things like, say, terrible lending practices that cause financial and economic turmoil.
Also, the smart clients they're pitching things to will probably think bad spelling and grammar and such are signs of carelessness, and smart people might be educated such that they can recognize them. For example, not that it makes me think less of you, I noticed you wrote "Ivy's" - it's "Ivies" (plurals don't use apostrophes; possessives and contractions do - I'm not doing this to be anal; it's something we should all learn in 6th grade). This is a kind of silly, piddling issue, but it's an issue some people will recognize.
I go to a target, and we had a careers in business seminar where one investment banking alum repeatedly stated he wasn't looking necessarily for "smart" people - he talked about 3.5, 3.6 GPAs as fine. (He started sounding a bit silly, and one of the other presenters eventually shot him down for it.) Bankers aren't all geniuses, and it's a huge stretch to say banks try to hire people who could really make inroads to a Grand Unified Theory (and some of those people might be too difficult to interact with anyway) but there are loads of kids with 3.7s and 3.8s at rigorous schools between the "dumb" kids (more like, kids who don't apply themselves in school) and the future astrophysicists.
Classic.
I'm not sure I know of one who is...
Hahaha! Wait...this is a joke right?
aguy wrote:They have to be smart so they can avoid things like, say, terrible lending practices that cause financial and economic turmoil.
Hahaha! Wait...this is a joke right?
my post is laced heavily with sarcasm
In fairness at that point I had been up for over 30 hours preparing for my Options final but I have been mindlessly typing "Ivy's" for quite some time now. How embarrassing.
Its all about "Attention to Detail" . I still wonder why banks don't hire more accountants actually.
they are selling their ideas to CEOs and CFOs of company, who I am sure most would agree have to be 'smart' to get to the top of their respective fields.
And to impress the extremely sharp C level executives, you can't be a dumbass.
I would say in my experience, most people I've met in banking have been extremely smart in one or more respects (analytical/emotional intelligence etc), and even the average bankers are not really 'dumb'. Everyone I've worked with has impressed me. Maybe the job at the lower levels does not require extreme creative intelligence, but that does not mean the people working at the job are not quite intelligent. People are afterall picked through a very selective process.
great post aguy
Would you say that most bankers are NOT mensa level? Mensa is top 2%.
2% of the general population is a pretty low bar.
Bankers certainly aren't the most brilliant people you'll ever meet, but I'd be willing to bet that at least 50% of bankers are in the top 2% of intelligence (since I think top 2% is only like a 1450 or better on the SAT).
several things to consider:
true banking is not the most intellectually challenging work, however it's by no means easy
supply and demand, the demand for jobs far out weighs the supply, thus all things being equal, you pick the person with the best qualifications
gpa's and undergrad institutions don't indicate pure intellegence but rather a dedication to hard work, from a hiring perspective, the kid with a 3.1 vs. the kid with a 3.8 can probably both do the job from an intellegence stand point, however the 3.8 kid will probably not slack off as much and have a better work ethic
smart people learn faster, why hire someone you have to teach something to possibly 3, 4, or 5 times when you can hire someone that will pick it up on their first try
its a business of smoke and mirrors, the clients that are paying the firm top dollar dont want to make sure they are getting what they pay for
smart people make less mistakes, attention to detail is key
the list can go on and on
You also have to just look at it in terms of what the banks can have. If I have the ability to attract the best I can based almost solely off of salary and bonuses, why should I hire joe average? If I have something that everyone else wants, I'm going to give it to the best I can find.
From what I've read... Harvard,Stanford, et al, are recruited at least in part due to tradition. That wouldn't surprise me in the slightest. Tradition runs way too many things in life. Military officers are supposed to have "attention to detail" and some of them are dumber than a box of rocks.
What's really wild is that in schools that aren't target, I consider the business majors to be the slackers. They want to party and not work too hard, so they pick a pretty easy major. If you want to work, you choose physics, engineering, life sciences, or pre-med. I can't speak for the top tier, but business degrees from state-U have never been met with much respect.
attention to detail is all that matters
Obviously, there is no true construct definition of intelligence as any attempt to measure intellgince would be highly subjective and require interpretation. Banks hire "smart" people with top academic degrees because it is a service industry and the name plate is just as (if not more important) than the actual content and/or product quality.
While bankers need to have a modicum of common sense and intelligence I think personality, charisma, and work ethic are the most important attributes of any successful banker.
It's more drive and aggression rather than intelligence that makes the best bankers.
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