Your Guide to Crack Investment Banking Interview

As a financial institution, an investment bank plays the role of assisting corporations, governments and individuals with securities (IPO / FPO) or raising capital, ancillary services, mergers, acquisitions, derivatives trading, foreign exchange, equity securities and fixed income instruments. An investment bank works in multiple functionalities.

As such, a career in investment banking is lucrative and it begins by successfully cracking the investment banking interview.

This guide is designed to help candidates with informative knowledge for clearing the investment banking interview. It assumes that the candidate possesses the necessary financial background required for the position.

However, even if the candidate does not have finance background, it is still possible to land a job in investment banking. I recommend you this article that beautifully outlines the steps and hurdles along the way.

The Pre-Interview Stage

1x1.trans Your Guide to Crack Investment Banking Interview

Preparation is the key to clear any investment banking interview. Once the elation of landing the interview subsides, it is time for some serious preparation.

1. Research the Financial Institution

A lot of candidates fail to clear the investment banking interview because they avoid researching the financial institution.

It is essential to have working knowledge about the financial institution, its activities, and what they are looking forward to in a potential candidate.

Knowledge and information about the financial institution can be gleaned from their website.

2. Research the Opening

Once the first step is accomplished, move on towards researching the role and responsibilities of the applied position.

Again, a detailed list of role and responsibilities is made available by the financial institution and it is the job of the candidate to dig deeper into the roles and prepare for the interview day. This is necessary to achieve higher success rate.

It is worthwhile to remember that the interviewer has other candidates lined up for the same position and there are time constraints too.

It is not rocket science to realize that the investment banking interview questions are going to crop up from the detailed roles and responsibilities the selected candidate needs to fulfill.

A candidate who is clear about the job’s roles and responsibilities in detail enjoys a higher chance of acing the interview.

To improve chances of selection, practice mock interviews.

3. Invest in Personal Grooming

Presentation matters.

While first impression is definitely not the last impression these days, it still matters.

Inappropriate clothing reeks of unprofessionalism. The interviewer or the panel looks into each aspect before drawing the final list of recruits and presentation features high on their list of attributes. The candidate needs to be dressed for the job.

Both male and female candidates should opt for power dressing. Power dressing imbues a sense of authority, competence and serious outlook. Never wear casual clothes and never be sloppy. Be confident and take ample rest before the D-day.

The Interview Stage

Potential candidates have lost jobs not because they lacked knowledge but due to subtle mistakes they make during interviews. It could be wrong body language, faulty manner of speaking, over confidence or lack of it and many other factors.

In the 1970’s the Journal of Applied Psychology published a seminal paper on Non-Verbal Cues in the Employment Interview where the findings revealed that social skills, the hiring potential of the candidate and motivation levels were seen by the interviewers to be closely correlated.

Let us look into the interview stage in some detail.

1. Professional Knowledge

This, as the term suggests, is all about questions related to investment banking. Candidates should expect both qualitative and quantitative questions.

Expect detailed question-answer sessions on topics like intrinsic valuation, relative valuation, cash flow analysis, case studies, financial instruments and other quantitative or technical questions. Find good resource books and papers online and do rigorous preparation.

As mentioned before, every dimension on the intended roles and responsibilities should be clear before going to the investment banking interview.

Furthermore, the candidate should focus on the resume.  If the resume mentions experience in certain segment of investment banking, get ready for detailed questioning.

Interviewers are most likely to ask foremost from the experience shown on resume and only if the candidate clears the step, it goes on further.

While the technical questions are quantitative in nature, the qualitative questions focus on understanding whether the candidate is a ‘good fit’ for the financial institution or not. Adjudging the ‘good fit’ quotient is extremely important because investment banking entails a lot of group effort.

The candidate should expect questions on leadership, experience stated in resume, the intention behind working in investment banking, expected career growth down the line and analytical competency.

2. Body Language

The overall personality of the candidate plays an important role in hireability. Par excellence performance in displaying professional knowledge will not show any results if the body language or social skills is poor.

A better body language comes with practice; therefore, the candidate needs to constantly work on his or her body language and people skills.

There are many mistakes a candidate makes unknowingly. Here is an interesting find. The US-based body language guru, Patti Wood, says: “Most hiring decisions are made within the first ten seconds of an interview”. If this is true, an interviewee has ten seconds to make a profound impression.

While ten seconds are not enough to judge the professional competence of a person, it is perhaps enough to judge the person on social skills.

If the candidate assumes powerless poses like slouching, stuttering, displaying nervousness or appearing jittery, forget cracking the investment banking interview ever.

