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How to Get a Job on WALL STREET
Proven Ways to Land a High-Paying, High-Powered Job
By Scott Hoover The McGraw-Hill Companies, Inc.
Copyright © 2012The McGraw-Hill Companies, Inc.
All rights reserved.
ISBN: 978-0-07-177853-4
Excerpt
CHAPTER 1 GETTING THE JOB
Successful candidates understand what a bank is looking for. They prepare for interviews on a daily basis, beginning well beforehand, so that they can build a base of knowledge on which to draw. In doing this, they prepare a résumé that highlights what they have to offer a bank. Finally, they use the interview to strengthen their case rather than weaken it. In this chapter, we cover three areas. First, we discuss the qualities and characteristics a bank looks for in candidates. Second, we discuss the importance of the résumé along with a few basic pieces of advice. Third, we discuss the dos and don'ts of the interview itself.
AREAS OF FINANCE
The finance world typically is divided into the buy side and the sell side, terms that describe those who are tasked with buying securities on behalf of themselves or others and those who are tasked with selling securities on behalf of themselves or others. The sell side consists largely of units within the major investment banks (e.g., Goldman Sachs, JPMorgan), middle market investment banks (e.g., Harris Williams, Lincoln International), and smaller boutiques that tend to specialize (e.g., Howard Weil, which specializes in energy services). The buy side also includes units within the major investment banks but in addition covers mutual funds, private equity funds, and hedge funds. Commercial banks are also major players, acting as intermediaries between those who wish to save money and those who wish to invest those savers' money. In recent years, several major investment banks have joined forces with commercial banks to create much-needed balance sheet stability. For example, Bank of America and Merrill Lynch merged in late 2008 to form a massive organization with over $2 trillion in assets. In Chapter 4, we will return to this topic by discussing the different types of financial services firms.
HIERARCHY OF A BANK
The hierarchy of a financial services firm can differ from sector to sector and firm to firm but is relatively consistent in investment banks. Generally speaking, there are five levels in banks: analysts, associates, vice presidents, directors, and managing directors. Analysts are the entry-level analytical force of the firm. As entry-level workers, they are responsible for anything their superiors deem appropriate. They typically work more hours than their superiors, with those in investment banking sometimes being asked to work 16-plus hours per day for extended periods. Although most analysts leave the bank after two or three years, the very best of the analyst class are asked to stay at the firm and be promoted to associates. In addition, banks often hire students directly from MBA programs into associate positions. Associates are senior analysts who organize the work of analysts and assign tasks to members of the team. After a few years of successful work as an associate, an employee may be promoted to vice president. The work of vice presidents differs in a significant way from those who work under them because it is at the vice presidential level that interactions with clients become more extensive and more meaningful. Although vice presidents are responsible for managing the associates and analysts, they also interact with clients and potential clients on a regular basis. Put differently, vice presidents are somewhat of a hybrid between the analysts and associates who do the analytical work and the directors who generate business through their interactions with clients. Promotion from vice president to director is often difficult to achieve because there are few directors in relation to the number of vice presidents. In contrast to vice presidents, directors generally are not involved in the analytical process but instead concentrate almost solely on client interactions. Successful directors truly understand the financial world and are highly effective communicators. Furthermore, they have a commanding knowledge of the different tools firms use to achieve their goals. Managing directors represent the pinnacle of the company in the sense that a managing director is responsible for a bank's entire business within an area such as leveraged finance. They organize the efforts of the directors and work extensively with the executives of major companies in an effort to understand their needs and provide for them. As one might expect, directors and managing directors typically earn substantial salaries.
THE EASIEST PATH
Although there are many diverse paths that lead to Wall Street, the easiest path starts with an internship during the summer before a candidate's senior year in college. In recent years, banks have moved toward a model in which their entire full-time employee classes are selected from the pools of summer interns. Before this movement, banks would recruit a significant number of full-time, entry- level employees during the fall of their senior years in college. After that hiring period, the banks would turn their attention to juniors in an effort to hire them as interns for the following summer. This effectively meant that the banks would go through two back-to-back recruiting seasons. Because bankers play a very active role in the recruiting process, this structure necessarily meant that bankers spent a great deal of time on activities that generated no direct income for the firm. As a result, the major banks have opted to move to a single internship recruiting season, all but eliminating the traditional recruiting of fall-term seniors. As in any business, of course, there can be exceptions when unexpected needs arise.
Because the recruiting of college juniors has increased in importance, banks increasingly are looking for juniors who worked in finance during the summer after their sophomore year. Ironically, however, many banks shy away from hiring sophomore interns because they fear those interns will want to try something different the next summer. To combat this, some major banks are seeking to hire sophomore interns into their satellite offices and then move them to New York for their junior internship experience. The hope is that this change of scenery will be enough to keep a candidate in the fold and therefore give the bank a clear advantage in its effort to hire the best interns into full-time positions.
Some firms have become quite creative in their recruiting strategies. For example, Harris Williams, which is perhaps the premier middle-market investment bank in the world, recently eliminated the typical summer internship experience in favor of something it believes is much better for both the candidate and the firm. To understand why the firm made that decision, note that a typical deal at Harris Williams takes about six months to complete. Because a summer internship is at most a three-month experience, the firm found that it could not provide its interns with more than a partial deal experience. To address this deficiency, the firm opted to create a boot camp of sorts in which candidates experience an entire deal in a compressed two-week time frame. In contrast to firms that carefully guard their top prospects, Harris Williams does not hire the boot camp students for the entire summer but instead encourages them to work elsewhere for the rest of the season. The firm believes that the two-week experience gives the candidates a real feel for what working at the firm would be like. The firm also believes that it will be able to compete successfully to hire those candidates into full-time jobs. Although the Harris Williams boot camp model is only a few years old, early numbers indicate that the firm has been quite successful in retaining candidates even if they work at oth
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Excerpted from How to Get a Job on WALL STREET by Scott Hoover. Copyright © 2012 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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