Many students want to enter a career in finance after college, or dream of being a high powered banker. But how can you do that? What classes should you take, what major should you pick, how should you spend your summers? And what does an investment banker do anyway?
The investment banking division (IBD) of a bank creates capital for other companies or governments. Finance roles are usually put into two categories: buy-side and sell-side. Investment banking (IB) is a sell-side industry that creates securities, underwrites mergers and acquisitions, makes initial public offerings, and myriad other services. Essentially, investment bankers act as the middlemen between a company and buyers.
There are two entry points into IB: undergraduate and business school. Moving into IB after a previous job is rare. This guide will focus on entering IB after completing your undergraduate education. This path is more common and looked at more favorably than entering the industry after graduating from business school. Bankers entering at this level are designated the Analyst position, whereas post-MBA employees become Associates. The differences between the positions are detailed later in the article.
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Investment banking is a disproportionately well-paid job; it does not require any innate talent or unique skills. So anyone can become an investment banker with enough effort. But this is a double-edged sword. Incredibly accomplished people in mathematics and related fields are often rejected in favor of less qualified candidates.
The importance of networking and the relative lack of technical qualifications creates this issue. The abnormally high pay also renders this an incredibly competitive industry. Banks know they do not have to hire the smartest people – simply the ones who know the basics, are immensely dedicated to the grind, and are agreeable people to work with.
Talented math and science students seeking to enter finance should seriously consider entering trading roles at quantitative firms or hedge funds (not to be confused with Sales and Trading roles at Bulge Bracket banks). These jobs allow students to capitalize on skill differentials, whereas IB prioritizes grunt work over real talent. These roles are rarer but have higher compensations.
Most bankers were not well-versed in finance, let alone IB, when they were high school students. As such, pursuing this career path in high school is rare and should be capitalized upon (though it is difficult to do so).
Finance is an incredibly cliquey industry, so having strong family connections is the only way to land a banking internship in high school. Most students should instead actively seek out local startups and offer to help them in business development and operations. This establishes an interest in finance for interviews later on. See our guide on finding an internship for advice on setting this up.
However, high school experience rarely matters in IB interviews because banks do not take these roles seriously unless you have a truly unique accomplishment. Gaining experience in high school is an exploratory endeavor, rather than a career move. Internships become more strategic upon entering college.
Selecting universities for investment banking roles is a crucial step, and will define many of the career opportunities available to you. Industries such as software engineering have meritocratic elements through technical interviews and such, but hiring in finance – and especially IB – is almost entirely prestige-based.
The following is a general list of priorities in selecting colleges with the express goal of entering IB upon graduation. Each individual is different, and these steps are meant to address the general case; make sure to attend a college that works for you foremost.
Bankers are more likely to respond to networking emails and grant first-round interviews to students from more prestigious schools. Entering the Ivy League is a surefire way of guaranteeing students an IB internship and full-time offer, but the prestige considerations in IB are slightly different than in the humanities. For instance, state schools such as the University of Virginia and University of Michigan are revered more than Ivies like Brown. A tier list is detailed below.
A business major is incredibly helpful in pursuing an IB career. Interviewers look at a resume top-down. The university name is on the first line and the major is on the second line. A business major is not required as banks want diverse analyst classes and open themselves to all majors. However, the vast majority of bankers are finance or economics majors. Majors are irrelevant at universities like Harvard, but become more important as students progress down the prestige ladder. Interviewers also do not factor in the difficulty of major when making GPA considerations. Candidates must have at least a 3.8 unweighted GPA to have fair standing in the recruitment process. So, a 3.8 in engineering and a 3.8 in business are the same to bankers despite being vastly disparate in difficulty.
Students need to be strategic in selecting colleges by examining past placements and new trends. For instance, Cornell is Goldman Sachs’ target school with most of its hires coming from Ithaca. Simultaneously, Georgetown University has been on the rise in recent years despite having an underwhelming business school ranking. These trends are indicative of what students can expect when it comes time to recruit. Examining differences across identity groups is also crucial as some schools excel in diversity recruitment processes and produce poorly in the regular cycle.
