IB Grad FAQ
The glamorous world of investment banking, a prized career amongst the ambitious and financially savvy. You've seen it in the Wolf of Wall Street, the Big Short and other timeless classics that have enshrined the cut throat, ruthless and fast-paced nature of the role, but what does IB really involve and how do you get there?
This FAQ hopes to answer some of your burning questions and what you should be prepared for as an aspiring graduate or even just as someone interested in an investment banking career. There is certainly plenty to learn and we would encourage you to read these FAQs to get a bit of a head start in the process.
I'm currently studying at Uni, and looking to get into IB. Do you have any advice so I can best prepare myself now for a future in the industry?
It’s all about showing tenacity, grit and intellect so naturally your marks will be important (HD average) but failing that IBs will look beyond your marks (to an extent) if you can show grit and tenacity in another way (e.g. starting a uni side hustle business, etc.)
IB is a tough nut to crack given there aren’t a ton of roles and most 90% of the grad roles are absorbed by interns so it’s important to set yourself in your penultimate year for the internship processes
There are a tonne of resources available for preparation of the interviews and case study just give it a Google.
Can you give us a run down on what investment banks are looking for in grads?
Assuming this is for traditional investment banking roles then there is a general bias to commerce students with a double degree. That’s not to say other degrees don’t get a look, but it would heavily skew to commerce given the accounting / finance theory you learn at uni + a it shows you have an interest in this space.
Straight commerce is fine, but double degrees are probably favourable due to the added "edge" it gives you over others with a single degree.
Once upon a time, investment banks were heavily skewed to looking at comm/law but more and more comm/eng is looked at favorably given the math / logic reasoning you learn with engineering.
Given the competitiveness of the industry, an HD average is ideal, a high D average will get you a good look and anything below will need some key differentiator to surface you among the competition.
I’m half way through university and my grades are not good – what are the necessary steps to take to improve my chances?
What we would recommend is to improve your grades and show drastic improvement during final years of Uni. If you can, extend Uni for an extra year by doing Honors.
If you can improve your grades during those years then your application will be viewed favourably as it shows a willingness to improve.
If you haven't already, try to network and meet people in the industry and attend their events. Having a personal referral may help you bypass the CV screening process and get you an interview. However, don't mistake an interview with getting the job. There is still a lot of work to do once you get to that stage.
Perhaps also consider doing internships in smaller firms with slightly lower thresholds and gather as much relevant work experience as possible.
Any tips for somebody who is about to do an internship in an investment bank?
One of the best things you can do is be absolutely rabid in following deals in your sector (if you are in a sector group). Not just to show off (although that is certainly valuable) but you will just learn the ropes and lingo of the trade faster.
When given tasks, it is a balance of researching / self learning with asking questions at the right time - investment bankers are busy people! This might sound fluffy but the point is that if you can often find the answer via Google or Investopedia so try to go there first and only after that, lean on your analyst for support.
The reality is everyone knows that the theory you learn in university is not necessarily easily applied once you get in the workplace. There is a lot of art v science when it comes to banking and finance theories but to the extent it is science (e.g. what’s the formula to calculate CAGR) then that is where you should be prudent to try and self learn first / research the answer.
Can I ask what type of person will do well in an investment bank?
- Be responsible for your work and for mistakes
- Attention to detail and proof reads – don't make too many mistakes
- Ability to take stress
- Be a team player
- Be humble and keep your ego at bay
- Be fun and social – be likeable
- Be hungry
- Be self-sufficient as much as possible
How important is it to be involved in a student society?
It helps as it shows you are proactive, but it’s not table stakes. The point is to show enthusiasm and grit. Being part of the student society is one way to show enthusiasm but not the only way (e.g. actively trade, read the LOI / AFR, etc.)
How important is it to be from a Go8 university?
Frankly, this is pretty important, especially for bulge bracket firms. Most if not all come from Go8 at the grad recruitment level. Non Go8 are likely to be lateral transfers later on.
Do companies allow final year students to apply for internships?
Generally no. Unless it is clear that your are / had intended to do a honours year. Frankly, given the number of roles, the IBs generally don’t want to “waste” an intern role on someone who isn’t likely to convert to a grad.
