Stuff Investment Bankers Don’t Like: The CFA, Your Activities, Your Ph.D., and More from Mergers & Inquisitions by M&I meaningless_certificationsI’ve noticed a disturbing trend lately: many readers have the wrong idea of what will help them with investment banking recruiting. Thinking that they need to do “something” at the last minute to boost their chances of getting into the industry, they come up with all sorts of “creative” – yet marginally effective – ideas. Read on to see exactly what not to do to get noticed in recruiting. 1. The CFA I must get more email about the CFA than any other topic (yes, even you, models and bottles). There are hundreds of reasons the CFA (any level) is a waste of time for getting into investment banking, but here are the top 3: a. It’s not necessary for advancement and the majority of bankers don’t even have it. If you want to be a portfolio manager, go ahead… but for the rest of us it’s marginally helpful at best. b. Studying for the exam requires an obscene amount of time – several hundred hours according to the website. Think about how much networking you could do in that same amount of time: let’s conservatively assume 200 hours of study time for the CFA. Assuming you can conduct 1 informational interview in 30 minutes, that’s four hundred new contacts. Which do you think will be more useful: a single line at the bottom of your resume, or hundreds of people who can help you get interviews? c. There’s almost no correlation between the CFA and what you actually do as an investment banking, private equity, or hedge fund Analyst / Associate. Last time I checked, the CFA curriculum did not cover administrative work, due diligence, pitch books, and the financial modeling specific to banking. Please, no more email or comments on the CFA. Use those 400 hours and do some networking, learn another language, or go on a trip around the world – any of those would be more helpful for getting into finance. 2. Your Activities “But wait,” you say, “I thought it was really important to be ‘interesting’ in interviews?” It is – but bankers pick resumes mostly based on work experience and whether or not they know you. Now if you’ve done something truly impressive – like starting a non-profit that built 1,000 schools in Southeast Asia – that can actually help you. But let’s be honest: many activities are just resume padders, and having 1 name or 50 names won’t make a difference if that’s the case. If you have absolutely NO finance experience and nothing even related to business on your resume, then you can play up your activities – but otherwise avoid it. 3. That Investment Club You Started If you can’t get a real internship, start an investment club or student-managed fund instead, right? Actually, this logic is not terrible: it’s certainly more helpful than the CFA, and in the absence of real business experience, it looks better than being a lifeguard or working at a restaurant. But no student-run investment club is going to put you on par with the guy who did 2 summers at Morgan Stanley. You should only do this if you can’t find a part-time, school-year, or summer business-related internship of any kind. 4. Your “Internship” Waiting Tables Truthfully, being an investment banking analyst is much more similar to being a waiter than it is to most “real” internships. You need to multi-task, you’re always running around, you have to deal with annoying clients all day, and you have to do a ton of grunt work. But bankers themselves don’t see it that way and won’t acknowledge this type of work experience as equal to a “real” internship. You don’t want to write about any of this unless you have nothing else to point to. 5. Bloomberg / FRM / CPA / Other Meaningless Certifications Similar to the CFA, most other certifications are also useless – although on the up-side they don’t waste nearly as many hours as the CFA. Some of these certifications – like the FRM and CPA – have nothing to do with investment banking, while others – like Bloomberg – are somewhat relevant but useless compared to, say, calling 5 alumni. Remember, the only part at the bottom of your resume that most people even read is what’s in the “Interests” section. Bored office workers always want to meet interesting people, but no one wants to meet well-certified people. 6. The GMAT While getting a decent GMAT score is important for business school admissions, it’s less relevant for getting into investment banking at the MBA-level. And it’s even less relevant at the undergraduate level. If you had to take it for business school anyway and earned a good score, you can list it if you want – but if you don’t have room, cut it. But if you haven’t had to take it for any reason yet, don’t do it in hopes of getting a good score and using that to propel your way into finance: your time is better spent elsewhere. 