career exploration

"Hardos"

“Hardo” is the term used to describe students that go hard to break into banking. They are the students that by second semester freshmen year (give or take a semester) know they want to go into banking, they know everything there is about how to walk the walk and talk the talk. They know their technical questions inside and out, they are extremely polished with their answer’s to why IB?, their resumes look impeccable (including freshmen year hedge fund internship at family friend’s fund in Greenwich), they discuss recent deals like they actually understand what deal rationale is, and they’ve networked with every banker you know.

“Scrub” is used to describe the complete opposite of a hardo. Someone who has no understanding of banking and it’s culture. Often times, signs of a scrub are having no idea what technical questions are, has never networked with a banker before, posts on Linkedin when they get a an internship offer, has a very low GPA (sub-3.3, as yes, there are still phenomenal candidates in the 3.3-3.8 pool, although elite boutiques and bulge brackets aren’t really paying attention to them anymore), has no relevant finance internship experience, resumes are mis-formatted, and the list goes on.

Essentially, the big differentiation is that hardos are typically the ideal banking candidates on paper* (checking all of the boxes), and they already have a relative understanding of the culture, while scrubs are considered bad candidates both on paper, and for behavioral reasons.

ATTITUDE

Hardos, although it would seem would make for shoe-ins, today, it can be either a compliment or a negative. Hardos were typically considered good candidates for banking because they took the time to understand the job and its people, and work very hard to get there. It took some of the guess work out of the equation when considering hardos because they had done a lot of the work tailoring themselves to fit in ahead of time, working hard in and outside of school, and wanting deeply to be great at the jobs... However, today being hard can also mean that you are too cookie cutter, have a bad attitude, or are a psycho because all you do is live and breathe for finance.

Junior bankers often times don’t want to be in banking for life, so when they see students that have no relative interests other than finance, it is a red flag of someone you would not want to work next to, at the desk. Additionally, because of the influx of Instagram and Snapchat accounts that propagate and mock the worst parts of banking culture, students are clinging onto and making this culture their gospel. Most junior bankers don’t smoke juuls, use the terms “deal sled” to describe their loafers, go to the Hamptons every weekend, or use MD speak in normal conversation. It’s not uncommon to see hardo college students speak to each other using language like “circle-back,” or to see college upperclassmen have attitudes as though they were MDs; these are the very kids who are the most desperate for prestigious jobs and treat bankers as the pinnacle of human society - they can be seen treating their peers with MD like attitudes and with attitudes of entitlement that most bankers absolutely despise. The very things that most bankers hate about banking culture can be caught influencing the next generation of would-be bankers in the most negative ways.

Everyone Talks

A friend of mine, who works at an elite boutique, sent me a screen shot of a text he received from a college student I had introduced him to, and whom he had spoken to once. The text was wishing him a “Happy Thanksgiving.” Moves made by college students that are not genuine but clearly made to endear themselves to bankers are easily spotted. This also wasn’t the first time anyone had sent me screenshots of a would-be banker doing things that junior bankers loathe - everyone talks and being a hardo or a scrub sends signals across the street.

Be Genuine

Many bankers involved in recruitment note that nothing replaces being considerate, genuine, and working hard. That candidates that are over-polished with their emails and in conversations are beginning to be ruled out because hardos have taken things too far and sometimes are being simply referred to as too insane, psychos, or having bad attitudes. Diversity in interests is desired and the elevator test is still king - today’s hardos just aren’t the kind of people most bankers want to sit next to at the desk.

Elite Boutique, Bulge Bracket, Middle Market...what does it all mean?

As sophomores (or anyone interested in Investment Banking) look into various banks they will surely come across terms like bulge bracket and elite boutique. Most outside of the field have no clue how to parse through the various categories of banks and what makes them different. We have created a comprehensive guide on differentiating between categories and finding out which is the best fit for you.

Origins

The term bulge bracket comes from the fact that on deal prospectuses the leading investment banks would have their names printed largest on the covers - almost as though they were bulging off the pages.

The banks that were most often bulging off the pages came to be called Bulge Bracket banks. They were the top banks to work at because they were the ones who got active, leading roles on deals - more leading deal roles, more fees, more prestige. This designation has shifted a bit today.

Differentiators

When differentiating the different investment bank categories there are a few factors that are important to keep in mind:

  • Deal Flow - as previously mentioned Bulge Brackets were historically considered the most prestigious and best banks to work for because they had the best deal flow. Bankers would get the most experience, most fees (translates to highest bonuses) and most prestige. Deal flow is an important factor that most junior bankers need to consider when recruiting.
  • Exit Ops - typically the exit opportunities for junior bankers were private equity and the buyside. As the landscape has shifted over the years and grown more competitive, understanding which banks lead to the top exit opportunities is a huge factor in planning career trajectory.
  • Compensation - the banks with the most deal flow and lean deal teams typically pay out the highest compensation. Street wide compensation doesn't usually differ much between categories unless you focus on the top elite boutiques. Compensation just comes with the higher level of work in that scenario.
  • Culture - junior investment bankers notoriously work long and hard hours, but it doesn't necessarily mean that they have to be in a toxic environment. Banks are focusing more and more heavily on creating better cultures to attract the best talent. 
  • Prestige - banks with the strongest mega-deal flow are typically considered the most prestigious. This is a factor that is important to many junior bankers, but it is a person to person consideration.
  • Work / Life Balance - many times when focusing building out their long-term career paths junior bankers focus heavily on deal flow, exit opps, culture, but neglect to think of work/life balance as it is almost impossible to have one when working in traditional investment banking roles. However, for those who take this factor very seriously, there are options that exist however they compromise on other factors,

Bulge, Boutique, Middle Market, Regional...etc.