What is the typical career progression and salary progression at Big 4 consulting?
Check our our latest Salary Guide!
What's something you wish you'd known when starting your career?
Excel and Powerpoint: your day is spent 50/50 on this software
Managing up: you don’t want to pull this card too early (until you prove yourself) but once you do and build trust then you need to manage up.
Are bonuses common and would you usually get one?
Yes. IBs live on bonuses. It is very year / cycle dependent. In bad years it would be 30% of base as an analyst. In good years it is 50% ish and in great years it is 70%+.
Would you be able to comment on how the main roles would differ from graduate through to director at an IB?
- Analyst years – mostly learning the basics of modelling, doing financial analysis and creating slides.
- Associate years – owning the financial analysis and delivering the presentation, meaning you are heavily involved in reviewing analyst work, but fundamentally you own the model and presentation. Responsible for the day to day of the deal.
- VP years – managing the team, setting direction (e.g. what should the deck look like, what is the storyboard), managing the process.
- Director years – delivering presentations, building relationships, driving a deal process.
Would you please give a rundown of what an "average day" would be like?
- You are probably splitting your time between Excel and Powerpoint.
- On Excel, you are doing financial analysis, running a model, creating charts and tables for the presentation.
- On Powerpoint, you are creating the slides that will be used for the presentation the client, board, etc.
What are the typical industries and types of engagements in IB?
The typical groups/sectors include:
- TMT (Tech, Media, Telco)
- FIG (Financial Institutions Groups)
- ECM (Equity Capital Markets)
- DCM (Debt Capital Markets)
The typical engagements are M&A, ECM, DCM. But you may also work with clients in a broader strategic capacity (e.g. client and their board want holistic advice on the financial options available to them, where pockets of value sit within the organisation and how they can best position the business to realise it).
You may also be engaged in more general advisory roles for large financial projects that aren’t necessarily M&A (e.g. bidding on a government tender).
How do employees get allocated to particular clients? Do you tend to be in the same teams of people across different clients, or is there quite a bit movement in teams from client to client?
As a graduate you will be working in different teams most of the time. After a while people get used to your style and you start forming your own "preferred groups" and these people tend to work together on similar projects in similar industries. It is important you work with managers that can teach you and are also understanding (there are good and bad managers!)
Where are the majority of your clients?
Clients are mainly in the CBD but resources and infrastructure clients may be the exception (e.g. in WA for mining clients).
What kind of hours do you work?
IB has a reputation for long hours and they can be long as an analyst – 70 to 80 hour weeks are not atypical.
100 hour weeks are rare but can happen. It can depend on your manager, but also it can often just be because of the deal timeline & client expectations.
Can I have other commitments outside of work?
It's important to be upfront with your managers so they can manage expectations. You can definitely have your own commitments but it is probably not good to be pushing it (e.g. you probably can’t have commitments every day at 5.30pm for extended periods as staying late at work is quite common).
Do many people maintain an active and healthy lifestyle where there's time for regular exercise and eating healthy? Or are the hours just too long to be able to?
This depends on your tolerance for stress, ability to balance work and your aptitude to disconnect when you can. In any event, more and more banks are trying to do their best to encourage balance given the competition for talent from startups who have more flexible and accommodating expectations.
The challenge often for bankers is consistency. You never know when a deal / client will blow up and thereby blow up your schedule.
Is this line of work best suited to someone that wishes to remain single for a long time?
Your relationship has to suit the work, and if you try hard enough, you will find ways to make it work. However, there is no doubt that the hours in IB may make it difficult to start a new relationship.
When do people exit typically exit and why?
Increasingly bankers are going to startups or founding their own startups.
Most go buyside and stay in finance after a few years where the hours are likely the same.
You also see a lot of movement in corporate development roles (i.e. in-house) because the lifestyle and hours are better.
What would you say is a typical exit path for someone in IB?
After 2-4 years, it would be typical for an investment banker to leave for buyside roles (e.g. PE, equity fund, VC).
Investment bankers may also leave to move into corporate development where typically you can move at any level but the later you leave the more likely you are taking a big paycut when moving from IB.
Do lateral hires into IBs happen?
Yes, although it is not that common. It is more common in boutique investment banks.