Why is GPA so important in finance?
I don't understand why - school doesn't require the exact same skills as the skills you need when you're working. For example, you could be an amazing trader but that wouldn't really have to do with how well you do in school. I understand that companies prefer candidates with high GPA, that's obvious, but why make ridiculous cutoffs (whether it is officially stated or not) such as 3.5+? I don't think they understand how many great potential candidates they will be missing out on.
In my major (computer science), GPA isn't that important. It's quite usual for companies to not consider GPA, but how well you can actually do the work and your extracurriculars (personal projects etc). I'm having a hard time understanding why the finance recruitment process puts so much emphasis on GPA and how it relates to the actual work.
Because recruiters need to somehow select applicants from a pool of otherwise (almost) identical candidates...
Because you can do wtf you want when you get 100x as many apps as spots you're looking to fill. Same reason they recruit from ~10 schools even though there's a couple thousand out there
Well said. It's just impossible for a bank to thoroughly review 1,000 resumes. When you are swamped by data, you find ways to trim them down into something more manageable.
I'll go with what most people have said. A good portion of the rationale is valid and the other part is "just cause".
My experience is the same as yours (or what you have heard). I will note that I work in the defense sector and I was hired by a large defense contractors straight out of undergrad. They did not even ask for my GPA. Finding someone with a BS Computer Science, Secret clearance and an end-user of the global command and control system for the project was hard enough. And even if someone had a stellar GPA, if they can't get through a length and expensive security clearance investigation, it does them no good because that person can't be placed on the project/contract.
*I'm not looking to get into a debate of defense blah blah blah. We've all heard enough. If the OP wants to know, he can do a search.
Conscientiousness (as evidenced by GPA) is typically just as important as intelligence is when it comes to analyst work.
Would you rather hire a 140 IQ analyst who never showed up to class and got a 2.5, or a 125 IQ analyst with a 4.0 who proved that he could make his 8am CS lectures and nerd out for four entire years?
the 125 IQ kid so that 140IQ kid can do something better with his life lol
Longitudinal studies have shown that IQ has almost no relationship with career success.
For IBD it's obviously 125.
you don't need to be a genius to be a banker.......
You don't. For many professions, you just have to be intelligent enough.
My non-scientific gut feel on this is that in order to be successful in a difficult major such as engineering, math, etc. or in a demanding field such as finance, you're looking at people who have an IQ of at least 115 (a full standard deviation higher than the general population).
...
Given that the average college graduate is around 115, I don't think this is a stretch of the imagination.
It is just a way to compare people. It's the same reason that you have to take the GMAT for B-school, LSAT for law. Obviously they aren't perfect indicators, but there a reasonable (or at least a least arbitrary) way to make decisions.
I second all of the above that they have to do something in order to weed out the 1000000000 applications they get.
We get 100+ resumes per 1 open position. I can pick resumes with 3.7+ and SAT of 2,100+ and 2 finance internships minimum, and still have like 20-30 resumes to go through
A high GPA means that you were able to study what was expected and answer in a way that was expected - pretty essential skills for someone who needs to be trained and is expected to produce a specific output.
Bankers simply don't have time to read 1000 resumes. It's simply harder to go wrong with a kid that has a higher GPA rather than a lower one.
Attention to detail. People who consistently bang out 4.0s are the ultimate perfectionists...they will be the ones more likely to proofread, notice errors, double and triple check data, etc. In most cases they'll follow instructions to the "t". Incidentally, this eye for detail more or less correlates with their standardized test taking abilities at this level, where often the percentile rankings/correct answers come down to who better notices a minor difference, which is another reason that many firms request the SAT and GMAT score. At least that's the assumption assuming that one's background is quantitative and/or rigorous.
It does make sense that they need to have these arbitrary cutoffs because there are so many candidates. But I just feel that people have different priorities and passions and school might not be the number one for some people. They might have their own business/startup or projects they are working on that they spend time on and learning from, as opposed to a person who only focusses on school and gets good grades. I think the former has more initiative, drive, and smarts than a person who just does what school requires them to do. This is what I observed in my classmates as well.