Here, the recommendation is to assume a ‘high power pose’ few minutes before the interview begins.

A study by Harvard Business School finds that those candidates who spent few minutes assuming high power pose fared better in the interview and it increased their chances of getting hired. Another significant study of 66 students at the Columbia University produced similar results.

What is a ‘high power pose’? In short, it is an attitude. It is a positive attitude, displayed through posture, which increases the level of confidence, gives an impression of power, makes the person calm and collected – all of these features are necessary while attending the interview.

The high power poses could be standing straight and standing with feet apart and hands on the hips. Avoid sitting with crossed hands, sitting with crossed feet, crossing hands at the hips or standing with crossed feet. These are low power positions that create a negative response in the mind of the interviewer.

Furthermore, it is essential to maintain eye contact and get the handshake right.

Avoiding eye contact is always discouraged. Patti Wood says, “It is about being present and connected to the interviewer. There is research showing that the amount of eye contact an interviewee made with the interviewer while questions were being asked is a key determinant of success”.

This does not mean that the candidate should stare at the interviewee. It means that the candidate should create an environment of connection and alertness while communication and answering questions.

Similarly, there are theories on handshakes. Some studies say a higher number of handshakes improve the chances of success while other studies recommend cultural awareness before shaking hands with the interviewee.

Note what Wood says: “Physical touch is a very important piece to the interview. A handshake has been shown to be equivalent to three hours of face to face verbal interaction in establishing rapport. If you shake your interviewer’s hand, it will immediately make you feel more comfortable and more likable. This is very beneficial in an interview situation”. Shake hands with the interviewer confidently before the interview commences and after it ends.

Lastly, do not keep a ‘plastic’ face devoid of emotions. Occasional smiles are important too.

3. Ending the Interview

End the interview on a positive note.

An investment banking interview is time consuming. As the interview is about to end, take the moment as an opportunity to share doubts and questions to the interviewer. It is common to have questions about the job profile and the financial institution. This is, again, an important practice as it shows that the candidate was present and engaged throughout the interview session. The candidate should not be a passive participant. Once all the doubts and questions are clear, end the interview on a positive note. Pick up the files, shake hands with the interviewer and exit the room confidently.

As is evident, the investment banking interview is not merely about displaying the ability to crunch number and boasting analytical skills.

There are multiple other factors which collaborate cumulatively to get the candidate the desired job profile. Always remember that it is not much about the technical knowledge but factors like body language and communication skills which has a slightly higher importance.

The Post-Interview Stage

Once outside the office or building, exhale a long breath and relax. Get ready for the next round of interviews in the same manner, as explained above. If there is no conclusive response from the interviewer, follow-up after three days with a phone call rather than an email.

Any questions?

How to Make a Career in Top Boutique Investment Banks

1x1.trans How to Make a Career in Top Boutique Investment Banks

Since investment banking is such a hot topic of discussion among finance aspirants, I thought of taking this discussion to a detailed level.

It is important for us to know what various types of investment banks are available out there.

In this article, I am going to tell you about top and best boutique investment banks around the world. But, before we get into specific details, let us first understand what exactly these boutique investment banks are.

 

What Is a Boutique Investment Bank?

Investopedia defines boutique investment banks as – “A small financial firm that provides specialized services for a particular segment of the market. Boutique firms are most common in the investment management or investment banking industries. These firms may specialize by industry, client asset size, banking transaction type or by other factors to address a market not well addressed by larger firms.”

In simple words, boutique investment banks are small firms that offer services related to a specific industry or niche area. They are much smaller in size and revenues when compared to the mainstream large investment banking firms. They offer customized services to its clients and can cater to very specific needs of the customers.

Boutique investment banks typically work on the sell side of the domain rather than the buy side. Most of these firms are start-up companies usually owned by ex-investment bankers with some experience in large investment banks. These banks are a great place to start your career and getting acquainted with investment banking.

Below is the list of top boutique investment banks in :

 

NYC:

-          Akin Bay Company

-          AGM Partners LLC

-          Barman Capital LLC

-          Brocair Partners LLC

-          Chardan Capital Markets, LLC

-          Charles Morgan Securities, Inc.

-          Dynamica, Inc.

-          DZ Financial Markets LLC

-          Fieldstone Private Capital Group, Inc.

-          FinanceNYC, LLC

-          GLC Advisors & Co., LLC

-          Hyde Park Advisors, LLC

-          Junewicz & Co. Inc.

-          Lighthouse Financial Group

-          Lightstone Securities, LLC

-          Merchant & Schumacher Associates, LLC

-          Mercury Capital Advisors, LLC

-          Torreya Partners LLC

-          Touchstone Group, LLC

-          Walsh Manning Securities Inc.

