I have only heard standard cookie cutter answers before, and I am curious how best to answer thisquestion.
The Safe "Why Investment Banking?" Answers
Of course, your desire to stand out and leave a strong impression is justified. Interviewers have more applicants than they know what to do with. And yes, they're looking for people that display intelligence, confidence, and certainty in their future career path. But sometimes it's best to stick to the safe answers and just go with what works.
Here is a collection of the best standard responses to the "Why Investment Banking?" question from WSO users.
Broke it down to these safe and logical responses. "Steep learning curve. Result driven environment. Enjoy working under pressure. Significant responsibility.
The best answers would typically be some combination of experience working on big deals,
the caliber of your colleagues, gaining a strong financial foundation, and a strong interest in finance.
Phrased it well when he said, "Stick with cookie cutter -- they are cookie cutter because they work." Don't try to be special or unique; stick to logic and passion.
Detailed Why IB Answers?
While cookie-cutter responses are safe, sometimes a little more substance is appropriate/appreciated.
I want to work in investment banking because I understand it has a steep learning curve and will allow me to establish a strong foundation for valuation, Excel modeling skills, and understanding the XXX sector (or you can use the group, such as M&A transactions). I know the hours will be long, but the time spent understanding and learning about XXX space (again or XXX type of transactions) would give me the opportunity to remain in finance over the longer term.
This answer does a few things:
- You left him 'bait.' Now he will ask, "Oh really? So what hours do you expect?" So you simply answer 80 low-end and 100+ if a lot of going on.
- By mentioning valuation/Excel, you're showing you know what you'll be doing, and you have pitched why it is valuable 'a strong base of skills for *future* on Wall Street'. Why?
- Because you never want the interviewer to think you're interested in anything besides banking."
The Wrong "Why Investment Banking?" Answers
While there are very few "correct" answers, there are plenty answers that are just plain wrong. Here are a few common responses that might sink your interview.
Poor answers to this question would be answers that somehow indicate you are going into the profession to earn large amounts of money or because you eventually want to go to business school/private equity/hedge funds. While all this may be true, you want the interviewer to think that you are committed to the industry even though he/she knows that, more than likely, you'll be one of the analysts that decides to leave after two years of service. As an interviewer, it is better to hear the 'reassuring' answer rather than the brutally honest one, even though the interviewer knows you are being political.
Stick with the standard answers. Don't say anything about client interaction. Period. Every candidate I've ever interviewed in the first round that progressed to the second round, and every candidate I've ever interviewed in second and beyond rounds (implying they made it past the first), has given the standard tried-and-tested answers to the 'Why Banking' question. Any interviewer that's said anything about 'CEOs, executives, clients, management teams, and (cringe) the C-suite' are immediate 'this kid doesn't know what we/he will do here' dings.
What If You Are a Non-Business Major?
Had some solid advice for the non-business majors: "Great answers to this question focus on skill-building, networking, and a love for difficult challenges. You want to emphasize that, being a non-business major, you are excited to learn the complex accounting and finance skills involved on the job and eventually transform into an analyst that has potential to significantly impact the group. You also want to relay that you are excited to work with driven, smart, and motivated colleagues and are looking forward to pushing your limits from a work standpoint. You ultimately want to come off as a positive, 'go-getter' type."
Law to Investment Banking
A second year corporate associate outlines why the move from big law to investment banking makes sense for him: "I know that I love transactional work, like working in a fast-paced, demanding environment, don't mind long hours, and eventually want to be the one making the deals, rather than a lawyer/banker who only facilitates them. Investment banking makes sense for me because I could develop valuation/pitching/modeling skills."
Consulting to Investment Banking
If you're interviewing for an entry level junior role, then your response to the "Why Investment Banking?" question could sound something like this, "While I have gained some great experience working in consulting that translates well to investment banking, I feel that I could learn a more useful technical skill set at an investment bank working on live transactions at [XYZ Firm].