Location is becoming progressively less important with the adoption of virtual calls and interviews. However, proximity to IB hubs (New York, Chicago, San Francisco, etc.) still offers more opportunities than being in a remote location. Location can be incredibly helpful for first and second-year internships as livelier cities usually have more opportunities outside of formal IB recruitment processes.
While the university name is crucial in IB recruitment, being a mediocre student at Duke may be worse than being a top student at Boston College. Students must be confident in their ability to perform at top universities to break into IB.
If you want more personalized advice on your choices of colleges for investment banking, we have a long experience helping students find the best college for them. Schedule a free consultation with us if you want a more in-depth analysis of your personal chances for admission, and advice on what schools would be the best for you.
We are not investment bankers, and do not know exactly what they seek; these rankings are based off of observed results. You should also note that being a top-performing student at a top school is more important than attending a slightly more prestigious school. The top 3 tiers have minimal differences among them and students are likely to enter IB if they do relatively well. Tiers 4 and 5 have a more difficult time.
NOTE: Stanford and MIT are higher ranked than their IB recruitment numbers suggest. This is because most of these graduates enter more lucrative fields in finance, such as quantitative trading. Anyone who wants to do IB does just as well as the other Tier 1 schools.
Going to the Ivies is preferable for IB, but select state schools provide the same opportunities. Their IB-specific opportunities are not much different from other colleges. They include the age-old career treks to New York City, San Francisco, and Chicago. Information sessions and career fairs also help students in these universities become involved with the IB recruitment processes.
However, the conditions to enter IB are slightly different at state schools. The enormous student population ensures that results are fantastic at face value, but lowers their stature when ranked per capita. Michigan Ross and Berkeley Haas are essentially the same as the Ivy League for IB in terms of recruitment, but their admission process is equally as difficult. This reality makes these universities incredibly cutthroat because the quality of students is high, but so is the competition. At Ivies, a smaller student body and more liberal arts approach ensures that fewer people are interested in IB and most candidates receive a phenomenal offer.
For more ordinary students, the key is relatively easy admission for a relatively outstanding outcome – maximizing return on investment. Schools such as UVA McIntire, Notre Dame Mendoza, and Boston College Carroll stand out in this regard, with acceptance rates approaching 30%. The best school for pure ROI is Indiana Kelley. The overall university has an 80% acceptance rate. Although the business school has an internally lower admit rate, it is still high enough that most students get automatically accepted into a semi-target IB school. Again, competition at these schools is incredibly high, but good performers are consistently rewarded.
Understanding the types of banks is crucial before beginning the IB recruitment journey because you need to understand how these firms work before participating in the process. There are four main types: bulge brackets, elite boutiques, middle markets, and regional boutiques.
Investment Bank Categories | Larger Deals | Smaller Deals |
Balance Sheet | Bulge Bracket | Middle Market |
No Balance Sheet | Elite Boutique | Regional Boutique |
Balance sheets indicate that these banks have the ability to underwrite and lead financing deals due to their large stores of capital. These firms can lend and lead initial public offerings. Simultaneously, these banks also have other branches such as asset management and commercial banking, which can divert the focus from IB. Banks without balance sheets are also called independent advisors. They pride themselves on focusing solely on investment banking and running a leaner operation.
Deal size and volume are also integral to understanding firms. Elite boutiques and bulge brackets have the ability to work with Fortune 500 companies and regularly have multibillion dollar deals. These firms also have greater deal flow, which describes the consistency of deals. More reputed firms have more deals, allowing analysts to grow their experience rapidly.
Bulge Brackets have a large deal flow and have balance sheets. In other words, these are the banks with public name-recognition. Goldman Sachs, Morgan Stanley, and JPMorgan Chase fall into this category.
These banks have large analyst classes at ~150 analysts per year. These are optimal for students seeking to exit into careers outside of finance or go to business school after completing their tenures as IB analysts. The name recognition these banks have is powerful in subsequent opportunities inside and outside finance, whereas elite boutiques do not carry the same weight outside the industry.
