Internships, which were once rare and not a prerequisite to a career in finance, have now become indispensable. Investment banks are driven to offer robust intern experiences that rival full-time positions. The main reason firms have elevated these programs is to compete earlier on campuses for the top talent. Secondly, since most internships lead to full-time positions, intern programs allow a firm to strengthen its culture through hiring and effectively trying out an entire class of young professionals. The best performers and best cultural fits will hopefully come back as full-time employees. Those that do not perform, do not mesh with the firm’s culture, or don’t enjoy the work will exit and provide opening slots during the traditional full-time hiring on campus.

Key Learning Points

  • Investment banks use top internship programs to compete for the top talent
  • A summer tryout is the best way to see if there is a good fit with the firm and the candidate
  • Summers are generally a good time to nurture new hires and there are often resource needs at that time of year
  • Summer interns can become ambassadors on university or college campuses for a firm enabling the firm to attract more talent during the formal recruiting season

Seeking an Advantage on Campus

Summer hires are usually a fraction of the full-time analyst class. (For postgraduate students or MBAs, the summer hires more closely mirror the actual full-time hires.) Yet more and more effort goes into the recruiting process. Unlike the full-time program which will cast a wider net among the top universities, the intern programs generally concentrate on the very elite universities and the most qualified candidates at those schools. The growth of the private equity sector has also increased competition on campuses for top recruits. By nature, PE companies are usually smaller and hire smaller-sized full-time classes. They hire a very small number of interns if any. This gives investment banks an advantage in pursuing top recruits if they can make an impression on them during an internship.

A Full Summer Tryout

Summer is a transition time in investment banks. Many second (and sometimes first), year analysts leave to pursue other positions in finance or graduate studies. This transition can sometimes leave firms short-staffed in the early summer months before new full-time hires emerge from training. Summer interns will work alongside more experienced analysts in learning the core skillset. This can include updating comparable stock and transaction databases, working on pitches, and compiling research. For most firms, there are never enough resources to fully complete these tasks. Business managers have the opportunity to watch interns (or summer analysts as they are also known) perform nearly the same level of work that a full-time hire will perform straight out of training.

Clients of big investment firms, as well as influential people, will often make pushes to land jobs for their children or other relatives. The internship is often the best opportunity to satisfy this request as the firm does not need to make a full-time commitment to a candidate it might not otherwise pursue.

 

Conclusion

Too many investment banks, building a strong analyst class begins with a strong intern class.  There are limited opportunities to sway a campus recruit to join from afar but when an intern spends an entire summer with the firm, there are endless opportunities to make an impression.  Most banks take their work culture very seriously so the ability to see a candidate fitting in (or not) is worth the time and effort of building a strong intern program.