You could even get a 100% on the final exam, knowing the material fully, but still do badly on the course because the majority of the marks has to do with regular homework or quizzes which they put on their lower priority because they spent more time during the term focussing on things they are passionate about in the real world.
I understand that it's important to do well in school, but I find people who only focus on school and has no other passions more dull. Not saying you can't have both, but I think that not even taking a look at someone's resume because of their GPA is flawed.
I know dat feel man
All the above are correct, it's simply a metric by which to narrow down the thousands of kids who want to be bankers coming out of 50+ school each year. It's not like computer science and programming where one candidate can be lucidly better and more experienced than another--if you're proficient with excel and have a couple internships under your belt, at an analyst level, you're no more qualified than the dozens of other hungry applicants looking to fill the same role.
Past the analyst role, I believe a good argument could be made that GPA plays (played) too much importance. Between my team director and VP, the one who went to a state school is infinitely better at his job, more effective with clients, and generally much more respected in the firm because he manages people and builds trust so well. The other is absolutely brilliant and has far more credentials (high gpa from top school), but is piss poor at delegating responsibilities and generally sheepish. That is where the GPA test breaks down and intangibles are left to dictate who rises the highest.
If you cannot find the time to do the work and be successful in college, banks are not going to expect you to be able to sit down for 90 hours per week and turn out quality work under pressure.
OP, you'd be surprised at the 'geniuses' who flame out, because they couldn't handle the workload. Banking has nothing to do with how smart you are. They pile shit on you at 110% of your capacity just to see if you can take it. I can tell you right now that a 3.0 GPA student would not be able to take it.
You also have to be able to live with your associate calling you a "fucking idiot" even if you went to a target, got straight a's, and were able to get a top banking job. It's just the culture whether you're in ny, chi, or la.
edit
GPA is a good measure of a candidate's work ethic, and the consistency with which they produce good work. If I'm hiring for a position that requires more attention to detail than creativity, I think GPA is a great predictor of performance. I want someone who has proven that they will consistently do what is required of them over 4 years. There might be someone far more brilliant with a 3.0 GPA, but at some point they slacked off for whatever reason.
Candidates who have perfect GPAs and have checked all their internship boxes etc are not the types who will shake things up though. They are not people who will 'color outside the lines' for the greater good. They are folks who will whine and cover their ass and always make it only about them, and them alone. They will happily watch their department decline safe in the knowledge THEY won't get chopped. Oh yeah, their perfect GPA and academic brilliance will lead them to think there is a quantitative solution to everything and over-lever their balance sheets and cause Great Recessions.
lol what is wrong with you
GPA is a good indicator of consistent performance and ambition. Most desks and Banks will usually take into consideration mitigating circumstances.
There is a simple and reasonable answer to this. Higher GPA indicates stronger work ethic, focus on success, and (perhaps) more intelligence.
Sure, this may ding some great future I-Bankers/Traders from the industry. But you have to remember it's an averages game, and on average they are going to get a better employee from the higher GPA pool. This is where some solid networking (and relationships, more importantly) can get around the GPA at bit, because that person may trust that you have what it takes because they know you personally.
I think even a better question is: Why do some companies hire both mid and high GPA candidates, yet fast-track the ones with the higher GPA right off the bat?
GPA does not indicate intelligence. Don't be silly.
Ya, that's why I said "perhaps". And I'm going to go out on a limb here and say that having a 3.7 from a good school makes you intelligent by definition. No one is dumb who is performing at that level. If we are thinking IQ, that's the biggest load of crap, especially when talking about success in life.
