Finance Recruiting Step 5: Networking

By Michael Jimney, Risk Solutions Analyst at BlackRock

Without a doubt, networking is the most important part of the recruiting process. You can have the most in-depth technical understanding of the markets or an M&A transaction, but without building connections your knowledge can all be for naught. Networking ensures you are more than just a name on a page. During internship recruiting, Human Resource recruiters receive hundreds of resumes for any open position. This book of resumes is typically passed on to employees in each division, and they are expected to give their opinions on which candidates to interview. To the over-caffeinated Analyst, with no time to read every single resume, this stack amounts to a long list of names. Thus, the best case is when an Analyst sees your name and thinks “I know this kid, they could be good here,” and quickly recommends you to be interviewed.

One opportunity for networking is at corporate events. For sophomores and juniors, these events are a way to cast a wide net or to get to know a variety of professionals. Companies targeting Baruch students will typically hold corporate presentations on campus. These events usually consist of a presentation that includes information about the firm, the positions for which they are recruiting, how to apply, and will also offer students a chance to network (introduce yourself and ask questions) with various professionals. One rule of thumb is ALWAYS to bring a pen and notebook. Take notes about each professional and any other relevant information DURING the presentation. It will allow you to plan who to network with and what to talk about (for more details about asking good questions, see post 2 HERE). During the presentation, it is a good idea to write down how to pronounce any names which are new to you. Making a good first impression can be a bit rocky when you mispronounce someone’s name; by contrast, it shows a great level of interest if you properly pronounce a difficult name on the first try.

Another opportunity to build connections is when someone offers to refer you to a contact in the business. For example, your friend says “I know an alum working in risk, you should reach out to him.” Typically, the next step would be to email this contact and ask about setting up a time to meet in person. The two benefits of this kind of networking are 1) a warm introduction, and 2) the person works directly in a role you are interested in. A “warm” introduction, such as this, is different from a cold one because the relationship has been brokered by a 3rd party who knows both you and the professional. NOTE: your mutual friend is putting their reputation on the line by making the referral, which adds to your credibility and first impression. The connection will likely think “If our mutual friend thinks they are good, I can at least give him or her a chance.” On the flip side, it is possible that people could hesitate to refer you to their contacts if they are concerned you will embarrass them. By sending an under-prepared student to an industry insider, it can make the mutual friend look bad. So if you have just started showing an interest in Credit Risk, do not be surprised if your friend is not quick to connect you to their contacts. Once you take the time to learn about the industry, they will likely be more willing to make referrals.

The second benefit is that you know the new connection works in your field of interest. At networking events, it can be difficult to anticipate who will be there or which groups will be represented. With a referral, you can ask your mutual friend or check LinkedIn for background information about your networking target. This will allow you to prepare industry specific knowledge and questions to ask during the conversation. One warning – not all potential contacts will be interested in meeting. At networking events, people are there for the specific purpose of meeting intern prospects. While a referral can connect you to a professional, that person may be too busy or not interested in a meeting. If they do not respond initially, balance being persistent with respecting their time. Perhaps reach out by phone and follow-up via email, no more than twice.

The final method of networking requires some bravery: the cold contact. With a cold email or cold call, you have no connection with this person. This can be necessary if you cannot find an alumni or friend with a connection to your target industry, or if you want to rapidly expand your network. The key to cold contacting is volume. Sending an email to five or ten people may not get a reply, but sending emails to 50 or 100 might. Remember, the person you are emailing or calling has no obligation to respond. In fact, you run the risk of creating a negative impression if your attempts to connect are unprofessional or annoying. To counter that, look for ways to build credibility. If you send a generic email saying you want a job in equity research, you may not get many responses. Instead, if you write an equity research report and attach it to your email, you demonstrate your seriousness about the career and peak their interest, and are likely to get a better response. It is also important to take time to craft a thoughtful email or call script which tells them who you are, why you are reaching out, and why they should consider you in the most succinct way possible. You will want to have it proofread by many people, each time asking “Would you read this if it was in your inbox?” and/or “is this annoying?”

