Is investment banking full of rich kids?

It seems that to get into investment banking, you must:
- apply early
- have been to a target school
- in order to get into the target school, excel in high school, have money and you must know which schools are targets for investment banking

It seems like that in order to tick off all these boxes, you must have rich and university educated parents. Preferrably parents who know how the finance industry works.

So is investment banking full of kids who are born rich?

 

Without a doubt yes. I’ve witnessed the richest kids in my school go for banking and consulting. They had a much easier time due to being able to speak very comfortably during coffee chats about things that only other rich people do or enjoy. It’s a lot easier to pick up certain traits and mannerisms from rich father who exposed you to the business environment at a young age.

Also some people get a leg up from doing unpaid internships. Many poor kids can’t afford to spend a summer/winter in nyc and work for free; they do a paid internship in a less relevant role or work a more typical college summer job. If you come from a well to do family it certainly makes it more doable and you get the opportunity to get the internship experience which will then help you land a FT gig elsewhere.

 

But are these coffee chats being used to weed a lot of people out? Not in my experience. I feel like the non-rich kid at the target school just needs to survive the coffee chat (doesn't need to sound polished, just OK) and then interviews are much later in the game after the lingo has been picked up.

Unpaid internships can maybe be a bit of a leg up but if they're a worthy investment then most people can upsize their loans a bit and cover living expenses for an extra few months. I don't think that's something only rich kids can do. Target school already costs a fortune, what's another $8k if the internship is really all that (which I sort of doubt).

 

At target schools, the coffee chats may be more of a formality. But at non-targets (much higher % of the "non rich" being discussed) they can be vital. An associate or VP alumni is only going to put his neck out for the absolute best he meets.

The unpaid internships I think Guest is referring to are the post Freshman or Sophomore year at a family friend's buyside shop. If you are an undergrad without those connections, you should absolute hustle and network your wan into working for free at a MM PE/HF/VC for a summer if you can.

 

Key phrase there - more doable, not impossible. I broke in with ZERO guidance at all from mom or pop. Neither were University Educated but had a great life, mom did billings at a Big 4 consultancy and dad worked as an Engineer in the Valley.

I didn't come from a silver spoon but the other intern I worked with did. Needless to say, our work ethics were VERY different and it showed. He got the gig from daddy connects and I networked my way in.

Fast forward to now and he couldn't get a Junior year internship in IB and is doing sales at a Software Company and I'll be at a more prestigious bank than the last one I was at.

All comes down to how hungry you are.. and a bit of luck.

 
Most Helpful

I mean, yeah.

Most of the kids that are aware about these top end careers have been coached through life with the help of money, their parents experience and their environments. It's not just finance either.. corporate law, medicine, tech entrepreneurship, top B schools, politics etc are all filled with cookie cutter rich kids.

Engineering, quant stuff and research/science tend to be more scrappy immigrants or smart formerly working class or lower to middle middle class kids.

That said the internet has definitely had an impact on this and has made the path to these fields a lot clearer for those who don't come from such nice backgrounds.

 

I don't have a chip - seen both sides.

Was that upper middle class expat kid who lived on business class flights, private schools, multiple vacations a year, nannies and homes with pools. I've also (after the passing of a loved one) been on the other side - struggling financially, having to hustle, getting income-assessed financial help etc.

So literally I don't have a bias; just telling it as it is based on my own perceived experience.

Case in point: I know a solid number of people from my high flying life in "prestigious" firms and basically none from my poorer life (high school) at the same places.

 

Everybody has a bias. Are you claiming that your riches-to-rags story has not coloured your view of the world?

Your initial reply that all IBers are cookie cutter rich kids and researchers/engineers/quants are the Will Huntings of the world is, to put it mildly, an overgeneralization. Sure, "rich kids" are overrepresented in IB, but that is not to say that there are plenty of middle-class born people in the industry. When I worked in S&T I'd say that the large majority of people there were born middle-class, with a couple of rich kids working in sales and similar roles.

I don't know... Yeah. Almost definitely yes.
 

You either have a irony-shaped chip on your own shoulder or are unable to perceive your surroundings objectively.

The fact of the matter is there are a lot of rich kids in IB due to smart/good parents and lots of other advantages in their upbringing. This doesn't mean those kids aren't hardworking or valuable employees, it's just a fact that some people don't want to accept because they (often incorrectly) think it means they didn't earn their position.

 
princepieman:
I mean, yeah.

Most of the kids that are aware about these top end careers have been coached through life with the help of money, their parents experience and their environments. It's not just finance either.. corporate law, medicine, tech entrepreneurship, top B schools, politics etc are all filled with cookie cutter rich kids.

Engineering, quant stuff and research/science tend to be more scrappy immigrants or smart formerly working class or lower to middle middle class kids.

That said the internet has definitely had an impact on this and has made the path to these fields a lot clearer for those who don't come from such nice backgrounds.

This.

Don't correlate it with rich kids, correlate as people who are "smart"*/in the know usually are good at getting what they want. Normally thats money, and money comes from high paying careers. *(by smart I don't mean 5.0 GPA, I mean people who have the brains but also the ability to get the job they want.) It's kinda like when Malcolm Gladwell observed that kids who do well in school came from homes that had a lot of books; does that mean that if you surround a child with books they will automatically get smarter? No, it means that mostly the parents value reading/knowledge, so it gets passed on to the kids.