There are tradeoffs for name recognition, however. Work culture is quite oppressive at these institutions. Goldman Sachs employees compiled a report displaying their unhappiness, which subsequently rippled to make some changes within the industry. 80-hour weeks are the norm, with the workload reaching 105-110 hours during a live deal week. The large analyst class size also means that people tend to become anonymous unless they are outstanding performers. This suffocates progression within the bank. Management also does not support analysts looking to exit. So, recruiting for private equity jobs is substantially more difficult at bulge brackets because they must do so on top of the pre-existing workload. Pay is also ~20-30% lower at these banks because they back themselves to pry talent away from higher-paying banks due to the prestige associated with their name.
The bulge brackets usually remain the same. The first tier never changes, but banks occasionally cycle in and out of the second tier, depending on their deal volume.
Tier 1: Goldman Sachs, Morgan Stanley, JPMorgan Chase
Tier 2: Bank of America, Citi, Credit Suisse, Barclays
Tier “Are they big enough to be classified as BBs? Maybe.”: Deutsche Bank, UBS
Elite boutiques have large deal flow, but do not carry balance sheets. Their independent advisory is a subtle criticism of bulge brackets, as their multiple departments often lead to competing interests that can work against the best interests of the client. These banks have smaller operations and deal teams. They carry ~20 new analysts in their class per year. These are optimal for students seeking better work experiences and dedicated to remaining in finance. People must sacrifice name recognition outside of finance, though their reputation within the industry is as sterling as the BBs.
The work culture at EBs is similar to BBs in terms of workload and sheer hours, but the leaner deal teams ensure analysts develop relationships with their seniors. This creates a more interpersonal environment which allows progression within the firm. Simultaneously, the smaller teams also ensure that underperformers stand out and leave the bank quickly.
The EBs philosophically diverge from the BBs. Most of these banks are quite new, forming in the 1980s or later. Their founders are former senior bankers at BBs who believe in bankers getting a larger portion of the profits and creating a family environment. As such, analysts are paid more at these firms, but EBs also maintain an expectation of contract loyalty. For instance, Centerview Partners requires its analysts to complete three years before leaving; most require two. When it comes time to transition, the senior management actively helps its analysts leave to top private equity firms and hedge funds. This entails recommendations, a lower workload to help analysts focus on recruiting, and other benefits.
The following are EB tiers, but these are less established and are subject to change. These rankings are based on deal volume and exit opportunities. Evercore and Lazard stand out in this regard.
Tier 1: Evercore, Lazard, PJT Partners, Centerview Partners
Tier 2: Qatalyst, Moelis, Perella Weinberg Partners, Guggenheim Partners
These banks are structurally the same as BBs, but have significantly smaller deal sizes and slower flow. At the analyst level, the work experience is incredibly similar to BBs because they are responsible for mergers and acquisitions, underwriting, among other functions in the suite of a full investment bank.
These banks have market-competitive compensation (though it can be lower depending on how small they are), but the lack of name recognition harms analysts’ exit opportunities inside and outside of finance. Analysts at these banks still have successful careers, but generally face a more difficult path to the same opportunities available to BB and EB analysts.
Examples include: Jefferies, RBC, HSBC, Macquarie
These banks function like EBs, but have smaller deal flows. This category sums up the rest of the investment banks not covered by the other three categories, but have some differences among them.
Some firms separate themselves by industry, such as Financial Technology Partners, which only focuses on mergers and acquisitions in the technology sector and operates mostly out of San Francisco. On the other hand there are boutiques that serve their particular region or which are too small to qualify for EB status.
Most regional boutique founders have similar backgrounds to EB founders but are usually earlier in the life cycle of an independent advisory investment bank. These banks have market-competitive compensation (though it can be lower depending on how smaller they are), but the lack of name recognition harms analysts’ exit opportunities inside and outside of finance. Analysts at these banks still have successful careers, but generally face a more difficult path to the same opportunities available to BB and EB analysts. Industry boutiques, however, have name recognition in their corners of the market.
Examples include: Stifel, Piper Sandler, Financial Technology Partners
The IB recruitment process has an early timeline compared to most professions. Most industries recruit in the fall or spring of students’ junior year, but IB recruits in students’ sophomore spring and summer. This difference creates unique circumstances under which students must approach the process.
