Investment Banking Recruiting is a Flawed Model
Ignore my title - worked in IB as an analyst before lateralling out to CRE. Hear me out first.
Why do investment banks emphasize recruiting 21 year olds right out of college for analyst roles instead of sourcing talent from big 4/other financial firms that have talent trying to break in? When I was in IB we had a combination of analysts recruited right out of undergrad, usually through our SA program, and analysts who were lateral hires through big 4 advisory/relevant companies in the industry my group covered. The analysts who were lateral hires almost always were:
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older and more mature
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better excel and soft skills
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committed to being bankers, and not just doing it for a year before bouncing out to PE
These lateral analysts generally performed much better than the ones (myself included) who went into IB straight out of college. They were much more mature, willing to put the hours in, and had much less of an attrition risk comparatively, not to mention vastly better excel/powerpoint skills from having worked full time for about two years prior.
Why do banks place more emphasis on hiring college kids who won't stick around for the long run and are generally less mature? Curious to hear both sides. And you can't convince me that its because these kids are "more talented" - from firsthand experience going to a target and being directly recruited did not make a difference between turning those CIM edits on time, if anything those kids were more arrogant (myself included).
Same reason as why many other professions hires kids out of college and doesn’t just hire experienced professionals.
Find me another profession that pays 22 year olds $150k+
A lot of STEM-related fields (SWE, quant finance, data science, certain segments of engineering), even consulting is getting close to $150k all-in with the new raises ($115k base + $25k EOY bonus).
There are far fewer of these exceptional laterals than you think. The reason you see really motivated, outstanding laterals is that it's a tough path to get to IB, and only the top handful of candidates are really able to network and lateral successfully. If you made this path easier you'd likely see a bunch of middling candidates who struck out of college recruiting for a reason, instead of just being too late for SA recruiting like many successful laterals. Big 4 TAS or a LMM bank are very viable paths for a top lateral to get to IB, but you can't tell me that they are generally exceptional pools of talent. More like a stopping point for a great candidate on their way to the BB.
Yes college kids can be immature, but analysts are really a commodity to the banks. They just don't need the #1 draft class every year to close deals, kids who are smart enough are just fine - this is not rocket science. College recruiting is very streamlined and easy for the banks and you can also use the internship as a trial period.
I agree with pretty much everything you said. I was very involved in BB recruiting and it was already a jamjob despite being one of the most streamlined bschool processes.
I also think part of it is that fresh grads often have less sense of the world, their relationships/priorities, etc. so it's easier for banks to mold them into shape working 100-hour weeks in sometimes toxic and disfunctional hierarchies (not a dig on new recruits by any means - I think for the young analysts recruiting out of top schools, the world is your oyster, professionally. Just easier to crank for years if you don't have a wife/fiance/kids/decades of vices).
Then there's the upside of keeping strong relationships with those prototypical analysts as they move on to PE.
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