As stated, with the rise of the internet, and making everything "global"/grassroots, you have to start everything at an early age. Look at the NFL, QBs use to have to sit a couple of seasons to understand play, now there are 16 year olds running pro offenses. Or golf, it use to take someone time to earn their PGA tour card, but now they're playing to pro style tournaments at age 8, so they are ready by the time they get to 21. It's like banking, its way harder now to graduate college and decide to go into banking vs knowing what it is at age 12.

 

Are you really saying that it's not rich kids, but kids who have the brains and the ability to get the job they want? Did you read my original post?

I think most kids don't know they want to get into investment banking when they're in high school. And if they did, they probably wouldn't know which schools are targets for IBs. Don't tell me that kids without rich university educated parents who know about finance think like this when they're in high school:

"I better get good grades in high school so I can get in insert target school for IB. Oh yeah, and ofcourse I have to do some extracurricular activities that look great on my resume because that's important too."

And I'm not even talking about how expensive target schools are.

I didn't entend to start a discussion between rich kids and not-rich kids lol.

I am just asking to the people who work in IB: are most of your colleagues born rich?

 
princepieman:
That said the internet has definitely had an impact on this and has made the path to these fields a lot clearer for those who don't come from such nice backgrounds.

Internet has only had an impact post-2011, when Google was actually useful for something other than porn. So, unless you were born in the year 2000, you were definitely fucked.

 

2000 checking in. Target school applications have been sent and pre-frosh summer internship has been secured. Dad was in VC which led me to pursue IB, so mentor theory holds.

 

"Most of the kids that are aware about these top end careers have been coached through life with the help of money, their parents experience and their environments."

Damn this hits hard. I only recently realized how true this is having met people who ended up in prestigious firms making good money largely because they had their paths laid out by their parents from a young age; attended expensive boarding school overseas or a prestigious international school and had the benefit of being exposed to the environment as well as access to lucrative networks while my lower-middle to middle-class friends don't really know anything about the world of banking and finance.
 

 

Yes, just a function of the things mentioned above. I do love how the internet and websites like this one and the educational material they provide are equalizing the playing field though. Lack of equality of opportunity is never a good thing.

A lot of rich kids don't realize it, but it's things like growing up in households without a computer, or having a good work space that compound and make a huge difference.

I remember using Microsoft Publisher to quickly make some bullshit presentation we had to do in elementary or high school which was the easiest A ever, but this girl I knew did everything by hand for the same grade but just didn't know of the shortcut because she wasn't raised around a computer.

 
m_1:
I remember using Microsoft Publisher to quickly make some bullshit presentation we had to do in elementary or high school which was the easiest A ever, but this girl I knew did everything by hand for the same grade but just didn't know of the shortcut because she wasn't raised around a computer.
Being able to use a computer at a young age has its advantages and disadvantages...

I once got suspended from school when I was 9 because I was the only kid in the class (or the only one brave enough) who could use a computer and went to a porn site on the class computer while the teacher was out of the classroom. Wasn't on there for very long before i was swiftly dragged to the Principal's office by a less than happy teacher.

 

The question is, why aren't schools doing this? Why is it that most people don't hear about IB until after they graduate college? Why aren't schools explaining to students potential career paths, earnings potential and what's required to land specific roles?

Instead of indoctrinating our kids with LBGQT fantasies and communist pathology, they should teach stuff that's, you know, actually helpful. That's how you close the gap.

 
mbahopeful88:
The question is, why aren't schools doing this? Why is it that most people don't hear about IB until after they graduate college? Why aren't schools explaining to students potential career paths, earnings potential and what's required to land specific roles?

Instead of indoctrinating our kids with LBGQT fantasies and communist pathology, they should teach stuff that's, you know, actually helpful. That's how you close the gap.

I think it comes down to two things. 1. If teachers knew what IB was, they probably won't be teachers (not meant to be offensive, my sister in law is a teacher, and its a lot of work). 2. Most school boards don't want to change that curriculum (bc they would have to spend a lot of money on books/teacher training) and public school in a lot of areas has become more of a day care where parents expect teachers to raise their kids. How are you going to teach someone about IB when they are four grade levels below where they should be in reading/math.

 

You also have to look at the differences in mentality of the public school board vs. private. In public school, you have to cater to a much broader audience than in private schools... generally speaking, (different cutoffs in regards to entrance exams etc.).

  1. Teachers in the public board do not have the resources available to counsel their classes of 30+ kids individually on what they think they would like to do in the world. From what I've seen of private schools, you generally have a much higher degree of resources available per student.

  2. Given the limited opportunities in IB and Consulting, the public board likely doesn't have much of an incentive to coach kids to go that route -- it's arguably much better for the economy to push kids into careers with higher success rates, (various trades, more in demand service industries etc.).

Just a couple thoughts

 

At the end of the day there are only so many positions out there. Even if everybody knows about IB, there are still only the same number of people who can get the job. That's not going to 'close the gap' to any meaningful extent.

 

my placement interview day (post-signing) for specific teams/sectors is coming up, with the bank paying for our travel and hotels. many kids in my division are flying in early, out of pocket, paying for their own hotels, just to try to get extra/early networking in with the desks they want. meanwhile, i work minimum wage on campus and even waiting for reimbursements for ubers can put me in a tight spot with my rent/tuition bills and budget.

what a life.

