Investment Banking Recruiting allows underclassmen to get exploited and doesn't do anything about it.
You're a bright-eyed college freshman, and you already know what you want to do with your life. You want that prestigious job at an investment bank, with your sights set on only the top groups of the most elite EBs and BBs. Luckily enough for you, you're ahead of the curve, already joining your school's top clubs and practicing your technicals. There's only one thing separating you from that dream job: experience. So you run to your nearest job board and start applying to all the internships remotely related to finance. You wait some time and the interviews start rolling in you get one at Red Rock Advisors, a boutique investment bank. One at Ocean Capital Management, a private equity firm!
You end up crushing every interview, and each interviewer reassures you about how much they value their interns. They told you you'd get to be on deal teams, they'll teach you modeling, and more! You don't even have an offer yet but you're already excited about the experience you're going to get. Maybe you'll even be able to get an even more prestigious Megafund internship and go straight to the buy side.
You finally get the offer and reaffirm your commitment to work there. They say they can't pay you but why does it matter? The experience is much more valuable! You start next week, and it feels like all your dreams will come true.
On your first day, they give you some simple work to do, emails, and writing. It's not fun but they tell you that you'll get more hands-on work later. After three weeks, they have you email-blasting founders begging them to sell. After six weeks, you realize that you won't ever get any meaningful work and don't even ask. At least they gave you access to their company drive and you can see the LBO they created over six months ago. As the semester comes to a close, you decide to quit and look elsewhere. You write down on your resume that you sourced 5 deal opportunities and built 17 models. You didn't actually learn anything about Private Equity but it's another line on the resume.
This is the reality for 90% of underclassmen internships. They're unpaid, don't teach you anything, and prey upon students who are desperate to break into banking. I've looked through some of these companies on LinkedIn and they can have over 50 interns at a time. And with the high competitiveness of a high finance job, many students don't think they have a choice but to go through these internships. Legitimate opportunities are rare outside of top targets and diversity programs, and even then extremely competitive. Even some legitimate companies have bullshit internships that take advantage of students.
This has created a big problem in recruitment because it's either brushed off completely or can even lower the value of students with actual experience. I was fortunate enough to have worked a legitimate internship that was paid and where I did actual PE work, but many just assumed I was a sourcing monkey because they don't take semester internships seriously. Despite this, having 4 BS internships where you learned nothing is better than one singular legitimate internship. As long as people take these jobs seriously, students will continue to be exploited.
Damn, can relate to this so well. Worked 3 bs, unpaid internships before finally landing a legitimate one (MM IB in NY this summer). First one was basically just industry research, second one as well, and last one was sourcing + building a couple simple CIM's/LBO's for internal presentations.
As someone with multiple unpaid IB/PE internships, can say that they paid + in-person ones are usually legit and you won't be just email blasting all day
So the take ways is don’t be a goof off in high school and go to a real college?
This applies at most schools though, maybe not as much at a Harvard/UPenn/Stanford but other targets definitely have this problem. It also heavily depends on region.
So you're telling me at a regular target (as opposed to the handful of super-targets) the difference maker is going to be quality of underclass internship experience? I thought that would still come down to grades and interview performance more than anything else.
I go to a target (non-diversity) and I had to do these BS internships starting my freshman summer to break into a FO role at a BB. My friends who succeeded in IB/ER/PE recruiting did the same. It seems like everything is a catch-22 nowadays: for a well-paying entry level job, they want prior experience, but they won't let you have experience without prior experience. In dating, you are de-facto expected to have prior dating experience (you are expected to know what to do), but it's hard get into a relationship without prior experience. Even when trying to join a hobby/interest group, you are often expected to have prior knowledge of the hobby despite having no experience. There's nothing to do about this without gritting your teeth and putting in the hours.
You’d learn a lot more about the industry through classes, clubs, and online courses than doing de facto data entry.
I was doing all those things too but during the interviews for my current internship, my past BS internships were what the interviewers discussed. These internships still have a great deal of signaling value (show you can grind and know at least something about the real job) and help you stand out when every other applicant is in finance clubs/classes.
Wow recruiting in America sounds brutal. It's nothing like that in the UK... I've seen people from targets getting IBD Summer Analyst positions after having previously worked at Tesco, or M&S or something like that. I got mine with only 1 proper "work experience" (retail) that I didn't even include on my CV. Most of my stuff were just experiences built up at university.
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Reality check. Anyone offering you an internship is essentially doing you a favor, which you are free to take or reject. At no employer do interns actually provide needed services of value ( hint-work does not get busier in the summer). At best interns are a fairly low-cost recruiting tool which do not take up too much management time and provide a look at future hires. Understand that they tolerate your presence accordingly, and choose to learn what you wish
It's dishonest. You either recruit some interns because you need help with some workload (so they are a de facto employee) or you just simply don't recruit.
The shops out there recruiting interns without paying resemble when someone offers their help, they start doing it, and then you tell them "but I didn't ask", you use them and you don't even show recognition - which is exactly what those shops do.
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High finance is less like a job and more like an apprenticeship. You're getting credibility, access, and network. Internships are what you make of them, if you show yourself useful, and don't fuck up basic stuff, you'll get pulled into more interesting stuff and build some good will when it comes time for recruiting. my 2c.
I totally agree with everything in this post. I see so many kids with “Private Equity Analyst” roles on their LinkedIn where they’re just rotting at a Search Fund. I genuinely think these unpaid internships are generally exploitative and at best a waste of time. Thank you for shining light on this and I hope more companies wake up to what these unpaid internships actually entail.
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