When it comes to forming new connections, first impression is key. Preparation and doing your homework can help you maximize your first impression so take the time to do your industry research (See Post 1 HERE), develop your soft skills (See Post 2 HERE and Post 3 HERE), and learn about relevant technical skills (See Post 4 HERE). It is not uncommon to meet professionals who have worked in the industry longer than you have been in school, so do not try to BS them. Before meeting with someone, I usually take a mental inventory. The point is to understand which topics I am prepared to talk about and which ones I should avoid. For example, before going into an event I may feel that I am up-to-date with the news and ready to talk about the equity market, but I do not have a good understanding of the foreign exchange markets. This does not mean I will avoid the currency traders during the event. Instead, I try to make sure that when the topic of cross country currency hedging come up, I will not get pulled into a deep discussion of the idea. I will be transparent about the fact I do not know about the subject because I have not learned about it, not because I do not understand it. The worst thing you can do is keep nodding your head and saying yes I agree. The trader will assume you are absorbing what he is saying and will expect you to add to the conversation, or will see you are just yessing him. In either case, you are wasting their time and yours.

The final step to networking is the thank you note. Often overlooked, this simple follow-up is not to be underestimated. After meeting with someone, send a thank you email within 24 hours (make sure you put thought into the timing of your email, sending it on a Friday afternoon is a bad idea). This email should consist of you thanking them for their time, showing excitement or interest in the material, and reference a unique topic you discussed. This is especially important for meeting someone after a networking event. Speaking about a unique topic will help the professional, who probably met dozens of eager students in a very short time, remember who you were. With even the simplest of notes, you are telling the professional that you are interested in the topics discussed and would be receptive to future communication. Students who do not send thank you notes risk being quickly forgotten.

Now that we have discussed the major tools necessary to land an interview, next I will talk about actually preparing for an interview.

Finance Recruiting Step 4: Technical Skills

By Michael Jimney, Financial Leadership Program (FLP) Correspondent

Technical skills have a special place in every finance student’s head. They are the core skills you develop once you land your dream job; yet, at the same time, students live in fear of having these skills tested in an interview. The perceived difficulty associated with technical skills can dissuade students from various positions because they do not feel prepared to have their skills evaluated. Thus, the purpose of this post is to demystify technical skills and to point you in the right direction when developing these skills.

Many students misuse the term “technical skills.” Students tend to think of technical skills as a catch-all for any skill that involves numbers, formulas, or math. When preparing for interviews last year, I read the largest technical skills guide I could find. My strategy was to understand everything in the guide and then I would be ready for anything. The mistake I made, along with many others, was presuming that technical skills meant the same thing across positions. When evaluating which industries to initially target for an internship (see Step 1 HERE), one of the goals is to identify what an analyst, for example, does on a daily basis. You can also get the scoop by asking a professional good questions about his or her role (see Step 2 HERE). Now is the time to convert that knowledge from “Can I see myself doing this?” to “What do I need to know if I want to do this?” Each position has a different set of technical skills required, so it is important to identify what they are. For an investment banker, this includes understanding concepts related to valuation, financial statements, and the deal process. For a trader, technical skills are more about understanding the markets, macroeconomics, and tools like Bloomberg. Diving into a huge textbook of everything finance can be time consuming, confusing, and intimidating. When you are trying to decide which skills to develop, be specific and clear about which role you are targeting.

Another thing to realize is that technical skills do not necessarily have to be quantitative. Math and logic problems tend to be feared because they can be “tested” in an interview. However, many of the skills you would not consider technical are actually very relevant. I have found a few core skills that are a must for any job in finance, and none of them are based in mathematics. They are:

Following the News/Markets
Reading and Summarization
Written and Verbal Communication
Attention to Detail
Problem-Solving

If you only do one thing to prepare for a technical interview, I recommend following the news and markets. Doing so is the best way for students to learn about finance, end of story. As I listed in Step 1 (HERE), there are many periodicals and news sites which are great resources. By reading the news every morning, you will have a greater grasp of industry trends, the economic situation in the US and abroad, current deals, investing ideas, and topics to use when asking insightful questions.

Related to keeping up-to-date with the news is your ability to read. Any analyst role you work in will require you to read a large amount of material. Thus, keep an eye on how much you are actually retaining. The more efficiently you can translate words into information which you can use or explain to others, the better you will be at your job. Breaking down documents or news into a few key points is what separates a mediocre analyst from a great one. For example, investment banking analysts are responsible for reviewing 10Ks. If you cannot articulate why you are using certain numbers in your model or why a company made a certain decision, in either an email or conversation, no one will trust that you have done a good job.