Most of IB recruiting is based on networking. The high attrition rate at investment banks means that someone you are speaking to today may leave for a private equity firm the next day. Investment bankers are usually analysts for two years before they leave for greener pastures, though some decide to stay and become associates. This timeline is crucial when considering who to network with.
The early recruitment also means that your resume will be incredibly raw during the interview season. As such, bankers place the emphasis on technical and behavioral interviews and how candidates come across rather than how qualified they are. Technical interviews merely check the box, whereas behavioral interviews dictate where you can land internships and jobs.
IB operates with two separate recruitment processes: diversity and regular. All women, LGBT+, underrepresented minorities, and military veterans fall under the diversity designation. These processes have different deadlines, so you will need to know which group you fall into quickly.
Take relevant academic classes in business disciplines:
Introductory accounting classes are essential with financial modeling and management courses being great additions.
Aside from business classes, enroll in interesting second major/minor possibilities:
Bankers are seeking out interesting individuals, rather than the typical Business and Computer Science “hardos.” Humanities disciplines are interesting choices, but how you tie your interests into interviews during recruitment season is the ultimate key here.
Join relevant finance extracurricular activities. Each university has its own Student Investment Fund. Many also have dedicated investment banking clubs:
Participating in these allows you to build your finance network and reputation on campus. Networking with SENIORS is incredibly important because they will be interviewing students come recruitment season in sophomore year. Many investment banking clubs internally recommend students to alumni at banks, so making a good impression in these clubs is crucial in landing an internship.
Try to gain leadership experience, but this is significantly less important for IB recruiting when compared to work experience and GPA.
Join a business fraternity if possible:
Their importance varies by campus culture, but bankers are more likely to respond to networking emails and lobby within their respective firms if they have a business fraternity connection with students. These also unlock numerous career opportunities and resources that you otherwise would not have.
Develop a relationship with the career center:
It can be a useful resource as they develop industry relationships and advise students. They are limited in that career coaches oftentimes were never bankers, and thus they lack first-hand experience. However, they are great resources for resume reviews, cover letter construction, and other general advice.
Casually network with IB professionals:
Be careful when networking during freshman year because most bankers are unwilling to speak with first-year students. If you make a bad first impression by making errors in an outreach email or being rude during an informational interview, that reputation can haunt you well into the future. Instead, ask junior and senior mentors to practice informational interviews before conducting them with professionals.
Keep in mind: many of the people you will network with in your freshman year leave the firm. Even if a beautiful relationship develops, it is useless (at least for the purposes of IB recruitment) as soon as the professional leaves the firm. Maintaining relationships with bankers is also incredibly difficult because they have busy lives and barely have time for college freshmen. Networking too early can lead to breakage before recruitment ever arrives and students never get to their ask – a first-round interview.
Network with local startups, asset managers, and other finance companies:
These entities offer possibilities for mid-semester and freshman summer internships. Building these relationships and providing value creates employment opportunities. Securing IB internships is nearly impossible unless you have high-importance connections at esteemed banks. Instead the key is securing a finance internship. Interviewers do not place a major emphasis on the freshman internship, instead looking for demonstrated interest in finance.
Prioritize name recognition when selecting first-year internships over job function. Bankers look upon startup internships at unknown firms with suspicion because they often do not have established internship programs. Having a brand name on the resume as early as freshman year catches interviewers’ attention and displays a level of panache in securing an internship despite the incredibly bureaucratic and junior-focused recruitment processes these firms have.
Search for insight and first-year programs at reputed banks:
Most banks have first-year exploratory programs that allow freshmen to visit their offices and speak to investment bankers. This helps them build their pipeline and can advantage participants during recruitment interviews.
Refrain from putting these on resumes. People may say they count as work experience, but these should be the last resort. Firms maintain internal records of program participation, but putting your insight series on your resume essentially signals that you do not have any real employment experience.
For diversity candidates: There are programs and information sessions specifically catered to diverse students and candidates can begin creating an outstanding resume through these programs. Their applications usually open in the second semester of freshman year.
Much of this year is building on the foundation you built in Year 1.