-          Winchester Realty, LLC

-          Wynston Hill Capital LLC

-          XT Capital Partners, LLC

San Francisco:

-          Jefferies

-          San Trust Robinson Humphrey

-          Headwaters MB

-          Viant Capital

-          Pharus Advisors

-          Stifel Nicolaus Weisel

Chicago:

-          AG Becker & Co.

-          Arnstein & Company, LLC

-          Blackmore Partners Ltd.

-          Blackwater Capital Group, Inc.

-          Chicago Investment Group, L.L.C.

-          China-America Capital Company, LLC

-          Dresner Partners

-          DSI Global M&A

-          Fort Dearborn Advisors, LLC

-          Gardner Rich & Co.

-          GTR Partners

-          Hamptons International

-          Healthstrat Capital Advisors, LLC

-          Houlihan Capital, LLC

-          Iliad Avenues, LLC

-          Performance Trust Capital Partners, LLC

-          Plaisance Advisors LLC

-          Resource Financial Corporation

-          River Branch Capital LLC

-          Stout Risius Ross, Inc.

-          Sustainable Capital, LLC

-          The Alliance for Corporate Wealth LLC

-          The Biotech Capital Group

 

Boston:

-          3LP Advisors, LLC

-          Adventum Group, Inc.

-          Aeris Partners

-          America’s Growth Capital LLC

-          CFBDS Inc.

-          Chestnut Securities, Inc.

-          Commonwealth Capital Advisors, LLC

-          Consensus Advisors LLC

-          Consilium Partners LLC

-          Copley Browne, Inc.

-          Corby Capital Markets, Inc.

-          Covington Associates LLC

-          EnCapital

-          Envoy Advisors

-          G2 Capital Advisors LLC

-          Game Plan LLC

-          Gordon Associates, Inc.

-          Gryphon Management Company, Inc.

-          Northstar Global Partners, LLC

-          O’Conor, Wright Wyman, Inc.

-          Prevail Capital, LLC

-          Progress Partners, LLC

-          Provident Corporate Finance, LLC

-          Thornton Group LLC

-          Trudeau & Trudeau Associates, Inc.

-          Versailles Group, Ltd.

Houston:

-          Corporate Finance Associates

-          Howard Weil

-          Mike Adams Enterprices

-          Mills & Stowell

-          Tudor, Pickering, Holt & Company, LLC

Washington:

-          Jefferies Quarterdeck

-          Friedman, Billings, Ramsey & Company

-          FBR Capita Markets

-          McLean Group

-          Newman & Associates

-          NorthMarq

-          The PFM Group

-          PRC Grpup

-          Monticello Capital

London:

-              Ambrian Capital

-              Arma Partners

-              The Blackstone Group

-              Boenning & Scattergood

-              Brewin Dolphin

-              Brown Brothers Hariman

-              Climate Change Capital

-              DC Advisory Partners

-              Hawkpoint

-              Evercore Partners

-              Evolution Securities

-              Execution Nobel

-              Glaecher Shacklock

-              GCA Saavian

-              Harris Williams & Company

-              Houlihan Lokey

-              Liberium Capital

-              Moelis

-              Panmure Gordon

-              Perella Weinberg Partners

-              Piper Jaffray

-              Seymour Pierce

-              Thomas Weisel Partners

-              William Blair & Company

-              McQueen

Boutique Investment Banks Internship

As I have always stated in all my articles related to finding jobs and building a career, getting into a firm as an intern is the best way to do it. Finding an internship in a boutique investment bank and in a bulge bracket investment bank are two different ball games all together. Following is the list of most commonly observed differences:

  1. Deal size – Usually a large investment bank will strike a deal of millions or even billions of dollars at stake. While a boutique bank will hardly ever touch a few million dollars.
  2. Number of employees – When a bulge bracket investment bank will have offices around the world at multiple locations, a boutique investment bank would often work out of a few locations with a very small staff.
  3. Responsibilities – As an intern, you will have a very few task and responsibilities in a large investment bank. While in a boutique investment bank you could have a lot of responsibilities. There is a flip side to it as well. Sometimes you might also end up doing really basic work in boutique banks, with minimal learning. But in such cases you can always demonstrate your potential in the initial days and demand more complex work.

