Internships, which were once rare and not a prerequisite to a career in finance, have become indispensable. Investment banks are now driven to offer robust intern experiences that can rival full-time positions. The main reason firms have elevated these programs is so they can compete earlier for top talent on campuses. Secondly, since many internships can 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 are not selected usually have not outperformed, do not mesh with the firm’s culture, or don’t enjoy the work will open slots during the traditional full-time hiring on campus.

Key Learning Points

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

Seeking an Advantage on Campus

Summer hires generally cost a fraction of the full-time analyst class as they can be a shorter duration. (For graduate students or MBAs, the summer hires more closely mirror the actual full-time hires.) Yet more and more effort goes into the recruiting drives to carefully select interns to join investment firms. Unlike the full-time program which will cast a wider net among the top universities, the intern programs typically concentrate on the very elite universities and the most qualified candidates at those schools.

The growth of the private equity sector has intensified competition on campuses for top recruits. By nature, PE companies tend to be smaller and hire smaller full-time classes. They usually hire a very small number of interns, if any. This does allow 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 can work alongside more experienced analysts in learning the basic skillset. Work given can include updating comparable stock and transaction databases, preparing pitches, and compiling research. For most firms, there are never enough resources to complete these tasks. Business managers also get 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 other influential people, can frequently push to land jobs for their children or relatives and contacts. An internship can often be the best opportunity to satisfy this request as the firm does not need to make a full-time commitment to a candidate it may not otherwise pursue.

Conclusion

For many investment banks, building a strong analyst class begins with a strong intern class.  There are limited opportunities to sway a potential 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 highly value their workplace culture so the ability to see a candidate fitting in (or not) more than justifies the time and effort of building a strong intern program.

Additional Resources

Investment Banking Summer Internships 2022
Investment Banking Spring Weeks
Investment Banking Courses
Investment Banking Interview Skills

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