What is Networking in Investment Banking?
As with any industry, networking in investment banking is all about building disciplined relationships. Networking in investment banking is the process of locating, contacting, and speaking with investment banking professionals to form strong relationships, gain industry knowledge, and potentially secure entry-level internships, investment banking job offers, or other benefits on the basis of those connections. Candidates will need to spend extensive time developing relationships with bankers in order to get the referrals they need.
Networking is crucial to getting that dream internship or full-time offer. There are hundreds of thousands of applicants at each investment bank; to get a real shot at an interview, you must network, especially when you are not from a target school or are in off-cycle recruiting. You are much more likely to get a first look and a first-round interview if you leverage your network when applying.
Key Learning Points
- Networking in investment banking is the process of locating, contacting, and speaking with investment banking professionals to gain industry knowledge, form strong relationships, and potentially secure entry-level internships, investment banking job offers, or other benefits on the basis of those connections.
- Networking is the best way to tip the odds in your favor when you apply for internships and full-time jobs. If you’re changing careers or you didn’t attend a top university or business school, networking can improve your chances of breaking into finance.
- Investment banking networking strategies: participating in informational interviews, cold emailing, and cold calling.
- Investment banking networking may seem daunting, but you will reap the benefits if you are dedicated and consistent.
How Important is Networking in Investment Banking?
Stand a higher chance of winning an interview
Investment banking is a lucrative career with extremely high salaries, so the jobs are highly competitive, attracting hundreds of thousands of resumes each recruiting season. Simply submitting a resume online will not guarantee you an interview, as most applicants have a similarly strong background. What’s worse, your resume won’t even have the chance to be seen by recruiters. To stand out from the thousands of resumes out there, you must have a solid internal recommendation from bankers in your target investment banks.
Connect with individuals you may be working with
Networking with investment bankers is a great way to show a strong interest in the position and company. It’s also an opportunity to learn more about the cultural aspects that will determine your preferred employers. Interacting with candidates before an interview helps companies better gauge their interests, motivation, and potential fit with the company culture.
Solid connections are beneficial in the long run
Networking can help you make a good impression, build personal relationships, and show other investment bankers that you care about them, not just your potential boss. Never underestimate the power of networking in investment banking recruitment processes. Building strong relationships will pay off in the long run. If recruiters recognize your name, they’re more likely to bring your resume out for the first round of interviews. If you have enough people helping you, your chances of getting an interview will increase dramatically.
If you want to be a standout candidate in your interview, enroll in our investment banking interview skills course. Find out what to expect in the interview process and how to tackle tough questions. You can also watch an example of a successful interview.
5 Steps Guide for Networking in Investment Banking
1) Make a list of bankers to reach out to
Make a comprehensive list of 200-300 bankers, which requires you to do research to determine with whom you want to connect. It’s important to cast a wide net, especially for students from non-target schools.
2) Get contact information
We recommend finding a banker’s email or messaging him or her on LinkedIn directly. Since these bankers are always getting emails from people wanting to network, you must contact them in a way that makes them want to respond to you.
3) Write a professional and concise email
To receive a response, your email must boast a compelling subject line and succinct content. In the email, you need to ask the banker to take a moment to talk on the phone or in person. To make it easy for them to respond to your email, you should immediately suggest a few points in time.
4) Schedule a time and prepare questions
If you can get a willing response, you should research the banker, and the bank, and be ready with questions targeted toward each person. Thoughtful questions will help you stand out among other students and thus get referrals.
5) Follow up and stay in touch
The ultimate goal of every networking interaction is to get a referral for an interview. Once you’ve established a connection, you must follow up and make sure your good conversations translate into referrals.
Investment Banking Networking Strategies
There are three main strategies for networking in investment banking: 1) Conducting informational interviews and networking events, where you build connections with bankers over time; 2) cold emailing, where you directly ask about open positions; and 3) cold calling, where you do the same thing, on the phone.