 

Most are generally well off, but its not like being poor excludes you if you are talented and polished

why the monkey shit? More people than not that I have met haven been UMC or higher, skewing more told UMC. Yet some people I know worked hard in high school, got into good schools, networked, got good grades etc. Target schools are over emphasized-they help-but plenty of non targets go to decent state schools. While this becomes an obstacle at some firms/echelons, for the most part the people who really rise in finance are the people who work hard, intelligent and possess soft skills. A bank doesnt care if an MD went to a state school as long as they make the bank money.

Non-targets have to work hard to break in, but its not like going to a good high school and college is a golden ticket by any means.

 

"if you are talented and polished"... the definition of polished is pretty much "you grew in the right background and, as such, are able speak the same language than other people who grew in the right background".

Is it impossible to learn to be polished? of course no. Are you at a disadvantage if you didn't grow at least upper middle class? hell yes.

 

Yeah but polish is also not as important as people in this forum make it out to be. If you went to a target and got good grades, you're going to get interviews. The interview outcome will be mostly based on technicals; yes there are "fit" questions but there's often no right answers to those, and technicals end up being most of the measuring stick. Doesn't leave a lot of room for polish to be the difference maker.

Edit: see comment below about how I define technicals. The textbook technicals aren't a deciding factor, but I think the next-level softer technicals ("tell us about a deal in the news" etc.) are meant to demonstrate true interest in finance and this is where technical ability meets polish. Ability to talk a good finance game is a big deciding factor and I would argue those are still technicals; prepping for those involves truly understanding the intuition behind technicals so you can apply that knowledge to examples.

 

Perhaps use a Linkedin search.. there are plenty of students in IB who graduated from non-target universities. I attended one of the lowest ranked state schools in the US, and graduated from HS where kids were constantly getting stabbed and not showing up the next day because their parents couldn't afford to pay rent. Don't think we need a thread to prove that it is harder to get places with less resources. If you're a good student at a shitty university, PM me i'll gladly recommend you for an interview.

What concert costs 45 cents? 50 Cent feat. Nickelback.
 
Jamie_Diamond:
Perhaps use a Linkedin search.. there are plenty of students in IB who graduated from non-target universities. I attended one of the lowest ranked state schools in the US, and graduated from HS where kids were constantly getting stabbed and not showing up the next day because their parents couldn't afford to pay rent. Don't think we need a thread to prove that it is harder to get places with less resources. If you're a good student at a shitty university, PM me i'll gladly recommend you for an interview.

I think it's one of the "starting on third base arguments". Anyone can get into IB, but would you want to start from more a target school, or from a non-target (or with parents/mentor or none).

 

No it's actually not, the first post clearly stated (see below). Again do we really need a thread to prove that it is harder to get places with less resources? If i come to Vegas with 999,999 usd, its easier to leave with a million bucks. There is no debate.

dontbugme:
It seems that to get into investment banking, you must: - apply early - have been to a target school - in order to get into the target school, excel in high school, have money and you must know which schools are targets for investment banking

It seems like that in order to tick off all these boxes, you must have rich and university educated parents. Preferrably parents who know how the finance industry works.

So is investment banking full of kids who are born rich?

What concert costs 45 cents? 50 Cent feat. Nickelback.
 
Jamie_Diamond:
There are a ton of students in IB who graduated from public universities. For example, myself.. went to one of the lowest ranked state schools in the US, and graduated from HS where kids were constantly getting stabbed and not showing up the next day because their parents couldn't afford to pay rent. I thought my situation was great gunpowder to motivate me to succeed, but its clear a lot of you don't have the same mindset. Don't think we need a thread to prove that it is harder to get places with less resources.

I don't think most people on this thread are basing their responses on their own experiences alone. Let me say that i know I am not. The kids that worked on my desk had exposure and guidance from mentors/parents. It has to be that way, because "polish" isn't a hard skill. Not saying it's impossible to learn on your own, because I know I did myself. But it's not part of how you grow up.

Only a handful of kids (out of 20K) I know of at my university got IB. The one I was closest to most likely would've considered himself poor, and probably went to a HS like the one you speak of. I'm sure it was public and had a lot of poor kids. But he had a family member who was running an Asian markets group at GS/MS/JPM. He didn't have crazy resources, but this isn't the type of poor I'm referring to.

Of the kids I met at BBs/EBs, they always had mentors/parents. One kid went to a public school, but his parents ended up knowing some MDs at a top BB/EB. A black family I know, that sent both of their kids to Harvard -->> prestigious tech/medical careers, would definitely be poor by their address, but parents steadily made gains in their respective fields and most likely gave kids a similar mindset.

The issue I see is, banking relies on soft skills and prestige, two concepts with abstract practical concepts. Most poor kids rest on the belief that hardwork (like their parents) is what matters. Not knowing the real deep implications behind who you know instead of what you know.

It's kind of like the ice breaker where you see what a secret is by the time it goes around a room. Poor people are the last ones to receive the message and they actually don't know what the real thinking is from "the elite". They tend to mislead their kids down the wrong path, and etc. I use the analogy of kids are starting from the wrong hill and climbing it, while kids who are a few links away, may have a hill to climb, but at least they are headed in the right direction.

Just my 2 pennies.

 

Did you just write 5 paragraphs on a fact i never debated? i.e. it is obviously harder to get places with less resources. I was never handed any guidance, I learned a ton from WSO, its a great and free resource I used at public libraries. This isn't the 80s where wall street is on lock down by prestigious universities. I literally got to IB by watching wolf of wall street, googling how to get into wallstreet, and using wso as a resource. When I told my dad that I was going to New York for my banking internship, on my own dime, from the middle of bumfuck no where, he thought i was a crazy guy headed to the big apple to work as a bank teller. But then my road has been a lot more exciting, wouldn't have had it any easier.

