If you have just landed on this blog the place to start your investment banking journey is on my 7 step guide to getting into Investment Banking. As I mentioned in that post the first (and one of the most important steps) is to go to the right college or university. Going to the right university alone will not guarantee you a job at an investment bank…the industry is far too competitive for that but it will help you more than almost any other one thing you can do.
But that’s not fair…I go to a good school with a good finance program. Why aren’t I considered on equal terms with someone from a target university / college?
I’m in total agreement with you. It isn’t fair that investment banks recruit from such a narrow selection of schools and there are plenty of great finance programs at universities which are not on the investment bankers target recruitment list. Unfortunately wishing it weren’t so isn’t going to change the system. The best way to maximise your chance is to understand the system and then do your best to work within it.
So why do Investment Banks limit themselves to such a narrow selection of schools? Effectively it comes down to three core reasons
- Limited resources
The reputation of the college / university provides a natural screening process
Investment banks get thousands of applications each year from a variety of colleges and universities each with different course structures and different marking standards. Investment banks focus on colleges / universities which have good reputations because typically these schools have managed to attract students of a ‘higher quality’ (i.e. they have already had a competitive entry process which creates an initial screening process).
If you are applying from a ‘non target’ school this will not cut you out completely. It just means you need to be that little bit more impressive to get noticed in the first place.
The familiarity with the university subjects and marking systems
This is probably the biggest reason investment banks only target certain colleges and universities. Even within similar degrees (e.g. finance degrees) universities offer different subjects which are marked in in different ways and which cover different materials. For example a 90% in a subject called Corporate Finance at one university may be the equivalent of a 75% of a subject called Business Finance at another.
For this reason investment banks tend to stick to the universities they know which tend to be the universities they come from. It was simply too much effort to do otherwise.
The question you need to ask, therefore, is “what universities do most bankers in the [City A] office come from?” This will be different for every city in every country. Most of the other advice I’ve seen online is very US centric. I could give you the breakdown for Australia (shoot me an email or ask below and I’ll put it up) but this wouldn’t be useful to those in Canada, the UK or a hundred other countries. The best way to find this out is to go to a networking event and just ask.
Investment Banks have limited human resources for recruiting
Although the idea of investment banks having limited resources may sound counter intuitive, the fact is that hiring is one of the things that they do focus on the most. They almost always prefer bankers to be the ones doing the hiring and so when they go out and are scouring colleges and universities for the top talent, they want to send their bankers out to do this.
Junior bankers are the ones usually tapped on the shoulder but they are invariably barely managing to keep up with the work that is already on their plate. As a result banks focus their efforts on a very small selection of universities when it comes to their marketing and networking efforts.
What does this mean for me?
Although the system isn’t great and it may be unfair that investment banks target certain universities so heavily, the fact is that they do. If you are already going to a target school then you have a leg up. If you don’t go to a target school you need to either
- Transfer to a target school – this may seem extreme but actually it is not as hard as it sounds. Transferring is normally easier than getting into the course in the first place and it gives you one less hurdle to jump when it comes to recruiting
- Stay at your current university and try and maximise everything else – this may seem like the easiest route but it actually is putting you at a disadvantage. You have to get over one massive hurdle before even being considered on your other merits. You normally have to be better than, rather than equal to students from target schools. It can still be done and you see it but it is the exception rather than the rule
What experiences have you had regarding recruiting from a target versus a non-target university? I went to a target and managed to get interviews reasonably easily. My friends at non targets found it much harder.