Informational interviews and networking events
Investment banking informational interviews, also known as “Investment banking coffee chats” or “Investment banking networking events”, are the most effective way to network and gain information from professionals who are actively working in the investment banking industry. For example, you can conduct informational interviews by talking to investment bankers at your target firms, or you can attend campus events and information sessions held by investment banks each recruiting season. While informational interviews alone rarely lead to job offers, they are key to getting your foot in the door and ultimately helping you get an interview or job referrals, especially if you didn’t attend a target school or have less than stellar grades. Ideally, you should start requesting and conducting informational interviews 6-12 months before the hiring begins, as this process requires much time and effort.
Cold emailing is a request for help sent to someone with whom you haven’t had any prior interaction or contact. If you’re a freshman college student, an incoming MBA student, you’re graduating, or you’ve just graduated college, and you have a target school or other brand name on your resume, then requesting an internship or job offer directly via cold email can be effective. In your initial email you can ask directly about internships or jobs. Response rates may vary depending on the school’s alumni network and your profile, but a 10%-25% response rate is standard for cold emails, which tend to work best at boutique companies that lack a formal hiring process.
Cold calling means calling bankers at your target firms and marketing yourself to them. Cold calling is the last major channel to use when getting in touch with bankers in order to secure interviews and, eventually, offers. It’s very repeatable, has a low success rate, and tends to be effective only for undergraduates and recent graduates – and it rarely works for companies larger than boutique firms. However, when time is limited, cold calling can be better than cold emailing, since emails tend to be ignored and require a lot of follow-ups, which can be a waste of time. Done properly and persistently, cold calling can help you get hired and grow your career.
What the most appropriate strategy is for you depends on how much time there is before the internship or full-time hiring process begins, and which channels are available to you. To get started, access the download to see 10 Investment Banks listed by sector, market share, and net revenue, with a link to their company website.
A Cold Call Email Template
Here’s an example of steps for reaching out to alumni in investment banking via cold email.
When should you start networking for investment banking?
Generally, investment banks start recruiting very early. You need to start prepping for an investment banking internship in your first year as an undergraduate, because the recruiting season for third-year internships occurs during your second year. These third-year internships can lead directly to full-time offers after graduation. Without these internships, securing a full-time investment banking analyst position becomes a much tougher challenge.
If you want to find an investment banking analyst job after graduation, a great deal of networking is required from the first day in order to get decent internships, especially if you are not from a target school. If you’re at a target school, where networking is easier, you should start networking no later than six months before the hiring season to have the best chance of landing a full-time investment banking position at a top-tier firm after graduation.
Investment banking networking mistakes and how to avoid them
- Trying too hard to impress: Asking too many questions too quickly so as to prove your interest, interrupting or arguing with the person with whom you seek to build a relationship with are not wise It’s better to show some vulnerability and ask for help with overcoming your weaknesses when needed. You should come to the event with 2 or 3 thoughtful questions and try to act natural, respectful, and calm.
- Using the wrong channels: LinkedIn is great for finding people, but not for corresponding with them, so use your professional email.
- Lengthy emails: Try using email templates to make sure that your emails get straight to the point.
- Awkward questions: It’s all right to ask about personal interests, but avoid controversial topics. Never ask about money, politics, how much they work, etc.
- Not asking directly for what you want: If you want to get results, you must be proactive and make direct requests.
- No business card: Contacts need a way to follow up. Keep a digital business card with you, to share during networking events.
- No follow-up: Bankers are usually busy, so you need to follow up and be politely persistent until you get a response.
Networking is the main tool that helps many people start investment banking careers. Making a good impression on people who can hire you or who can recommend you to recruiters will greatly increase your chances of getting an interview. The goal of networking isn’t just about getting an offer, but getting to know other investment bankers on a more personal level. To make sure your networking efforts don’t go to waste, be proactive and ask for what you want directly, always maintain a positive and friendly tone, and try to avoid making mistakes.
If you want to impress the banker at your next investment banking interview, enroll in our investment banker microdegree in order to develop practical skills in accounting, financial modeling, and valuation, as well as M&A and LBO analysis.