What concert costs 45 cents? 50 Cent feat. Nickelback.
 

1) Yes, the kids going into careers like IB and consulting disproportionately come from wealthier families.

2) Good luck getting them to admit that because everyone wants to think they're a special snowflake who managed to get into their fancy jobs via talent, charisma, and hard work, as opposed to being there because they had the good luck to be born to parents who even knew what "investment banking" means and grow up surrounded by friends trying to hustle their way into working at MBB instead of McD's.

3) Of course exceptions to the above exist, but if you think that the exceptions disprove the rule then you're probably on the wrong website.

 

Short answer, yeah. From getting to know a number of other analysts in my class (MM, non-NYC), I get the impression that many of them grew up going to private schools, having their college expenses paid for and overall being in-the-know much earlier in life than many others in our age group. I'm not trying to make a catch-all sort of generalization, but I think it's fair to say that a handful of people you'll come across at least at the analyst level in investment banking grew up with some sort of upper-middle class lifestyle.

For me, the cards just sorta fell into my hands. I lived in apartments until I was 10. I recall my family going to the food bank since there was no money for groceries. My dad worked two jobs to support the family. Never had a car in high school. Paid my way through college cranking out scholarship essays and taking out loans. If it weren't for discovering WSO in call it my freshman year of college, I guarantee I wouldn't be where I am today.

Some of the other users in this thread mentioned this point, but growing up comfortable really does give you an early advantage. You and your peers go to decent schools. Their parents have nice jobs. You're just much more aware of the opportunities that are out there than a typical, run-of-the-mill kid from suburbia.

Side observation: one of the associates on my floor grew up similarly as I did (no-name town in a flyover state, most kids stick around after HS). He joined the Army after college and then went into business school to get into banking. He recalled most of the military guys in banking that he met probably share the same sort of background.

 

Those kids are definitely in a better position and are disproportionately represented in IB, but other than apply early (I'd call it on time), none of those factors are requisites to landing an IB job.

Anecdotally, I'll be starting in IB in a few months and I (i) come from a poor family, (ii) knew no one in finance before getting to college, (iii) did poorly in HS, (iv) went to a JUCO before going to a semi-target, and (v) did not know what investment banking was when I got to college.

Also, kids from poor homes who achieve highly tend select into law and medicine primarily because law and medicine are visible, high-caliber career paths regardless of where you are and there are structured paths to break into both. The latter is true of IB, but certainly not the former. That is to say, the smart, hard-working kid from Trenton is likely not going to wind up in IB because he has no concept of what a career in IB is during his educational years, not because he's being screwed over by the trust fund kids and the parents of the trust fund kids (who themselves are children of trust fund kids).

I come from down in the valley, where mister when you're young, they bring you up to do like your daddy done
 

Analysts might come from well off background, but most people at Associate and upper level seem to come from not super well off background. Both Ib head and group head in my bank came from pretty poor families. So did two vice chairman I worked w in the past. Within associate / VP level, you also get lot of state school -> mba or internationals who eventually ends up being senior ppl.

 

I would assume so.

From what I’ve seen people who have “less” money aren’t as interested in IB as those more we’ll off. If you go to a Target on the west coast (Stanford, USC, Berkeley, etc.) you need to be pretty rich to afford the school (unless you go to Berkeley) Same thing on the east coast for targets, (UPenn, Harvard, NYU, Ross, etc.) all cost a ton.

 

i will say a lot of rich kids wont do high finance/consulting cuz they dont have the same drive motivation. very deadly combo if you grew up rich and your parents instilled some kind of drive in you to develop a business career from early. not saying that parents put considerable effort into helping motivate kids; because sometimes its just picking up the phone and telling his buddy he's got an 18 y/o who should proll get some internship experience. Because i will say there's a lot of rich kids who're perfectly fine doing f8ck all in the summer. my $0.02

 

Let's go through all these boxes that need to be "ticked". According to you, attending a target means you must:

  1. Excel in high school: "excel" is a strong word but yes, you need to be a good high school student unless you can play a varsity sport or donate a building

  2. Have rich and university educated parents: why? Plenty of lower middle class kids went to target schools, including yours truly. Take out a loan, major in a real subject and you're fine.

  3. Know which schools are targets for investment banking: and that's hard why?

It's really not hard to get into a target school and getting into a target isn't make-or-break for IB anyway.

If there's one reason IB has a few extra rich kids, it's because their parents were savvy enough to teach them that getting practical experience out of school (like IB) is a wiser move than getting a law or masters degree. I feel like the allure of the prestigious-but-worthless graduate degree is mostly a practical joke on the lower middle class, and some rich kids are wisely steered away from that trap.

 

My parents didnt go to university. I made it into a target school without even knowing it was target (that was a very lucky point in my life, as I wouldnt be in same place right now if I had gone to local college). I had really good grades in high school and went to visit the campus and though it was awesome so went for it despite all my friends staying in my hometown.

In my second summer I went back to my hometown to work a construction type job to make money to help pay down some tuition debt. I distinctively remember seeing some of my university friends updating their Facebook job profile with places like Merril Lynch and thinking "wow they are working as tellers for the summer, that must suck and they must not be getting paid very well".

Anyways I didn't learn about investment banking or private equity until my third year since wasnt very involved in anything school related because I was working a part time job to help pay for tuition. That being said, I can see how coming from a rich family/family that knows something about the business world can give a huge edge.