Attention to detail is another prerequisite for any position in finance. Because you will be dealing with money, everything you do needs to be precise and accurate. Especially if you are in a client-facing role, a mistake in the details can have a negative effect on both your analysis and your reputation.

Finally, a more obscure but still technical skill is problem-solving. This is your ability to break down a problem and identify the best way to resolve it. This has nothing to do with how groundbreaking your solutions are, but how you actually identify what the problem is. During your internship you will constantly be faced with tasks or materials that are completely new to you. Your ability to problem solve will determine how you tackle these unknown challenges, almost like solving a puzzle.

While the above skills are required for any position, there are specific skills required for each role in finance. For a position like trading or asset management, a lot of emphasis is put on understanding the market. This includes giving a stock pitch and having a view of where the macro-economy is going. Understanding how to analyze a security is also important, including using fundamental analysis (price to earnings, and other key ratios) or doing bond math. Being able to do math quickly is also a must, so prepare to be able to do multiplication and division in your head. I especially recommend knowing how to convert 1/8 into decimal form.

Equity research will require one to have some market understanding and security analysis, but it will also put a lot of emphasis on written communication skills. This makes sense considering the main responsibility of the research analyst is to write a detailed report of their stock analysis. Market risk positions also revolve around understanding the market but can be far more math-heavy. Being able to speak about VaR, statistics, and probability is important.

Looking at the skills required for a position in investment banking or credit risk, you will find a very different set of requirements. An understanding of accounting, specifically how to read financial statements, is an absolute must. Knowing various valuation techniques is also important, so make sure you can build a DCF from scratch and understand what the inputs, including WACC, terminal value, and free cash flows, actually mean. The different parts of the capital structure are also important to learn so you can accurately identify a how a company is funded. The fork in the road is which communication skills are emphasized. Credit risk analysts are required to submit reports of their findings, which means writing skills (while qualitative) are a technical skill. Investment Bankers require more of a blend. Verbal communication is important for interacting with clients, but written communication is just as important to produce the stacks of pitch books required from an analyst.

As you speak to professionals, you will gain a better idea of which skills are required for a particular group. Once you identify which skills to focus on, it is helpful to use time-based objectives to ensure you are making progress. Set up a series of checkpoints with specific goals you expect to reach by certain dates. For example, I may have a goal to finish a book by December 1^st and build my own VaR model by January 1^st. Please also note that you do not want to cram for an interview. Yes, I understand it works for class, but interviewing is a different game. Immediately following a test, your mind will purge the facts and definitions you crammed in. When interviewing, you must presume there is always a second or even third round. If you have Super Day a week after that first round interview, are you going to re-cram all that information? What happens when you have an interview pop up with only 24 hours’ notice? Memorized answers are too easy to forget and will be obvious to anyone interviewing you. Committing to memory your walkthrough of a DCF will quickly break down if you miss a step, lose your place, or are asked to explain a specific part in more detail. However, by actually taking the time to build a DCF, you will understand the steps through experience. It will take time, but learning what each piece of information actually means gives it more permanence in your mind. An interviewer’s job is to differentiate knowledge and problem-solving from memorization.

I am sure some of you are disappointed I did not just post a list of skills you must have for each position. The truth is each job is unique in the skills required to be successful. Many finance professionals will say “it isn’t rocket science.” The reason for that is because factors beyond technical skills are also important to be successful on the job. For example, the firm’s culture, its size, and the structure of the internship program will impact one’s ability to land that full-time job. As a student, an intern, and even a first-year analyst, it is expected that you will be on a steep learning curve. You don’t need to learn everything now. Instead, estimate which are important skills to cultivate now but know this will be an ongoing process. Once on the job, put yourself in your team members’ shoes and think about what skills they have developed. Then, just as you did to prepare for interviews, create a new list of skills you want to target and set up your calendar goals.

