What's the benefit for a bank to have summer analysts?
Might be a dumb question but genuinely curious. What's the point of banks having summer analysts that can't do shit, and then taking them as analysts that still can't do shit for a decent amount of time? Especially the larger PE firms that are having analyst classes of kids that they have to train for months until they get value from them. So many kids leave after 2-3 years as well. Just wondering.
SA's are bank's pipeline for full-time recruitment, that's their benefit. Not everyone leaves banking, many do stay (especially those in product groups like DCM, ECM, and such), so it's a worthwhile investment. Plus SA's are cheap for the bank.
Not sure what firms you interned at but usually if it's a reputable shop the intern program is pretty rigorous. It's a good way to culture-check future analysts (something hard to assess in full-time interviews) and it is a good way to ensure your future analysts will understand how your firm works. It's one thing to ace technicals, it's another to prove you can actually succeed on the desk - even if only for an internship.
Plus the expenses for a SA program are negligible to the firm and even if they just push papers and do basic modeling they are still saving the analysts valuable time.
Cherry pick talent for peanuts.
I remember at a few banks hearing the costs of recruiting an Analyst on avg is in the tens of thousands, when accounting for campus visits etc. SA's help keep mediate some of those costs down.
2 months long interview. You can eliminate people that have showed up well in interviews and do bad in the office.
Also, it’s an industry point. Same as buy side recruiting in the US: if your competitors do this and you don’t, you’re left with candidates who didn’t get a job through summer internship
Hiring staff is an expensive endeavor for any company, even if someone only did the SA stint - there is familiarity and you know the person. Every single headcount you can reduce on your future intake means less fees for recruiters, HR staff, and an existing relationship with that person.
Also, don't forget that college students go back and boast about their banks' brand on campus, the experience they had, how smart their colleagues were, and this will be picked up by other students, professors, by WSO and the college in general. There is a reason why we (and others) hand out merch to these younger folks.
People recognize this and may want to work at, with or invest in these brands going forward. It is therefore a form of marketing as well. Young, active adults are a coveted group for any brand because, in the long-run, educated grads are also among the richest demographic in the nation.
From the firm's perspective, a summer internship is essentially a call option on talent. The firm gets a ten-week trial period to figure out who would be a good fit full-time and who definitely won't, and then they get to exercise their call option on the people who are worth it.
Also, if you think back to your economics coursework, using the summer internship as a trial period also nicely sidesteps the information asymmetry problem where employers don't know whether a candidate will be good or not until they actually get hired.
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