 

"biggest predictor" needs context. I'm guessing that wherever you got your info, they were using an early age.

If I looked at predictors of career success for 22 year olds, I'd say where you finished college, your GPA and probably your major are going to tell me more than your parents income, and certainly more than their education level.

If I looked at predictors of career success for 25 year olds, I'd say current income tells me the most and college GPA/school still tells me a fair amount.

If I looked at predictors for 30 year olds . . you get the point.

Age is just one bit of context that would be important to understanding what you're citing. In general, saying parents education/wealth is "the biggest" factor (arent these two separate factors?) just seems fluffy to me.

 

On average, yes. But banks/PE love a rags to riches story if the person presents themselves in a promising way. It’s on you to convince them.

I grew up in North Dakota and went to a high school where less than 50% of the kids went to college. Those that did went to a shitty state school and continued to work minimum wage jobs after they graduated. You need to grind it out and sell yourself. If you have the promise, banks will pick up on it. But it’s on you to sell that to them. Once you’re in you’re a golden child. It isn’t easy.

 

Similar situation here. Family wealth does play a huge part in getting into investment banking and would definitely make the journey whole lot easier but not being born into one does not mean that you stand no chance at all.

I grew up with my family's income at the bottom 10th percentile of the nation's but here I am about to start my analyst role at a BB in a few months' time. And I am sure there are other many living proofs here that it's possible.

You just got to have that fight in you.

 

In my opinion it depends. My personal experience, I didn't come from a particularly "rich" background and not a single person in my family was in finance or anything even tangentially related. It was definitely luck that I went to a target school, I just happened to live nearby to one so that's where I went, got grades in the top 1% of my university class, worked a couple internships tangentially related to finance, worked a ton on my resume/cv and interview prep, applied super early and ended up getting multiple offers from the largest banks in the city of my choice.

There was pretty much zero planning involved. I had a friend from class who went into IB and when I was hating one of my internships I decided I wouldn't work like a slave for slave wages, so I switched to the IB path and had a job 8 months later.

 

Rich/privileged kids have an easier time breaking in. The ones who manage to STAY in and climb to the top are the ones who are the hungriest, which can be but are rarely the ones who came from said wealthy background. So while a rich kid has a higher success of getting that analyst job, if you manage to break in from a working/middle class background, your chances for great success are much higher than theirs. This goes beyond just finance.

 

Hmm, not necessarily I'm Nigerian and my parents immigrated to this country.. Busted there tail to send me to prep school, went to a non target collegebut I did play D1 football, and I got into IB. By no means were my parents rich.

 

How did your parents know to send you to a prep school? My parents are European immigrants and in our country prep schools don't really exist, is it the same in Nigeria? Even if my parents had extensive knowledge about prep school they still wouldn't send me to one because of how close they always were with me.

 

Also Nigerian. Can relate to this 100% - are you in the US or U.K.?

Nigerians are the 1st or 2nd most educated immigrants in the US with approx. 20% of all Nigerian Americans have completed at least one master's degree. Forgot where I read this but google it.

Nigerian parents (particularly Igbos) are strict as fuck about school and Catholicism lol.

I had a flair for languages. But I soon discovered that what talks best is dollars, dinars, drachmas, rubles, rupees and pounds fucking sterling.
 

Yes, and the reasons for this have even been studied in an academic setting. There's a prof at Kellogg named Lauren Rivera that did some field research with recruiters at various professional firms (banks, MBB consulting, big law firms) and found that hiring managers at these places select for a certain "cultural match" which generally means having some upper crust experience and interests. Interesting stuff which might give some perspective to kids looking to break into these industries. Some of her work:

Rivera, Lauren A. 2012. “Hiring as Cultural Matching: The Case of Elite Professional Service Firms.” American Sociological Review 77: 999-1022.

Rivera, Lauren A. 2012. “Diversity within Reach: Recruitment versus Hiring in Elite Firms.” ANNALS of the American Academy of Political and Social Science 639: 70-89.

Rivera, Lauren A. 2011. “Ivies, Extracurriculars, and Exclusion: Elite Employers’ Use of Educational Credentials.” Research in Social Stratification and Mobility 29: 71-90.

Rivera, Lauren A., and András Tilcsik. 2016. “Class Advantage, Commitment Penalty: The Interplay of Social Class and Gender in an Elite Labor Market.” American Sociological Review 81: 1097-1131.

 

I once read some research that said upper class women were one of the groups LEAST likely to be favored by recruiters at elite law firms - the idea being that women typically marry someone in or above their own social class. Hence firms are reluctant to hire upper class women because they tend to leave the industry altogether after a few years to pursue more interesting but less highly paid work.

Lower class women (nor lower class men) didn’t experience this because it’s assumed they will still need the high paying job. Upper class men didn’t either because it’s assumed they will stay with the firm for the social prestige.

I don’t know if this study was conducted by this same person (will check), but it seems to ring true in my personal experiences.

 

This is correct, and yeah it's the same researcher. She submitted law associate resumes that are almost identical, varied only by gender and certain extracurriculars that would indicate class status. The least likely group to enter the hiring process for elite law firms was the non-upper class men, followed by upper class women, followed by non-upper class women, and followed by upper-class men, who had a very distinct advantage when it comes to hiring.

In a couple other papers she details some of her interviews with cross-industry hiring managers on their hiring preferences, and how they justify recruitment and hiring on the basis of class. It may sometimes be the case that hiring managers have an eye on attrition when they take class into account, but some of the interview excerpts show that it's more about having a social preference for upper-class colleagues.