For those trying to get into more senior roles post-MBA, a more appropriate response would be, "I like long projects and getting to know clients; however, the transactional nature of investment banking is very appealing to me because you see the results of your work much more quickly. Whereas consulting engagements can last for years, especially when implementation is involved, the average investment banking mandate typically lasts for several months, so you are getting exposed to more scenarios and the learning curve is faster.
Commercial Banking to Investment Banking
Gives those coming from a background in commercial banking some solid advice, "Demonstrate you belong. Given your 'atypical' background, you will have to try that much harder to show you belong compared to your interviewing peers who may already be working at other IBs and looking to lateral. Read up on the latest M&A deals, know your technicals frontwards and back, and show an over-the-top eagerness to break into the industry. In response to the 'Why switch from CB to IB?' question, I recall responding, "Because I look around at 5 pm seeing everyone head for the exit, and I know I have more to offer and want more out of my career than that." May have been cheesy in retrospect, but I believe that's when I won over the interviewer."
Asset Management to Investment Banking
Started your career in AM and want to make a move to IB? Here's some insight on whether or not it's the right choice for you, and if so, how to convince a potential employer you'd be a fit.
If you don't feel you have an actual passion for AM, I would make the switch to IB because it gives much broader exit opps. If you actually enjoy your work in AM and can see yourself in this business for a long time, just stay.
With a background in AM, a strong response to the 'why' question could be, "Although Asset Management allowed me to analyze companies and financials and make trades based on that analysis, where I really feel that I would excel long term is working more directly with these companies and in transactional work.
Answering the "Why Investment Banking?" Question as an Engineer
Looking to make the move from an engineering background to IB? Don't worry you're not alone. From making the decision on what's best for your career path to structuring your interview story, here are some helpful insight from the WSO community.
Coming into an interview with an engineering degree on your resume, you'll have a different set of challenges than most other non-business majors. While proving your ability to learn the technical aspects of the position might be easy, how will you convince the interviewer that you have a passion for banking and the people/communication skills it takes to work in IB?
Start by really asking yourself why you want to make the transition to banking. If you can't think of an answer outside of money/prestige/exit opps, then you'll have to dig deeper because these aren't answers that are going to get you an offer. Standard responses to the question, 'Why Investment Banking?' like 'steep learning curve, fast paced environment, working on big deals, etc.' won't be enough. You don't have a background in finance or banking. You didn't study business in school. You will need to demonstrate an active and passionate interest in the Investment Banking world and effectively communicate this interest to your interviewer.
"What peaked your interest in the industry?
What related classes or self-studying have you done?
How will your current talents translate into the position?
Overall, can you convince someone already seeded with doubt in your communication and business skill set that you not only can work 80-100+ hour weeks in a field you don't have a background in but that you actually WANT to? Stress your commitment to banking, address the doubts the interviewer most likely has head-on, and articulate your 'why' clearly and logically.
Middle Office to Front Office Transition
While making a transition from a middle/back office position to the front office is challenging, it's not impossible. Below you'll find advice from other monkeys that maneuvered through the ranks and get a better sense of how to prove your worth.
Like anything, it's going to come down to showing the right people that you're persistent and you want it. Do well in the middle office, and spend time going to lunch with front office people you meet to learn more about their business.
The best thing you can do is try to maximize your interaction with the Front Office guys. While talking to some of the traders on the desk, my knowledge of derivatives pricing theory came up, and I was invited to interview for a front office position after only being in my current position for a few months. I didn't get the job because of a substantially more experienced internal hire, but I definitely got their attention. I have been working the inside network route, looking for the next opportunity to make the jump.
In short: network, take the exams (it shows you want it), and possibly study. Looking back on my own personal experience, I would also not be afraid to develop a fantastic relationship with your manager and then basically ask them about the possibilities.
As someone in a MO position, there will be less of an emphasis on your response to the 'Why IB?' question and more of an emphasis on 'Why should we give you a shot?'. You'll need to demonstrate not just a desire to learn but actual IB knowledge. Network, learn, be persistent, do whatever it takes to stand out. Depending on the firm you're at, you'll get little to no edge (and occasionally a disadvantage) trying to move from a BO/MO role to FO.
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Interested in Investment Banking - Breaking In
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