Take relevant academic classes in business disciplines:
Taking financial modeling and intermediate accounting courses are great choices for this year, especially to prepare for IB technical interviews.
Continue the momentum in academic clubs:
Try to get two or more substantive leadership positions to have as a backup in interviews. Many never reach that part of the resume specifically, but these experiences are useful in crafting the investment banking story.
Gain additional work experience if possible:
You should never stop looking for opportunities to add work experience to your resume. Mid-semester internships and co-ops are strategic choices here because they allow you to finish before recruitment starts in the second semester.
Polish your resume:
Your resume is incredibly important for first glances. First-round interviews are handed out on the basis of resumes and networking. Generally, there are four sections: education, employment experience, leadership and professional development, and skills and interests. Standard templates found online suffice for this portion.
Ensure the bottom section usually titled “Skills and Interests” is well done. Interviewers often jump to the bottom of the resume because they are interested in how candidates are different from one another, rather than going into the same formulaic conversation about finance. It should have four lines: languages, skills, activities, and interests.
Begin crafting your story:
The story is the most integral portion of the IB recruitment process. This is the first question bankers ask during informational interviews and internship interviews. As such, this first impression endures throughout the rest of the conversation and can severely affect the chances of a relationship developing between candidates and bankers. These should be 60-120 seconds long, but err on the shorter side because it is easy to ramble and lose the banker in progress. The story evolves throughout the process.
Begin networking with investment bankers:
The beginning of your sophomore year is a crucial time to begin forming relationships for eventual first-round interviews. Diversity candidates must start earlier because the recruitment process is earlier for them, but regular candidates can wait till November or December if you wish.
IB networking is fairly formulaic. You should send professional, 5-8 sentence emails to bankers and establish as many commonalities with them for the highest response chance. During the informational interview, ask questions about the bank and establish a real connection with the interviewer. This allows you to gain answers that you can use during real interviews. For instance, “I love X Firm because Y person told me Z and I had unique takeaway A.” Most last around 30 minutes, but bankers can be in a rush, so 5 minute calls are also common. Some bankers are willing to speak for 45 minutes to an hour, but you should always do a time-check at the 30-minute mark.
Always follow-up – even if the informational interview went poorly. This is the beauty of perception. You may feel like a call went badly, but the banker may think otherwise. Sending a follow-up never hurts. However, not sending one effectively kills your chances for that person ever lobbying for them in internal deliberations. In follow-ups, thank professionals for their time and include one or two specific takeaways from the call. These emails should also include resume attachments and an ask for further references within the firm. This allows students to gain a reputation within the firm and gain more supporters come time for handing out offers.
Try to set up a second meeting to strengthen the relationship. Even asking for a favor such as technical interview preparation or a resume review helps. This allows you to gain information from within the target firm while developing a more personal relationship with the banker.
The ask. Depending on the timeframe, you will need to make the ask for a first-round interview preference. Having a longer relationship prior furthers the chances of a stronger internal recommendation, but bankers inherently understand the transactional nature of this acquaintance and are often willing to do so after one meeting if they like the candidate.
Prepare for technical questions:
Begin preparing for these comfortably in advance of interviews. The first EB interviews occur in late February to early March, so brush up on technicals during November and December of the previous year. Knowledge from accounting and financial modeling classes that should already be on your transcripts by this point help in this endeavor. Be wary of preparing these too early because it is easy to forget the minutiae of advanced technical questions. Bankers treat these as box-checking questions, and technicals never dictate who gets a job. Rather, they are used to see if you will advance to the behavioral rounds. Use resources like Wall Street Oasis guides to prepare these interview questions.
Prepare for behavioral questions:
These questions are significantly more critical than the technicals because interviewers make hiring decisions based on these. You should have 6-8 stories for the 40-50 common behavioral questions semi-memorized with the story lengths being 60-120 seconds. Use resources like Wall Street Oasis guides to prepare these interview questions.
Begin the interview process:
These steps prepare any successful IB candidate. Interviews can be stressful, but treating them as if they were more casual informational interviews can help reduce stress levels. Never forget to thank interviewers for their time afterwards.