 

Interesting study and results are not inconsistent with what I've seen (I was a biglaw attorney once upon a time). But I would say the impact of gender and class in law has been rapidly shrinking for decades, to the point where it was barely relevant when I was a lawyer and I'd expect it to be irrelevant today.

In my experience, the biglaw firms are so unbelievably fixated on grades (in summer/entry level hiring) that it's hard to imagine they care about anything else. My class had extreme examples of candidate A with the thinnest possible edge in grades, who is otherwise awful, getting a callback over candidate B who has a 3.8 and is much stronger in every subjective category. Not exaggerating. Imagine Napoleon Dynamite with a 3.9 vs. Don Draper with a 3.8 and Napoleon getting the callback. I swear, I saw that shit happen so many times that it became clear they don't even look at your resume or evaluate your first-round interview, they just do a GPA cut with a razor sharp edge.

The real world eventually sorted things out such that the Dons are now on partner track and the Napoleans are working for the feds or at bucket shops. But it sure didn't start that way.

 

Do the majority of high finance professionals come from upper-middle class backgrounds? Yes. Does that mean coming from a privileged background gives you an advantage when it come to breaking into one of these careers? Yes. However, it DOES NOT mean that your background is a pre-requisite to obtaining these type of jobs. I grew up on a cattle ranch in the middle of nowhere and was the first of 6 kids in my family to graduate from college. I definitely had some things to overcome that a "rich" kid with highly educated parents didn't, but ultimately you can be in control of your own life.

The theory of path dependency is not a rule. You can accomplish things beyond what your past experiences could predict.

 

Largely, yes. There will be outliers of course. Most working class kids have never even heard of investment banking until they’re in college. Kids from wealthier backgrounds know all about it. And most people never really understand it. My firefighter buddy still messages me every so often to jokingly wish me “good luck at investment banking today” (tongue in cheek) - I work for a Risk team at a bank, nowhere near IB but it doesn’t matter to him.

I worked for a WASPy wannabe in college - he was a lawyer by trade but he owned a restaurant on the side - I worked at the restaurant - his 8 year old daughter would tell anybody who asked her that she wanted to be an investment banker when she grew up. (There’s nothing creepier than an 8 year old kid talking about investment banking.)

 

I personally was not a rich kid and ended up in IB BB. That said, it is definitely filled with people who come from more affluent families. I wouldn't say there is no opportunity for those who are poorer, but it definitely is harder to achieve.

Then again, richer kids typically aren't as socially "impressive" when they land these roles, while those who are scrappier and come from poorer backgrounds are usually more applauded. So I think it has a way of balancing itself out.

 

I did ibd @ an EB & I would consider myself on the poor end of the analyst class. Parents made $70k combined pre-tax for a family of 5 in California.

Generally, I'd say most of the analyst class came from fairly wealthy families & about ~15% of the class were kids of clients to the firm. But, don't let this fool you. I hustled hard to get into a Target as a transfer student & I never had a problem 'out-hustling' my competition until I got to my Target school & saw kids from wealthy families + connections & the scary thing - they matched my drive. Very hard to compete with these kids, & separately, I noticed they were the ones filling up the ranks at the most desired groups/firms.

Overall though, don't let this deter you or let you create excuses for not breaking in. I met a kid from the most no-name target in banking & his rank at the end of the year was in the top 5%. I can only imagine the charades he had to go through vs. mine, but every analyst class will have a few kids like this every single year (at least during my 2-year stint)

 

Be mindful of the fallacies. Correlation vs causation, and survivorship bais, etc.

To get a job in banking, you must apply to it. So you must know about it somehow. Maybe your parents told you. Maybe your college mates told you. If you were heads down in an engineering course at a state school in Arizona where your mom works as a secretary and your dad as a yard worker, you have less chance of hearing about it than from your prep school friend in your finance major at Wharton. But how did you even know Wharton existed? Maybe you saw it in TV, maybe a parent or uncle. How did they know? And so on and so on.

It's not about being rich, it's just about knowing what exists and the path.

Note a lot of post-MBA associates might not have even heard of banking or Target schools until they got to their MBA program and started mixing with other kids "in the know" (coming from banking analyst backgrounds). Usually the analysts were from more "in the know" backgrounds than associates from other backgrounds. Also note that the "in the know" analysts are using banking for the 2 year stamp so they can get into a fund (as an analyst), while the associates (if they're realistic) are just entering into a banking career that becomes more about sales than analysis in the long run.

In the spirit of this forum being about making money and not just about getting into banking, I was surprised how many fields / professions make just as much or significantly more than IB and "IB required" paths. Like being the CEO of an SME selling washing machines ($2m / yr salary + $10m post-acquisition by PE fund) or oil drilling, or weed farming, or even now, software programming etc. But being blue collar type industries, the rich kids actually are NOT in the know when it comes to these, and I would expect most people in this forum, being at least somewhat in the know about I-banking, must not have oil rig workers or shipyard managers in their immediate family...

So its not about being rich, it's about being in the know from a young age. Upper middle class kids are in the know about I-banking, law, finance, medicine, etc. from the dinner table conversation --but not in the know on everything that makes you rich.

Perhaps one great disadvantage as a child (rich or poor) is parents not inviting a variety of guests to dinner.

 

Wish I could give multiple SBs to this post, very much spot on.