The term “technical skills” can be scary if you think about it as an oral exam. I prefer to think of them as tools in your toolbox, which you will need to demonstrate you know how to properly wield. You cannot memorize how to swing a hammer; you must do it until you get it right. Stay tuned! I will discuss a few strategies to meet professionals in Step 5: Networking.

Finance Recruiting Step 3: Developing Soft Skills – The Personal Pitch

By Michael Jimney, Financial Leadership Program (FLP) Correspondent

Networking is an important component of obtaining an internship or job. Considering any professional you meet will probably be speaking to several students in addition to having a full time job, truly standing out is a challenge. One good way to do this, which we have already touched upon, is asking good questions. Here, I will focus on another skill you need to master to differentiate yourself: the personal pitch.

A personal pitch is how you describe yourself to someone you meet. Commonly referred to as an “elevator speech,” it is a short summary of who you are and a bit of insight into what makes you unique. It is called a pitch, just as a marketer uses the word, because you are selling something: yourself. People will quickly get a first impression of you, so a strong pitch is a way to guide the impression. As a result, crafting your pitch takes a bit of practice and preparation.

One of the biggest mistakes people make when giving a personal pitch is listing everything on their resume. In a conversation, you only have a little bit of time to convey who you are; listing everything on your resume can be tedious and boring. If you meet someone on an elevator, as the name implies, you will have about 30-60 seconds to speak. If you meet someone at a networking event or for coffee, you can have 1-2 minutes. Practice allows you to know ahead of time what you want to say so you can maximize the use of your time. So, let’s dive into the actual preparation.

The best way to determine what topics to feature in your pitch is to start with a list. Start by listing all of your past jobs, clubs, and activities on a piece of paper. Many of these will already be on your resume, but include those that aren’t. Next, for each of these experiences, write down every project or task you worked on while you were there. There will be plenty of obvious ones, like the major analysis you worked on for weeks as an intern, but this list should also include the little things. Tasks that you might have only worked on for an hour or for a day are important to include. A week into my first internship, I built an Ikea shoe rack for one of the traders – include little things like that on your list. While it may seem silly, I frequently talk about it in my pitch.

Next, think about what skill(s) each of these tasks boil down to. Made cold calls? The underlying skills being developed are sales and public speaking. Prepared news summaries for your boss? That teaches you how to follow the markets and improves your written communication skills. Do this for all your jobs. Keep an eye out for themes like teamwork, problem solving, analysis, and technology skills. While projects are likely to involve a component of each, the goal here is to identify the primary skill. No task is too small or insignificant. My shoe rack example is about bonding with the team and having an attitude that no job is too small.

Now that you have all your experiences and skills listed out, it is time to create your pitch. As I discussed in Step 1 (here), you should already have some understanding about which roles you are interested in and which skills are the most relevant. Therefore, try to feature projects that best showcase your relevant skills. For Asset Management, one of the skills I really wanted to promote was my ability to follow the markets. When I give my pitch, I describe why I transferred to Baruch (to study Finance because I like following the markets), how I was able to get into my first internship (I demonstrated an ability to follow the news), and the work I did to develop my market and economic analysis skills (projects that involved staying plugged into the markets). Another important point to see from my example is how there is a story to my pitch. I show a progression of events, moving from point A to point B. As you go, show which skills you were able to develop. If you just tell someone what you did, it does not differentiate you from anyone else in that role. If you tell them about how you were able to develop skill X and Y, it shows them a little more about who you are. When I want to convey to someone that I can take on any task given to me, no matter what the challenge, I dust off my Ikea shoe rack example.

Once you have the basic outline of your pitch, you need to practice (a lot) with friends or colleagues. The goal when delivering a personal pitch is to get the other person interested in your story. You can tell if your pitch is good because the listener will be engaged and attentive. Don’t worry about including everything; if you do it right, you will have the rest of the conversation to share the details. When it comes to networking, a good pitch will help the conversation get off to a good start or make the new contact want to stay in touch with you.

Keep developing your pitch as the school year goes on because you will use it for job applications and for interviews (where “Tell me about yourself” is a common interview question). By taking the time to list out all of your experiences, you can adapt your pitch to any occasion or build on it as you become more comfortable. Once you have your personal pitch down, it is time to cultivate skills specific to your target position. Stay tuned for more about this in Step 4: The Technical Skills.

