Why so much focus on prestige in IB?
Why does prestige matter so much in Investment Banking? For example, why do banks care so much about hiring from top schools? From what it seems, the job functions that bankers do can be done by good students from any college. Then why so much focus on hiring from HYPSW and going to the best schools? I understand that's true for any job (every company, not just banks, wants to hire the best) but I feel that this idea of prestige is just a recurring theme in IB recruiting. Why?
Because they want the best people. Image & reputation is everything.
During my career across multiple countries and industries I have noticed that people from "less prestigious schools" may not be as skilled. This can be their network, their family background, their technicals, etc
> I have noticed that people from "less prestigious schools" may not be as skilled. This can be their network, their family background
imagine being considered less skilled than some ivy league limp-dick just because your dad is a blue-collar worker instead of the bank's client
Imagine thinking people who were able to get into ivy league schools aren't generally more intelligent/harder workers
A classic both right, both wrong situation here
I think two key points also haven't been mentioned so far: recruiting capacity and risk aversion on the employer side.
1) Recruiting capacity. Banks only have capacity to assess and interview a certain number of applicants. If you can get significant multiples of applicants for a position (10x, 20x or whatever the number is) just from a few top schools, out of which 5x would be more than qualified to do the job, why expand the search outside those schools? You don't have capacity to interview everyone anyway. I remember when I started in big4 audit in London, there were 10 applicants per open position. One of the ways to reduce the volume of applications to check is school cutoffs and GPAs.
2) Employer risk aversion. Given you can't get to know how a prospective employee can perform until they actually work for you, you try to rely on some signals or prior selections to form a view (apart from the interviews and assessments of course). One common assumption is that, on average, students from top schools are better than students from lower tier schools. This is a generalization, but is used by banks as a way to increase their chances of getting only top employees. That's why networking is key is these jobs if you came from a non-target. The bank has a bit more information on you to go own, making someone who networked well a more known quantity.
And a final point, which can be important at times, people are still more comfortable hiring someone from a similar background, school. For example, I come from Eastern Europe. I can assess very well the quality of a student from my country, without looking at what a certain GPA might mean or random rakings of universities. Someone else in my team might just not even consider them because they couldn't assess the quality of their education or potential skills.
This.
OP - The industry across all verticals is about risk mitigation, not risk taking (no matter what anyone would let you to believe). A big part of that is people like to hire and work with people like themselves.
Your original post could read the same for admission to top schools. Admit rates are low, but admissions officers know and openly admit that the vast majority of applicants "could do the work and be fine academically" at top schools. Similar in banking or most parts of our industry, where at junior levels one is an Excel/PPT/Word/whatever monkey doing basic stuff, that many can be trained to do easily. Banks and others know that most will be weeded out anyway, so who cares?
Disagree with the above posters. I think it comes down to making the bank seem more competent to clients. It’s as simple as that. A large corporate is only going to pay for advice from those who they perceive as a smart group of people. Hence why they pursue advice from EBs and BBs who are on average, mostly Ivy league students.
It’s not so much about the curriculum, but the students. There’s nothing in finance that’s that difficult to learn. People who go to target schools tend to be smarter (better academic credentials at least), harder working, and/or more well connected. All of these are beneficial to working in the industry.
I know a guy who landed a gig at a top BB because they were trying to win over a mandate with a company that had a parent in a leadership position. It’s shocking that this still happens, but trust me when I say it does.