Also a big driver behind why I'm building an accurate/legitimate career guide site to really help democratise this kind of info because it really is a shame that many otherwise capable kids will never be "in the know".

 

I think there are a lot of upper-middle class kids in I-banking. If you're truly a scion of the upper-class standing to inherent $10M+, I'm not sure it would make sense to kill yourself in IB. I mean--what would be the point? That said, I do know a few VERY rich kids who went into IB and management consulting, but that's definitely not the norm.

There is a huge different between people whose parents make $200k-500k a year and those who will inherit millions. The mentality tends to be quite different. If your parents come from the professional classes, that's naturally where you tend to see yourself. If your parents are successful entrepreneurs, it's easier to see yourself in that same light. And if you're one of the lucky few who come from the landed gentry, I don't suspect you see yourself working a normal job. 'Trustifarians' aren't sitting in some office for 80 hours a week.

The problem is, the really hungry kid who works his ass off but comes from nothing brings no network to the table. You not only have to teach them everything, but even after a decade in the business, they're still not going to have a great network. Their network is essentially always going to be a subset of the firm's existing network. It's unfair, but if some kid spent his life hobnobbing with elites, he has a massive amount of social capital that a poor, hungry kid doesn't.

I think you're imagining that the only characteristics that should matter in hiring are tenacity and intelligence, but that's just not the case. In addition to your intellectual capacity and your work ethic, you also bring a network with you. If you attend a non-target, your network will be weaker than a Harvardian's. The same goes for high school. Let's say you're 22 when you graduate from a non-target. That's 22 years of networking you haven't done. You're starting at a massive disadvantage.

Now, that disadvantage doesn't become transparent immediately. While it may translate to less ease in interviews and less in common with rich bankers, the job of an analyst or associate isn't to source deals. But when you make director in your early 30s, you need to sell something. It's a fucking shitload harder bringing in your first deal than you might imagine. How many CEOs of companies willing to pay investment banking fees do you know? How many CFOs? How many partners at PE funds?

I didn't know any when I started in finance, but plenty of kids do. That gives them an extra year or so as a buffer to close a deal or two when they reach director. The same is true in management consulting. I used to work directly for the CEO of a Fortune 100 company, and I can tell you with certainty that even very senior MDs at major BBs and EBs don't have working relationships with a lot of CEOs. They have a few key relationships that they leverage to make their whole career. If some kid starts his career with a father who has a friend or two willing to help his son, that's a giant leg up.

While it's unfair, if one of the Bushs or Kennedys felt like working for me, they'd have a job tomorrow no matter how dumb they might be because they'd pay for themselves eventually. If you don't bring a network with you, then you need to pay for yourself in some other way. Since M&A isn't exactly rocket science, you can't really be smarter than your competition. At least, you can't be so much smarter than it matters. Instead, you have to outwork your peers and be enjoyable to be around. Conviviality and determination are the meal tickets for those looking to climb the ladder entirely on their own merit.

Initially, determination matters most. Determination will make you competent and will allow you to outlast the sons of greater privilege, but it's insufficient for being a great dealmaker. That is more of a relationship management skill than anything else, which is where likability meets competence. It's certainly possible to thread the needle and outperform your peers despite unlucky parentage, but the path is more difficult and relies heavily on serendipity. Hard work presents you more chances to get lucky, but you could work your ass off and be well-liked your whole career and never catch a break. There's no way to know that going in, though, so there is little reason to worry about competition that you can't do anything about anyway.

 

Probably above-average than most industries. Some people in investment banking, private equity, and real estate are legacy/next generation. I don't think parents necessarily have to be in finance, just relatively wealthy (doctors, lawyers, business owners, etc.). For example, even most doctors likely know what investment banking is, what the compensation is like, what qualifications you need, etc. That's obviously more resourceful then a single-mother (or father) working minimum wage at McDonald's.

To be fair, I have met some intelligent (or at least hard-working) folks that were lower/middle middle-class that figured it out along the way. Make it to a top college/university, and you're surrounded by peers and resources that are extremely insightful. Economic mobility is there, just really tough.

For future generations, its become easier (and getting more so) to be informed earlier on, thanks to websites like WSO and others. You can become an Excel pro by watching online tutorials while still in high school, provided you can bypass the temptation of drinking and partying and shit lol.

 

Hard to tell since I don't work in banking. But my 2 cents - I didn't know what banking/consulting was in highschool. Came from a middle class family, dad in the navy, mom was a govt contractor. I also know that none of my close peers new what banking/consulting was and I think this is a product of my small market/middle class upbringing. My two friends who are currently in banking (met post college) grew up rich. So I would have to agree with the general consensus, on average, there are probably more kids who come from affluent (i.e rich) families.

 

I don't think anyone so far has mentioned the cultural differences between different social classes that go way beyond the upper-middle class' informational advantage some brought up.

There are some highly interesting studies on this subject. For example, one study found that even if you only look at the students at Cambridge and Oxford as a sample size, upper-middle class students were much more likely to land so-called elite jobs such as banking and consulting. In fact, virtually no working class students even at Oxbridge made it into these professions.

Studies like these refute the point that some brought up about upper-middle class people supposedly being more intelligent, more hard-working or more determined. That's incredibly ignorant of both our society's social reality and one's own privileges.