7. Non-Native-Speaker-Level Language Skills Ok, this one is not 100% true. It helps to have some language ability, even if you’re not native speaker-level – something is better than nothing. But unless you’re at an extremely high level (i.e. you could watch a university-level lecture on economics, understand everything, and then write a brilliant 10-page paper about it in that language), you can’t leverage language abilities to move to offices in other countries – there’s too much reading and writing required. There are some roles – like trading and certain back and middle-office positions – that don’t necessarily require language mastery. But if you’re reading this site, you’re probably more interested in areas like investment banking and private equity, both of which require a lot of communication and reading/writing. 8. Your Ph.D. After the CFA, this might be my #2 question received via email: “Will a Ph.D. help me get in? Do banks care about my quantum physics skills? What if I’m the next Isaac Newton?” First off, if you’re smart enough to write the next Principia, you should not be in investment banking because you’re going to get a lot dumber. Go write a book about your discoveries and win a Nobel Prize. The math required in finance is VERY simple. Addition, subtraction, multiplication, and division if you get really fancy. Most of what you do in M&A is administrative: sending emails, keeping track of different buyers, and updating Word documents. So the only reason to get a higher degree is if you want better access to recruiting channels at a more prestigious school – and even then, stop at the Master’s level rather than doing unnecessary work. 9. Financial Modeling Courses “Wait a minute, you just RELEASED your own financial modeling course, and now you’re saying that banks don’t care whether or not we’ve gone through them? Are you crazy?” No, I’m just being honest. The *knowledge* you gain from these courses is very helpful, especially if you don’t have a finance background or you want to prepare before you start working. But listing the course itself on your resume – no matter which one it is, or whether you invest $100 or $10,000 – doesn’t guarantee you anything. The bottom-line is that if you want to prepare for interviews and for work itself, these can be a good option – but they fail as mere resume padders. Wait, So What DO They Care About? Easy: 1. Work Experience 2. Educational Background (more applicable if you’re a student) 3. How many people you know at their firm and how much they like you (networking) But there’s a problem if you’re trying to use any of these to boost your chances at the last minute: each one takes years or months of effort – you can’t do it overnight. But It’s the Last Minute and I Really Need Something! It’s pretty much impossible to add anything substantial if you only have a week left before interviews begin – but if you have a few months, here are 2 quick examples of how you can make some impressive-sounding last-minute additions: 1. Study abroad program / some kind of international experience. (doesn’t need to be 3-4 months – something shorter is fine) 2. Summer, night, or part-time program at a well-known school. Any type of study abroad program is also great to talk about in interviews, especially if it’s to a completely random country or region. Going on a trek to Antarctica stands out more than going to Paris. Doing some type part-time or summer program at a brand-name school is more helpful if you’re not going to a well-known school right now – anyone scanning your resume quickly will say, “Aha, I recognize that name.” Last-Minute Standout? Of course, none of these tactics will make up for a lack of solid work experience or lack of contacts in the industry. But if you’re struggling to stand out with only a few months left, you don’t have much of a choice – you have to take what you can get.
"Think about how much networking you could do in that same amount of time: let’s conservatively assume 200 hours of study time for the CFA. " That statement 1) shows how ignorant he is & 2) somehow manages to state his case. Most people in banking don’t have the designation and therefore don’t understand it and don’t value it. He’s also right that Bankers just need to bang out pitchbooks and play with models. CFA goes way above the skills needed to be an IB Analyst.
agreed… but seriously who networks that hard? Don’t think that comparing that to studying is apples to apples comparison.
He is basically right…
I don’t agree with this statement: “Which do you think will be more useful: a single line at the bottom of your resume, or hundreds of people who can help you get interviews?” Of course, networking will help no matter what field you are in. But he is also saying CFA is JUST a line on your resume. You do learn a lot of finance concepts that would otherwise be unknown to many people trying to break into the industry. That said, I do think people hype up two things about the CFA: 1. What it can do for your career 2. How difficult it is Answers: 1. It won’t do much for your career, especially if you have no relevant experience. 2. It’s not rocket science. The process is very time-consuming and challenging no doubt. But someone who has a decent amount of willpower will succeed.