Finance Recruiting Step 2: Developing Soft Skills – Asking A+ Questions

By Michael Jimney, Financial Leadership Program (FLP) Correspondent

Generally speaking, soft skills refer to your ability to interact with others. Think about that. How you address someone, what subjects you raise, and how you smile or nod during a conversation are considered skills. These nuances feed into someone’s impression of you. In Finance, it is critical to be aware of the impression you are making on others. Because you will only have one chance to make a first impression, try to develop your soft skills before that first handshake. Knowing how to create a good impression is important. Luckily, there is one weapon that can be the key to your networking arsenal, and it will be the topic of this post – specifically: How to Ask a Question.

Networking is an essential component of your finance internship/job search. To effectively build your network, you need to create a connection with your contact. This means doing more than listening to them speak at a company presentation and collecting their business cards. One way you can build a rapport that will establish a real connection is to ask questions. In addition to creating a connection, it also allows you to gain insights and information into a particular career. Before I explain how to craft a question effectively, it is important to know there really are such things as good and bad questions. In order to better understand how your thought process works, professionals look at the kinds of questions you ask as a reflection of your judgment. Asking a bad question may not do you any irreversible harm, but a good question can make a big impact in making an impression.

Consider the four kinds of questions students generally ask when meeting with professionals (listed below in order of importance):

The insightful question
The attentive question
The typical question
The wrong question

Starting from the bottom, there are some questions which are just wrong. How much leeway you have with asking a wrong question is directly dependent upon the person with whom you are speaking. If you are talking to a Managing Director, you do not want to ask him what an investment banker does. That will make you seem lazy and gives off a bad impression, because you could easily have read about it on your own time,. However, asking that question to a current student who interned at an investment bank or a recent graduate is reasonable (albeit typical). Another wrong question would be “How much do you earn?” This is a question that makes most people feel uncomfortable. Asking about something they just explained is another no-no, as it shows you were not paying attention.

Typical questions are those you will frequently hear being asked. Those old standards include:

“What does a typical day look like?”
“How do you like working at company XYZ?”
“What do you do for fun?”
“Do you recommend any books or reading materials?”

Truthfully, these questions are an effective way to get information about the company and/or a position. Questions about what their typical responsibilities are or what skills they view as the most important are a good way to understand if the role fits your interests. When you first start networking, these will likely be the types of questions you will frequently ask. Just keep in mind that these questions will not get you noticed or remembered. Over time, try to shift from these typical questions to the insightful and attentive questions, otherwise known as the “good” questions.

The attentive question is where you take something the speaker has said and dig deeper. For example, “Earlier, you mentioned your involvement in the ABC transaction; could you tell me a little more about it?” The benefits of such a question are: 1) the speaker will know you are actively listening, and 2) you will get additional information about a subject where you might be lacking knowledge. A good rule of thumb: people like to talk about themselves. If you show a bit of interest in something they have done or mentioned, they will be more than happy to talk about it.

The final and most important of the aforementioned categories are the insightful questions. These questions connect outside learning to the subject at hand. For example, asking a banker “Considering the recent growth of the ABC sector, do you see the focus of your group shifting over the next few years?” shows that you are paying attention (like an attentive question) and you are also looping in outside information. Here, you get all the benefits of the attentive question with one key difference: you demonstrate that you are learning about the finance industry on your own time. The more detailed or complex the outside info, the higher the return will be when it comes to making a positive impression. Make sure you understand what you are bringing up because it is easy for a professional, who probably knows more about the topic than you do, to tell if you are just trying to sound smart.

In Step 1, I discussed the significance of researching the finance industry. Asking questions while networking is one way you could use that knowledge. It is also very important to stay up on current events. The Wall Street Journal is the standard (students get a discount price: http://student.wsj.com), but there are plenty of other periodicals or news sites like the Financial Times, Bloomberg, Reuters, Barron’s, and The Economist that are worth reading. The more time you spend reading, the better your questions will be.

When it comes to speaking to professionals, you want to spend most of your time asking insightful and attentive questions. That way, you get meaningful information from your networking contacts while leaving a positive impact. Questions are a great way to make a great first impression, but it is not the only skill you need to cultivate. In the next post, I will be going over how to develop your own personal pitch.