In fact, what has been cited the most as the reason for this phenomenon are cultural differences between classes: the way you speak; the way you dress; the way you navigate certain social interactions such as high-class restaurants. I highly recommend watching J.D. Vance's TED talk about his experiences at Yale Law ("America's forgotten working class" on YouTube -

). Or this article about dress codes in investment banking that seem natural to us, but are cultural and specific to the professional class (https://www.cnbc.com/2016/09/01/wearing-brown-shoes-could-lose-you-a-ba…).

Of course, these factors extend into other areas of life including college admissions. Harvard College has roughly as many people from the top 0.1% than from the bottom 20%. The truth is, if you are not from the professional or upper class, then the odds are against you. Yes, you can make it if you're from the working class. No, not every upper-middle class kid has it easy. (And most kids on this board surely work hard to get into IB, that's why you're here.) But at the same time you have to acknowledge that many people end up in elite colleges and investment banks almost by accident, simply because they followed a path that was laid out for them without screwing up too much. That doesn't happen for a working-class kid. Ever.

So, please, make sure you understand your own privilege. There's nothing wrong with it and you don't have to feel guilty. However, don't make bullshit assumptions that you only made it because you are so incredibly hard working and all the working class peasants are dumb dumbs who prefer to smoke weed all and aren't intellectually capable of pursuing banking; or how banks are so smart not to hire them because 10 years down the line they might lack the network (as if anyone cares about your network as an analyst). If you made it to a top school and are so clever, then at least take a sociology class.

 

I'd pin good parenting/upbringing as a more primary factor than wealth. Growing up in a household that is well-informed, irrespective of social class, is crucial in indoctrinating high goals and promoting awareness of how the world works. That said, being well-informed/in-the-know (from the parents' perspective) is generally correlated with high income.

My siblings and I grew up in a middle class (maybe just barely upper middle class) household in a suburb in the south. When I look back, it's those subtle moments of my dad somewhat jokingly saying "if you get into Harvard I'll buy you a PC" when I was 10 or "I don't see why you can't work for Bain" when I was in high school that really stuck with me and catalyzed my internal drive.

 

No. I have witnessed very few truly rich kids (family with $10mm+ net worth) in banking. Why the f*** would these rich kids work 100 hour weeks as scum of the Earth analysts if their family already had money?

The vast majority of people working in banking, especially those that make it to Associate and beyond, come from middle class or upper middle (less than $2mm net worth, on the coasts at least) families.

 

especially how accelerated recruiting is nowadays, its even more likely that investment bankers came from parents with the same social class. Target Schools almost all have 'feeder schools' which are some type of private school, and there's no way to navigate that system without one parent at least giving a shit about their kid's education

 

OP, investment banking is full of investment bankers - that’s all that matters

 

I think most people in banking jobs "had it easier than others" or certain advantages. They were most likely born in a Western nation, had the opportunity to attend the right schools and eventually even the chance to go to college. This process in itself is a huge privilege many others will never have.
Have I met kids from very wealthy families? Yes. Are they in the majority? No. Very few come from families so wealthy that the kids wouldn't have to work. Most are middle- to upper-middle class families with smart, ambitious kids who put the work in and earned their seat in the companies.

National Suicide Prevention Lifeline  1-800-273-8255
 

Wall Street Oasis and LinkedIn have changed the game for kids born 2000 and after. Even if you have private school and 100% grades in top classes you can’t get accepted into university Business schools in the right Business centres (aka targets) So the hurdles pre-WSO were and some still are:

1) geography to get into a target school (which is just a university closest to IB firms- look at every top rated school that’s all they are and same curriculum). (Switch universities part way through 4 year bachelors)
2) money for studying aboard (debt for you)

3) knowing what a target school (WSO helps if you find the website)

4) knowing what IB is and why you want to do it (WSO helps if you find the website)

5) connections (can be made through rich uni friend’s parents)

6) getting good grades in uni coming from an average public school (up to you)

7) money for 2k+ interview suit ensembles (debt)

8) having parents who are supportive (free)

9) having friends/peers who are supportive (free)

10) interview skills (uni programs)

So there are a lot of hurdles but you can get over them with knowledge of how to. The chances of someone getting over these hurdles are extremely small.

Im not in IB and even still 30% of my peers are international elites (all in PE now). 50% had university educated parents that tried to get them into tier 1 positions from birth (knew which path they wanted to go-consulting,PE,IB,etc.). 20% (I fall into) were the first university educated person in their family/3rd world country kids/non-targets (worked very hard and some made it to tier 1).

Commercial Banking Banking Ape
 

In short, yes most kids that work in banking probably come from (statistically) the upper middle class or the “rich”.

Growing up rich certainly helps, most importantly you’ll probably hear of banking earlier and understand what steps to take in order to secure a banking job at a much younger age compared to someone who did not grow up rich.

In my opinion just simply understanding what is required to get into banking is probably the most important piece of information. The earlier a candidate understands that, the better chances they have.

Personally, I had absolutely no idea what banking was until my last semester of college. I missed the boat on the traditional paths to break in, so had to do it the hard way. I didn’t break in until I was 3 years out of undergrad (25), but nonetheless I figured it out thanks to WSO.

Other thing I’ll say is that just because someone grew up rich doesn’t make them a bad person or lazy or whatever preconceived notion you have. Just like someone not be born rich, rich kids are just playing the hand they are dealt. Before I got into IB I had a little bit of a chip on my shoulder/disdain for those who were rich and knew about banking when they were 10 years old or whatever. These kids are just as smart and hard working as anyone else. For the most part, you still have to earn your seat, and once you get the job, based on my experience, your performance is the only thing that matters.

 

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