 

You should adopt the following strategy to apply at a boutique investment bank:

 

  1. Create a focused resume – As against a bulge investment bank where the clients are from across industries, boutique investment banks operate in a niche segment. You can highlight your interest or expertise in that niche area to enhance your chances of getting a shot at the investment banking interview.
  2. Personal application – Large investment banks would usually accept only online applications, but a boutique investment bank might not even have a section of internship careers on their website. It does not mean they would not have an opportunity of internship to offer. In this case a better strategy is to drop by at the office location and submit your resume. Trust me more often than not it works wonders.
  3. Extensive networking – Large investment banks have umpteen number of employees available on LinkedIn and other social media websites. But for a boutique investment bank the number of people available there will be far less. In order to network with such people you have to work a lot harder. Again personal visits and telephonic conversations have proved to be very fruitful in my experience.

Boutique Investment Banks Salary

The salaries offered at large bulge investment banks are obviously more than small boutique investment banks.

At times the difference can be 50 per cent less. But in terms of satisfaction levels, people working in boutique investment banks are better off when compared to the bid guns.

The working hours usually do not go beyond 60 to 65 hours in a week, and there is hardly anyone who works over the weekends (unless there is a deadline for submission or completion of task).

Following is a comparison of salaries offered at various levels in bulge investment banks as against boutique investment banks:

 

1x1.trans How to Make a Career in Top Boutique Investment Banks

Why Prefer Boutique Investment Banks for Career?

Well, this is a million dollar question. “Why should I choose a smaller firm to begin my career if I can work at a large firm with better compensation?”

There is no right or wrong answer for this particular question. It all depends on the perspective you are looking at and what are your expectations from life and your career. But in my opinion following are a few short term and long term advantages of choosing a boutique investment bank over a bulge investment bank:

Short term benefits

 

  1. Ease of getting a job – Since the global slowdown, getting jobs has become much more difficult and demanding than ever before. Large companies are fighting for survival and the operating margins are narrowing. Not many big companies are willingly taking up new recruitments so as to curb costs. Whereas smaller firms are not that much affected by the slowdown. It is partly because their overhead costs are still in control and they can afford to add more staff at reasonable salaries.
  2. Location preference – Most of the boutique investment banks have 1 or 2 offices. If you have a location preference you can apply to one such firm where your chances of moving around are very less. People who have recently started a family, or people with health obligations usually have a location preference. For such people boutique investment banks are an ideal place.
  3. Steep learning – Since the size of the company is typically small, there more chances of you getting more responsibilities at your position. In the beginning of your career you will be exposed to situations that are extreme and result in steep learning for you as an investment banker. You would not feel like a cog in the wheel in a small firm which you otherwise would in a bigger firm.
  4. Better to be a bigger fish in a small pond than a small fish in bigger pond – As this famous saying goes, whatever little you contribute to the cause of the company it will be recognized and appreciated. You will get more visibility in the company and the chances of you getting promoted and getting better work are a lot higher when compared to large investment banks.

 

Long term benefits

 

  1. Expertise – Since you will be operating within a specific domain and a niche, you will gain domain knowledge and expertise. At a large firm you will be working on multiple industries and verticals, whereas in a boutique firm you will be engaged in one particular industry. Your learning of that industry can mould your career and take you places in the long run. In a large firm you are unlikely to work on an industry for more than 3 to 4 project. But in a boutique firm, within a span of 5 years you would have worked on more than 10 projects (assuming one project lasts for about 6 months or so).
  2. Work culture – In a smaller firm, the work culture is more flexible and gives you an opportunity to adapt yourself to different situations. If at a later stage you decide to make a shift and join a bigger firm, it would be easier for you to adapt to its work environment when compared to a transition which is the other way round.
  3. Learning from the masters – You are likely to report to and work directly under the industry experts with a lot of experience. You can learn a great deal working with these people. In a large firm the opportunities of interacting and working with the higher management are minimal.
  4. Job security – There is a lot more job security in a smaller firm when compared to a large firm. There were more than 10,000 job cuts in large investment banks in the last 10 years, whereas this number is insignificant in the case of boutique investment banks.

 

Boutique Investment Banks Trends

Due to the global slowdown and economic crisis of the recent times, the influx of boutique investment banks has multiplied in the last few years.

Big shots from the large firms (who are not too secure about their jobs and growth) have branched out by opening their own firms. By doing this they have been able to snatch a few big client from the large investment banks.

According to the Wall Street Journal, the share of the U.S. M&A market held by those firms has fallen to 79% in 2011, from around 89% in 2001. The drop was even steeper in Europe: 64%, down from 76%.

This trend is expected to continue in the future as well which will result in setting up of more boutique investment banks in the industry.

I hope this article gave you enough clarity on the top and best boutique investment banks, and the advantages of working in these smaller firms. In case you have any questions or suggestions, please feel free to write back

 

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