Coaching Squad: Answers for Undergraduates

Each week, our Coaching Squad answers questions posed by undergraduates young professionals from around the country. The Q&A is designed to help guide you through key issues as you begin exploring the idea of starting your career in finance and possibly earning your MBA. Many of the responses include links to additional information for you to explore. 

Navigating the Industry

 Launching Your Career

MBA / Post-MBA

 

How hard is it to break in to the finance industry?
The industry is always actively hiring smart people who are inquisitive and hardworking.  For the larger banks, the bulk of hiring for analyst. A financial analyst tracks the performance of companies and industries, evaluates their potential value as investments, and makes recommendations on specific securities.

When the most highly respected analysts express a strong opinion about a stock, there is often an immediate impact on that stock's price as investors rush to follow the advice.

Some analysts work for financial institutions, such as mutual fund companies, brokerage firms, and banks. Others work for analytical services, such as Value Line, Inc., Morningstar, Inc., Standard & Poor's, or Moody's Investors Service, or as independent evaluators.

Analysts' commentaries also appear regularly in the financial press, and on radio, television, and the Internet.

Recruiting for positions (undergraduate / entry level) occurs in the Fall prior to your undergraduate graduation. The same hiring pattern applies for associate positions for MBA graduates. Banks tend to hire their summer analysts and summer associates for full-time positions, so securing a summer internship provides a strong entree. Also, there are opportunities to be hired as a "lateral" professional, i.e. someone who has already graduated and has a little bit of experience at another firm. This occurs in research, for example, when a candidate may have deep knowledge of a given industry and the markets (such as oil/gas, aerospace, technology). To get hired, you need to learn all that you can about the industry and the specific bank where you will interview, whether an analyst, associate or lateral professional.

Do you have to be a business major to work in the finance industry?
No—not at all. Recruiters are seeking smart, talented people and many are hired from other majors, including liberal arts. Recruiters are interested in your aptitude, critical thinking skills, interests, and interpersonal skills. Bringing these attributes to the table will make you a valuable candidate.

In addition to those qualities, it is also important to do your part in building your toolkit in preparation for the finance industry. Determine the role of interest and the one most suitable for you (see our Career Map); research that role so you can articulate why you are a suitable fit. Determine if there are any additional skills necessary (i.e. Excel skills for financial modeling), familiarize yourself with industry terminology, and stay on top of industry news. The Ready-For-Finance "Launch Your Finance Career" countdown is designed to help you map out your game plan.

If you are not (or were not) a business major, you may feel more comfortable taking a few business courses to give you that exposure and knowledge to ease your learning curve. There are several sources, including executive education programs, community college courses, or online courses, including free OpenCourseWare online courses from many top universities such as MIT/Harvard (a joint offering), Stanford, Notre Dame and others.

How hard is it to break in to the finance industry?
The industry is always actively hiring smart people who are inquisitive and hardworking.  For the larger banks, the bulk of hiring for analyst positions (undergraduate / entry level) occurs in the Fall  prior to your undergraduate graduation. The same hiring pattern applies for associate positions for MBA graduates.  Banks tend to hire their summer analysts and summer associates for full-time positions, so securing a summer internship provides a strong entree.  Also, there are opportunities to be hired as a "lateral" professional, i.e. someone who has already graduated and has a little bit of experience at another firm. This occurs in research, for example, when a candidate may have deep knowledge of a given industry and the markets (such as oil/gas, aerospace, technology). To get hired, you need to learn all that you can about the industry and the specific bank where you will interview, whether an analyst, associate or lateral professional.

Do entrepreneurial ventures play a role in the finance industry?
Yes, there are opportunities to be entrepreneurial in the finance industry.  The best example is as a private wealth manager. In this position, you are required to design and then implement a business plan.  You are basically managing your own business so the sky is the limit on your earnings.  In careers such as investment banking or equity sales, as you advance to higher positions, you will have more business development responsibilities—and with that comes the opportunity to flex your entrepreneurial muscle.

 
Do you have to go to an all ivy school to be recruited by the large investment
banks?
There are many excellent MBA programs—and not all are “ivy.” While many of the major investment banks recruit at the “ivy league” schools (i.e., Columbia, Harvard, Wharton) , they recruit actively at many other schools.   In fact, investment banks (both large and boutique) seek to hire students with diverse backgrounds, and this includes their academic alma maters.

Besides a school’s “status”, it is important to understand its culture, class size, and teaching methodology (i.e., case method). Also, it is important to note that a top ranking school does not always directly correlate to top teaching rankings. For example, in the 2006 Business Week rankings (completed every other year), many schools not in the top 10 received an A+ in teaching quality, while some schools ranked as top 10 were given “B” for teaching quality.
 
Another important metric to consider is the strength of the on-campus recruiting—which companies seek out graduates from the programs you are considering. Contact the oncampus career center at the MBA programs that match your style to find out which recruiters actively recruit there. Most schools post their employment data on their website and will provide you a list of companies who actively recruit on campus.  Do your homework beforehand and you will be armed with knowledge that will become important as you start your investment banking career search.

As part of your research, review key rankings for MBA programs.

Is it possible to move from operations into a sales and trading position? To an investment banking position?
It is possible, but it can be difficult. To make this move, it is important that you get the bankers and traders that you have been supporting in your operations role to really believe in you and your ability to make the transition.  You should be inquisitive and always interested in doing more than just the minimum of your operations job.  They need to see that you are truly interested in what is happening in the business, how they get their work done, and that you have been preparing for the transition to the "front office" role.