Why not? There is at least a correlation.
i can introduce you to many of my friends from HS that go to top 20 undergrads and have 3.8+ GPAs and dont knw wtf the fiscal cliff is/was when it was a bigger deal or what caused the housing market to collapse- sure these are "finance" realted topics, but not really. the housing market really changed the US economy and affected everything in our lives domestically and globally and the fiscal cliff is a big fucking deal (especially when china has a lot of debt in the US and can tell us to bend over soon)
on my experiences with students in college for the past 4 years, and i mean this without offending anyone, the kids with gpas with 3.0-3.7 usually had more idea of wtf is going on in the WORLD and not just in the text book, had more of a sense of direction of where they want to go in life because they do other things than study 24/7 and talk to people and try and FAIL different things and are not socially awkward fucktards that cant hold a conversation with a stranger
being well rounded/balanced academically, physically and emotionally + having a great social skills + having a direction in life = intelligence
^ to me at least. feel free to argue haha :)
There is certainly a correlation---but correlation does not imply causation. I was a bit terse in my previous statement, allow me to reiterate.
Obviously, a degree of intelligence is required to get one into a good prep school/college/grad school, but past a certain point, I think GPA is completely based on work ethic. Is it easier for smart people to get high GPA's at good schools? Absolutely. And the majority of high GPA folks at top schools are undoubtedly intelligent.
However, I think it's fallacious to assume that someone at a top school with a 3.2 is less intelligent than someone with a 3.8. My ex gf and I are an example of this. I worked decently hard in HS and college, but was always able to make it out with a 3.3-3.6 with minimal to moderate effort. I scored a 2170 on the SAT without studying a single minute in HS and was a junior national merit candidate. She, on the other hand, graduated HS with a 4.0+ GPA and college with a 3.89 undergrad finance degree, among the top in our class. Still blows my mind because it was not an easy program. On paper, she had brains in her teeth, and made me look absolutely terrible.
Her original goal was to go to law school, but after studying rigorously for the LSAT (while I was doing cfa) she was unable to break the 150's after taking it twice. She had a couple high finance interviews, but told me that even getting through school w/ such an impressive resume, she had trouble conceptually understanding things like how depreciation moves through the 3 statesments. Basically, she would have to study things and memorize them like crazy before going in to class. Her writing was sub-par too, but after multiple drafts & visits to your professor's office it's hard not to get a good grade on a paper. For every 1 hour I studied she spent at least 3 or 4.
TL;dr I was off in saying "gpa doesn't indicate intelligence;" I more meant that it is not an interval measure of one's intelligence. A girl with a 3.89 is not necessarily smarter than someone with a 3.3, just like a 3.5 doesn't make someone more intelligent than someone with a 3.4. Hard work is a much larger determinant of GPA.
If you have some other passion that impacted your GPA, you should pursue that. Not banking or consulting that require high GPA. Along with academics, these firms how can you handle multiple things at once (extra curriculars, look for internship) and still do everything right.
As someone said above, you don't have to be a genius to work in banking. But you still need to be intelligent, though you don't need to be a savant by any means. It needs to be balanced.
I know banks will look at your SAT score too, since it's a statistic that has the greatest correlation with intelligence and that just about everyone has taken (apart from an IQ test, but how many people get IQ tests?).
How is SAT score anything different than GPA and test taking ability? If you didn't study the material, you're not going to do well. And if you didn't pay attention the last 4 years, you're not going to sit down and nail the thing...
Actually, that's not true. While you can study for the SAT, in the end your score is capped by your intelligence (and to a certain extent, luck). There was a study I saw recently that showed correlation between SAT and IQ -- let me find it.
anyone can manipulate their gpa by taking some easy classes to balance out things above 3.5+ It's what gets you through the resume process. If you know your shit and know how to network, then a subpar 3.3 gpa might not be a huge factor.
As for your ECs, a lot of ppl nowadays bs their resumes, and your gpa might be the only factor that's legit for the first round.
I'm inclined to buy the whole cutting down on applicants thing, but it just seems to be a cop out. You're telling me Microsoft, Google, and Facebook don't have hundreds of kids applying? How do they weed out candidates?
Most of the kids I graduated with who got positions with the tech giants for engineering positions didn't have a stellar GPA, but instead focused on extracurriculars, and building up their knowledge base (programming outside of class, side projects etc.)