This is one of the more misguided articles I’ve read recently.
fxguy1234 Wrote: ------------------------------------------------------- > > > Most of what you do in M&A is administrative: > sending emails, keeping track of different buyers, > and updating Word documents. > Based on this accurate description of the functions, all you need would be a high-school diploma. Why would someone who’s main function is to track buyers and send emails even need any certification or education beyond a basic BA ?
^Good point
mo34 Wrote: ------------------------------------------------------- > fxguy1234 Wrote: > -------------------------------------------------- > ----- > > > > > > > > Most of what you do in M&A is administrative: > > sending emails, keeping track of different > buyers, > > and updating Word documents. > > > > Based on this accurate description of the > functions, all you need would be a high-school > diploma. Why would someone who’s main function is > to track buyers and send emails even need any > certification or education beyond a basic BA ? Solid +10
He is basically right for banking, I think he is a little off in that the CFA is totally useless and not recognized for new HF or PE analysts. It really depends on the fund and whether you have actual investment experience (which if you have the CFA you should, unless you BS your work experience).
Why spend hours learning all you can about the industry when you can spend them changing the colors on the charts 40 times and aligning the page numbers just right
CFA is for portfolio management and investment analysis, not really for investment banking. So I think the article is more or less on target. Yes, there is some overlap in the FSA, Equity Valuation, and the Corporate Finance parts of the CFA, but most of the rest is kinda superfluous. If you want to be a banker, CFA is a lot of work, much of which isn’t terribly useful, so you look inefficient.
bchadwick Wrote: ------------------------------------------------------- > CFA is for portfolio management and investment > analysis, not really for investment banking. So I > think the article is more or less on target. Translation: you didn’t read the rest of the article where it says the CFA is not relevant for portfolio management and investment analysis either.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > bchadwick Wrote: > -------------------------------------------------- > ----- > > CFA is for portfolio management and investment > > analysis, not really for investment banking. So > I > > think the article is more or less on target. > > Translation: you didn’t read the rest of the > article where it says the CFA is not relevant for > portfolio management and investment analysis > either. I was responding to: "If you want to be a portfolio manager, go ahead… but for the rest of us it’s marginally helpful at best. "
Yeah, I’m with bchadwick on this too. The author is totally correct. CFA is helpful, but look at how many people are in the CFA program and are struggling to find jobs or move up in the corporate ladder. Nobody is saying that the CFA charter is useless, but tradeoff between time and benefit associated with the program is simply not a favorable one for IB or PE, in my opinion.
numi Wrote: ------------------------------------------------------- > The author is totally correct. Disagree. The vast majority of senior-level hedge fund analyst positions are asking for MBAs, CFAs, or a masters in a relevant field these days.
Well, I was specifically referring to IB and PE. Not sure about hedge funds, but a lot of the senior analyst positions I hear about through friends and colleagues don’t make any mention about CFA. The article was targeting people that are aspiring to get into IB. Maybe the CFA has been helpful to some people getting into IB/PE, but for the majority of us in those fields already, it isn’t. These same sentiments are shared by some partners/principals at our firm that have the CFA already – they’re not complaining that they have it, but they don’t encourage anyone that doesn’t already have it to go down the route because it’s so time consuming and minimally value-add to what we actually do every day.
Good insight Numi, thanks for that. Just curious how PE folks view the CAIA, considering its more geared towards the PE/HF space. Btw, sorry I haven’t responded to your email yet, I’ll try to get to it later tonight.
When it comes to getting into IB the MBA is more important/recognized than the CFA and the primary value from the program comes from the contacts from the MBA.
king_kong Wrote: ------------------------------------------------------- > Good insight Numi, thanks for that. Just curious > how PE folks view the CAIA, considering its more > geared towards the PE/HF space. > > Btw, sorry I haven’t responded to your email yet, > I’ll try to get to it later tonight. speaking for pe, i hardly see the cfa and i’ve never seen the caia from my encounters. i completed my cfa charter after i got into pe only because i had free time and i hadn’t gone through a formal training program. in my subsequent interviews with other my funds, the cfa was rarely brought up.