What are the benefits of doing an internship during undergraduate? How does an employer view that experience?
An internship during your academic career is very helpful in getting a job after you graduate.  A prospective employer views your performance on an internship as a demonstration of what kind of an employee you will be.  It is a practical, tactical example of how you can take the theoretical classroom experience and put it to use in the real world.  Also, the experience of actually working in an internship makes you better able to describe your skills, your work style and your accomplishments in a professional environment.  Working in an internship is the next best thing to working at a real job.  In fact, many, many firms use the internship experience as a long interview and they prefer to hire students that they have met and gotten to know during an internship.

What are the top three things a recruiter looks for in an undergraduate candidate and why are they important?
As an undergraduate candidate, you will not have a 5 or 10 year job record of success to “sell” your potential.  Therefore, you must demonstrate a record of success at the jobs you have held. The most important thing a recruiter looks for in an undergraduate candidate are:

1) Academic Achievement – Your GPA matters and so does the variety, complexity and depth of your courses.  If you are not an analytical/mathematical/scientific major, you must somehow demonstrate your aptitude for numbers or finance, mostly like through some course that you took –and did well.  This is important because the recruiter needs to be confident in your ability to work with numbers. If your academic record is not as strong as you would like, be able to discuss how your performance does NOT represent your ability, but do this carefully and without making excuses.  Perhaps you were a student athlete, heavily involved in major leadership roles on campus, were employed full time or had heavy family responsibilities.

2) Leadership AND Teamwork Skills – Leading projects or teams while a student is indicative of your likelihood to be a leader, an independent thinker and a strong candidate for future promotion in a professional environment.  Discuss your role in school clubs, sports teams, church organizations or even class projects or assignments.  Similarly your ability to work on a team is also very important to a prospective employer.  Be able to discuss what kind of a team member you are (with examples!) and the specific contributions that you will bring to a team.


3) Preparation – Before the interview, DO YOUR HOMEWORK. Know the company and why you might want to work there.  Know yourself, be able to give examples of your skills—leadership, teamwork, analytical—and be able to discuss your achievements.  Finally, come to the interview with prepared, thoughtful questions.  The wrong answer to the final interview question is always, “do you have any questions?”  You must always have a response for that.
 

I am heading off to my summer internship.  Are there things I can do this summer that will prepare me for an MBA in the future?
Yes.  Your first priority should be to perform well on your internship because you may need a person from this organization to serve as a reference for future career opportunities and/or graduate school.  Once you get settled into your internship, you can seek out people at your organization that have an MBA.  Then you can have casual conversations with them about their business school experiences and how it impacted their careers.  You can even consider having more formal conversations with them such as informational interviews to gather more detailed information about them. 

I am interested in pursuing my MBA at some point but plan to work for a few
years after graduation--when is the ideal time to take the GMAT?
We encourage undergraduates to take the GMAT your senior year in college. Your GMAT score is valid for five years so completing this step in the application process frees you up to focus on all the other aspects of the application.  Also taking the GMAT while you are a student can result in better scores—you are in study/testing mode already, once in the workplace it can be challenging to get back into that mindsetIf you wait until after college, we encourage you to take the GMAT at least 6-9 months before you plan to submit your application. This will allow you time to retake the test, if desired.

Does it make a difference if I go straight to business school after finishing my undergraduate degree?
Most business schools require a minimum of two years work experience prior to applying for the MBA. Among other things, applicants are evaluated on their work experience and how that experience will contribute to class discussions, as well as the individual’s potential post-MBA. Gaining work experience allows you to learn firsthand about businesses regardless of the industry and provides for a better understanding and grasp on the business theory and discussions in the classroom. Work experience also gives you a chance to test your career interests and explore industries to help refine your career goals. Some programs make exceptions to this requirement if an applicant has significant internship experience, or delayed their undergraduate education and had worked full-time.

 

For career changers entering finance post-MBA, what experience / education makes one candidate more competitive than another?
Many of us make the decision to attend business school (I did!) to change our career track.  In fact, without my business school degree, I never would have been a successful finance professional, as my prior experience was in computer consulting.

Your prior experience won’t necessarily position you “ahead” or “behind” of anyone else. What is important is how you tell your story – how you align and articulate your prior business experiences to your current career aspirations as a finance professional.  Think about your professional background and prior education and leverage relevant experiences. For example, a computer technology professional servicing the finance department can help demonstrate how his/her prior exposure to finance sparked the interest in becoming a finance professional. If you can show finance is within your knowledge grasp and can articulate a story that gives your prospective employer a reason to hire you, you will prove your value.

 

When you begin business school, do you have to know what specific finance specialty you want to pursue (i.e., investment banking, private equity, global wealth management)?
Do not stress—you do not need to know which finance specialty you want to pursue when you start business school. It is important for you to do as much research as you can before you start your business school pursuit. Once school starts, your free time to investigate and understand the inner workings behind different finance specialty areas will be limited.

Most of your classmates won’t know what area of finance they want or even what business practice they are interested in (e.g., finance, marketing, general management, etc.).  Some will have greater focus and may know that they only want a career in private equity, for instance.  Be assured, however, that many of these same individuals will change their minds during the course of their first or even second year of academic study.  The MBA experience will open you up to opportunities and career paths you might not have considered or known.

To explore your career options, attend as many recruiter presentations as you can. This will provide an opportunity to understand in-depth careers with a particular company and/or industry. Meeting the representatives of each company will also be vital to your decisions. Networking and doing your homework on careers in finance will be critical to your ultimate success as a financial professional, no matter which specialty area you pursue.