You're comparing apples and oranges. You actually need to know shit in tech, so as a "hirer" you're in less of a position to install some arbitrary filter on candidates. If someone actually knows their shit, you're not going to ding them because of their GPA or SAT. Everyone's interchangeable in finance, you can learn what you need on the job. There's a reason they rarely even give a shit what your major was. It pushes supply up and creates the need for these screens.
Okay, so WSO isn't letting me post links.
Go to Wikipedia & type in "IQ" and then CTRL + F: "SAT".
"Some measures of educational SAT aptitude are essentially IQ tests; For instance Frey and Detterman (2004) reported a correlation of 0.82 between g (general intelligence factor) and SAT scores [75] another has found correlation of 0.81 between g and GCSE scores.[76]"
I once met a HR at an OCR event, and asked him the same question. His answer did shock me at that time:
"I know there are tons of qualified candidates out there, but I don't care. All I need to do is to make sure that the people I hire are qualified, not that I hire all the qualified people. The fact is I can't hire them all. So don't question my criteria, that's my job, not yours. "
Supply >>>>>>>>>>>>>>>>>>>>>>>>>>>>>> demand
You have to find those fields where demand > supply ;)
I don't know how true this is, but some guy I know who worked in HR told me the application process is a numbers game. They put up an analyst position and they want 5 candidates to choose from. Yet over 300 people apply so how they get only 5 candidates? They trim the fat by filtering out candidates based on various factors like GPA, university brand name, ECA, previous experience etc. Then they hold 1st/2nd round interviews to further filter out people based on interview performance etc. They will keep doing screenings until they get 5 candidates to choose from. And then the big guy gets to pick the lucky winner of them all.
It doesn't mean they will pick the right guy but sadly thats the way the system seems to be. I personally think standardised tests are better at representing things than university GPA which can vary depending on your university/major etc.
Why would someone want to hire one of those "robot" kids. You can easily tell who they are in a class room. Usually these are just the people that study like crazy but have some combination of no social skills/have no clue about current events. In my opinion its pretty bad if you have no clue why the housing market collapsed. Think about it this way do you just want someone who can crunch numbers but has no clue how mirco/macro/industry trends affect this output? Coverage groups, corp lending, corp strategy, bunch of other positions you need to have a clue what is going on in the world rather than just doing plug and chug models.
Obviously there are people who have higher GPAs and are well informed and can hold a conversation, its people like these that make the most desirable recruits.
I've personally talked to a few recruits who stated that once you are really above a certain threshold for GPA (and this will vary) whether its 3.7+ or some other arbitrary number, the difference between a 3.7 and 4.0 is not great but the intangibles will play a much greater role. One guy even mentioned that some of these 4.0 people are "weird."
I attended an interview and was asked about the housing market and was glad that I could actually hold a conversation on this topic. Afterwards I was asked what I thought were the greatest challenges firms encounter in this industry. After talking to some people later, I could tell they were just not prepared for some of these questions. I actually know a person who aces every finance class he takes but doesn't have a clue outside of that as he did not have a Jr. year internship and did not fully maximize his 4.0 or whatever he had by not preparing outside of the classroom. Academics is only half of it. End of the day you to bring more to the table than just good grades.
No one said you have to hire all 4.0s. But a 3.5 cutoff is far from unreasonable. An intelligent person who slacks off / doesn't attend classes and studies mildly can get a 3.5 in most finance / liberal arts programs (obviously, this is different for STEM).
If you guys don't mind if I butt in with a small question related to all this GPA debate... what would be an area of the industry that is less favoured by individuals? Where GPA matters less? Is there any such thing?
I think GPA is bullshit. I went to Uni to learn something, not get a good grade. But when I found out you learn nothing in Uni and it's all about getting that piece of paper, that certainly did not sit well with me and my GPA plunged as a result. I'll just have to find another way to break into the industry... Shrug
Everyone comes to this realization at some point in college. Hopefully you learn a few things and grow personally and intellectually - if for no reason other than having complete independence. But, unfortunately, GPA remains an integral part of recruiting because it's an easy way to narrow down the field to the people who worked the hardest in college.