Seek out second-year internships:
For regular candidates: These can be a rather difficult process because sophomore recruiting is slightly less shoddy than the freshman internship search. Some companies such as the Bank of America have non-diversity sophomore programs, but these are difficult to find and enter. Instead, seek out tangentially related programs at the BBs, such as wealth management and asset management. Students can also target regional boutique investment banks without concrete hiring processes. Interviewers understand regular candidates’ resumes will be slightly worse during the second year, so it is not much of a worry. However, note that most second-year internships are offered after junior year internships because of how early IB recruiting is. As such, it may not even end up mattering, but it is always a good idea to bring up the sophomore internship on resumes and interviews if you have it secured prior to IB recruitment.
For diversity candidates: You should target diversity recruitment programs at BBs and EBs. Most, if not all, of them run a sophomore diversity program, allowing you to become more qualified come time for recruitment.
Most students breaking into IB receive their internship offers during the summer after sophomore year, though some come early in junior year. This section is for students who were unable to successfully accept an IB offer during the sophomore recruiting cycle.
Continue previous years’ efforts:
Internship openings spring up occasionally during the year because someone backs out or an analyst leaves. These are seldom posted on LinkedIn or other job sites, but having an extensive network from previous years allows you to capitalize on these opportunities when they arise.
Direct full-time hiring is rarer, but the process is the same as before but less structured. Few people enter through this route, so a formalized recruitment process does not exist. Instead, candidates interview through the usual technical and behavioral rounds before having a decision made on their hiring.
Pivot to other business fields:
Consulting is a popular fall-back because its recruitment process is in the fall of junior year, but case preparation and other unique elements of consulting recruitment take substantial time to master. If you wish to follow this path, you must dedicate a major portion of sophomore summer to mastering these elements of the recruitment process. Sales and Trading and Equity Research are also potential back-ups to IB.
Position Title | Base Salary (USD) | All-In Pay (USD) | Promotion Timeline |
Analyst | 100K – 125K | 150K – 220K | 2-3 years |
Associate | 150K – 200K | 250K – 450K | 3-4 years |
Vice President | 250K – 300K | 400K – 700K | 3-4 years |
Director | 300K – 350K | 600K – 1M | 2-4 years |
Managing Director | 400K – 600K | 1M – 5M | N/A |
IB is a grueling two-year process that people often endure solely for the tremendous exit opportunities. Aside from the high starting pay, IB positions professionals to transition to essentially any area of business in a way other roles do not. Below are the most popular exit routes.
Most top-performing analysts leave banking to become PE associates. Most of the megafunds, such as Blackstone and KKR, have similar name recognition to BBs, but a better work-life balance – as if 60-80 hours is much better than 80-100 hours in IB – and better compensation. PE jobs are more research-oriented and occur on the buy-side. Some of these opportunities also offer carry, which is a portion of the firm’s profits being distributed to the employees.
This is a rarer exit opportunity because of the sheer selectivity of the industry. HFs run lean operations with great stores of capital per employee. This adds pressure onto investment professionals and creates a more volatile environment with lower job security. However, the compensation matches the risk, with a better work-life balance around 50-70 hours per week.
Some bankers decide to stay within banking and dedicate themselves to climbing up the associate and vice president ladders. The first two promotions are fairly standard, as good performers are reliably rewarded. However, progressing to director and beyond requires outstanding results and more luck because of how crowded BB and EB management teams are. The hours gradually improve as bankers’ seniority increases, but the pay is generally lower than PE and HF firms. Banks are increasing their compensation over time to become competitive, but the sell-side nature of the job and worse work-life balance make it a worse option than PE and HF. The people who tend to stay in IB generally love the job itself.
Going to business school after a two-year stint in IB is unconventional. Most analysts progress to PE and HF before eventually enrolling in business school. However, this path is viable for people who hate finance and want to pivot to another area of business.
Other popular exit opportunities include strategy consulting, quantitative trading (if bankers had a mathematical background in undergraduate), financial technology, and corporate development. Some bankers completely leave the business field and attend law school. Ultimately, IB is respected across all industries as a test of mettle. If candidates survive two years of IB, they are good enough to excel in any other career.
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