Understanding How the Referral System Works
The first goal, and often the hardest, in obtaining an investment banking job is to get an interview—a difficult proposition in general, particularly for job candidates not coming from a core recruiting program (this process is discussed at great length in the previous Chapter of this guide). Simply applying online by submitting a resume to an investment bank means next to nothing in this day and age — Bulge Bracket banks are inundated with resume submissions each day. In fact, while it is required that candidates apply and submit resumes online, some banks don’t even check this database at all in their investment banking recruiting efforts. Street of Walls estimates that large investment banks receive as many as 20,000+ job applications (resumes) online for investment banking roles each year.
Along these lines, during 2011, Goldman Sachs released some recruiting information that was incredibly eye-opening:
“Almost 300,000 individuals applied for full-time positions at Goldman Sachs for 2010 and 2011. We hired fewer than 4% of that population, and, though most had multiple offers, nine out of ten people offered a job with us accepted.”
—Goldman CEO Lloyd Blankfein
300,000 applicants is an incredibly high number. Assuming that most of the submitted resumes were US-based, it means that about 0.2% of the entire U.S. workforce is applying to Goldman Sachs each year.
In order to differentiate themselves from these tens of thousands of resumes, it is almost imperative that investment banking applicants nowadays have solid internal referrals from current employees. The Human Resources (HR) department rely on referrals in order to cut down on the thousands of candidates seeking first round interviews.
Setting up an internal referral is all about disciplined networking. Because the referral must be made proactively by somebody currently at the bank, it does take some effort and risk on their part to contact HR (the risk comes from the possibility that their referral of a candidate will work out badly, and make them look bad as a result). Because of this effort and risk, candidates will need to spend extensive time developing relationships with bank contacts to get the referrals they need. That comes through disciplined networking, which is the primary focus of this Chapter.
Effective Opportunities for Networking
Even in this digital, high-information, telecommuting age, it still remains true that one of the best ways to land a job within investment banking is through face-to-face contact. In New York City, for example, it helps tremendously to use every possible opportunity to get to New York for any event related to finance (including jobs and internships). This will make your networking task much easier. One way to do this is through networking and recruiting events: there are dozens of full-time investment banking recruiting events held each summer in New York not only for current interns but also for other candidates looking to learn more about the job opportunities at the bank.
As mentioned earlier, other financial analyst jobs (especially internships while in school) can help you tremendously with this networking effort. If you find yourself having trouble landing an investment banking job, look at these related fields as well:
- Equity Research
- Sales & Trading
- Management Consulting
- Private Wealth Management
- Private Equity
- Hedge Fund
All of these jobs will allow you to capitalize on being in the geographic area and working in related fields, for the purpose of investment banking networking. While in this position, try to set up informational interviews/meetings with investment bank HR professionals to discuss how the bank executes its hiring process and specific recruiting timelines. Also helpful is having coffee, dinner, or drinks with employees currently at the bank—especially if they are currently in the investment banking division. (Please note, however, that junior bankers may be hard to pin down for a face-to-face meeting—if only because they work so many hours!)
Break into Banking Using Your Alumni Network
Students and young professionals should take advantage of as many resources as possible in order to secure interviews and hopefully full-time positions. One of the most effective and, interestingly enough, most overlooked resources available is alumni networks.
Accessing Your School’s Alumni Network
Alumni networks are structured and operate differently at every school. Some have internal lists at their Career Resource Centers while others will have their own online alumni network bank, similar to a LinkedIn system but built and maintained by the college specifically for networking.
School alumni networks will have mechanisms available to contact alumni in your area of interest. For example, some schools allow current students to look up current investment banking employees from your school directly. The best suggestion is to visit the online Career Resource Center for your school or give them a call directly: they will know exactly the best way to network with alumni in your field of interest.
Reaching Out To Alumni
Once you have learned the ropes of finding and sourcing alumni contacts in your area of interest, it is time to start building relationships with them. Just as we discussed earlier, internal referrals are very hard to get, and employees rarely will stick their neck out for candidates unless they feel very comfortable doing so. Therefore, you need to let them get to know you.
That said, in general school alumni are loyal to upcoming students from their alma mater, and will be willing to help in some way. Often the best way to contact them is to send an email or call them, asking for career advice. Here is a suggested example introductory email:
My name is [Candidate] and I’m a current student at [college]. I received your contact information from the school’s alumni network within the Career Resource Center and I am writing for career advice. I have been devoting a considerable amount of time to learning about the [Investment Banking] industry and would love to talk with you to get your perspective on the industry, and get advice on my job search process. If you have time, please let me know if you’re available to speak.
[Name] & [Contact Info]
Making these inroads with industry contacts is extremely important and valuable in your job search process. You should plan to spend a significant chunk of your time building these relationships.←Investment Banking Job InterviewInvestment Banking Resume→