If and when you realize that you aren't learning as much in your job as you were when you started, your employer can't afford to take the risk that you check out.
I'll prefus the below with: don't let your GPA hold you back, go for what you want. Making the contacts is key, even if you have great credentials you can miss out on opportunity due to lack of connections. Make people know you are good and worthy, personally.
Private wealth management... If you can find your way into Private Banking, GPA usually isn't a huge issue there (unless we're talking sub 2.5). If you start in a structured program at a private bank or PWM, then you can expect to make faxes, get coffee, and send out performance letters. Nothing glorious, but it's a way in. You could start as a financial advisor and try to get a book built before they boot you, but expect very low salary with commissions making up the difference, if you can get the clients.
I'm not usually a grammar Nazi, but... really??
All hail The Leader NS. haha
Thanks, NS. I guess I'll have to work on it through networking and by getting related experience(s).
Has anyone asked this guy what his GPA is yet? Anyway I'm in the same boat. I have a sub-3.0 GPA and I am graduating in May of this year. My grades suffered because I was working full time to support myself and I had an hour+ commute to Georgia State University in downtown Atlanta each day. Your GPA is what it is, and if you've already graduated, there's really nothing you can do except go tear it up in Grad School. The only other thing you can do is put it behind you and realize the errors in your work ethic that caused your unsatisfactory GPA and start kicking ass in everything you're focused on going forward.
Problem is it's going to be hard getting into a good grad school with a low GPA. No point in going to a less than top 20 MBA, average MBAs are a dime-a-dozen; pretty much means nothing. There is no reason for a person with little work experience and an average/sub-average MBA to make any more than a kid with solid internships/GPA straight out of UG.
A sad but very true statement. I am going to grad school solely so I can qualify to be a CPA. Work experience trumps an average MBA.
Est omnis animi culpa nobis sit dolores ea. Enim blanditiis occaecati est repudiandae tempora quia dolorem dolores.
Incidunt dolore fugiat maxime quia qui et eum. Illo quod modi similique optio praesentium. Molestiae ipsam sed rerum corporis rerum similique. Non aperiam tenetur commodi sint. Enim voluptas adipisci quas repellendus. Autem facere natus corrupti sequi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Qui sit aut eos illo quam ut soluta ipsum. In quos in magni iusto maxime. Laudantium quos quo velit dolorem asperiores sit. Esse recusandae nobis nemo ratione deleniti et.
Et et eveniet modi. Neque nulla quis ipsum blanditiis et rerum sit. At et doloremque consectetur sequi velit quaerat. Repellendus incidunt expedita qui omnis eligendi at.
Cumque exercitationem ullam nihil nihil delectus eaque totam. Natus consequatur dicta in eum quis. Ut ad cupiditate quasi eaque rerum vel. Aut aut explicabo sed qui tempora. Voluptate id alias qui voluptatum.
Laboriosam sint dolores provident quia assumenda nihil. Sint et accusantium earum soluta. Accusantium est quis ducimus. Consequatur quaerat nisi iure quis libero. Ea est nobis dolorum quidem ut. Ducimus pariatur a error possimus qui harum. Ut voluptates autem corrupti assumenda perferendis.
Accusamus quae adipisci et corporis qui. Reprehenderit dolores aut cupiditate excepturi. Aut natus est et aut repellat.
Sint illo esse dicta ut aspernatur aliquam quas. Consequatur explicabo harum odio. Et non soluta tenetur molestias ea perspiciatis sapiente accusamus. Veniam fugiat doloremque quasi nihil.
Odit laudantium suscipit illo qui ratione blanditiis. Maiores non ut in possimus debitis. Non eligendi veritatis qui et odit nihil placeat.
Provident quia provident molestias est et tempora rerum. Et ex eum facilis ut soluta voluptatum qui. Quas numquam non harum. Est totam quia autem eaque quisquam vel. Esse est alias ullam eius velit.