Typically the banks most talked about are Bulge Bracket - the Goldman Sach, JP Morgans, etc.- however the other categories of banks are important to look at based on individual differentiators. Something that is commonly is misrepresented is that Bulge Brackets are still the most prestigious to work for, when in reality it is elite boutiques. A deeper dive:

Elite Boutique

  • Deal Flow - predominantly M&A focused banks with smaller headcounts and the best deal flow. This translates to less meaningless work (endless pitch books) for junior banks and considerably more deal flow.
  • Exit Ops - the best exit opportunities. Megafund buy-side opportunities come to bankers at elite boutiques more easily than at any other tier
  • Compensation - exceedingly the highest compensation on street. All-in first-year compensation is on average 20% higher than rest of street
  • Culture - leaner headcounts and higher focus on creating a better top down environment for junior bankers - junior bankers can also be very competitive
  • Prestige - highest of all categories
  • Work / Life Balance - nonexistent

Who is this right for? - anyone looking to have the most deal flow, loves finance, doesn't mind working as hard as possible, and wants the most prestigious exit opportunities. For those who don't feel comfortable when others aren't hustling as hard as them, as well as for those that understand that they want to be at the top wrung of high finance.

Bulge Bracket

  • Deal Flow - predominantly full-service banks with balance sheets that handle M&A, Equity Offerings, and Debt. Bulge brackets want to win every single deal, both the mega deals that elite boutiques chase and the smaller deals lower middle markets will attack - this means junior bankers will have a healthy mix of deals and meaningless work. Overall strong deal flow.
  • Exit Ops - great exit opportunities for the top producing groups at specific banks (target groups) and significantly less opportunities for non-target groups at Megafunds. Strong opportunities for middle market PE
  • Compensation - uniform with street
  • Culture - overall bank wide efforts to create better culture make a difference but the culture is difference bank to bank, and group to group. Sometimes you can be just a number because bulge brackets can have large deal teams and larger headcounts in groups, while in others you can be actively engaged with senior bankers and have strong culture...
  • Prestige - 2nd to Elite Boutiques - greater name recognition outside of high finance.
  • Work / Life Balance - nonexistent when staffed on active deals, but usually have 1-day a week off during slow periods

Who is this right for? - anyone looking to have strong deal flow, a great learning and training experience, and enjoys having name recognition for where they work.

Upper Middle Market & MM Boutiques

  • Deal Flow - mix of full-service banks with balance sheets that handle M&A, Equity Offerings, and Debt, and M&A focused boutiques that work on middle market sized deals. Overall deal flow is strong but focused on smaller deal sizes.
  • Exit Ops - opportunities for middle market PE
  • Compensation - uniform with street (MM boutiques may pay slightly above)
  • Culture - leaner deal teams and overall bank wide efforts to create better culture make a difference, but the culture is different bank to bank, and group to group.
  • Prestige - MM Boutiques are as prestigious as a bulge in many instances however the name recognition outside of high finance doesn't exist. For other upper middle market banks the prestige doesn't come from the bank name
  • Work / Life Balance - nonexistent when staffed on active deals, but usually have 1-day a week off, and can have long slow periods with great hours (< 80hrs / week)...MM Boutiques may work as much as elite boutiques with no work / life balance

Who is this right for? - anyone looking to be an investment banker, and have a great learning and training experience, wants a slightly better work / life balance, but doesn't care as much about the prestige or closing big mega deals...MM boutiques will have stronger deal flow, but not the work / life balance

Lower Middle Market

  • Deal Flow - full-service banks with balance sheets that handle M&A, Equity Offerings, and Debt. Overall deal flow is not as strong because they compete with both other MM and BB banks. Can expect to spend at least 10% more time on meaningless work than at a bulge, either pitching for work or on deals in passive roles (bank collects a fee for being on a deal but the bankers don't actually add any value in terms of advisory)
  • Exit Ops - opportunities for middle market PE
  • Compensation - uniform with street
  • Culture - leaner deal teams and overall bank wide efforts to create better culture make a difference, but the culture is difference bank to bank, and group to group.
  • Prestige - not really prestigious in terms of the bank names
  • Work / Life Balance - nonexistent when staffed on active deals, but usually have 1-day a week off during slow periods and can have long slow periods with great hours <80

Who is this right for? - anyone looking to be an investment banker, and have a great learning and training experience, wants a slightly better work/life balance, but doesn't care about the prestige or closing big mega deals

Regional Banks & "Banking Lite"

  • Deal Flow - full-service regional banks with balance sheets that handle smaller regional M&A deals, and specialized Equity and Debt Offerings. Overall deal flow is not comparable to EB, BB, or MM in terms of deal type.
  • Exit Ops - opportunities for regional PE (usually involves a pay cut)
  • Compensation - uniform with street or sometimes 10-15% below street
  • Culture - leaner deal teams and overall bank wide efforts to create better culture make a difference, but the culture is difference bank to bank, and group to group.
  • Prestige - not really prestigious in terms of the bank names or title
  • Work / Life Balance - great. 70 hour weeks are average with occasional weekend work

Who is this right for? - the person who wants to earn twice as much as the other finance graduates and similar to street with a great work / life balance, but doesn't care as much about doing traditional investment banking work


Networking as a Second Semester Sophomore

As junior year internships are the foundation to securing full-time investment banking roles, to prep for the internship recruiting cycle, sophomores need to begin preparing and networking earlier and earlier. Second semester sophomore year is a good time to begin cultivating and building networks ahead of the junior year fall recruiting cycle, which has actually been accelerated at many investment banks to begin NOW and have superdays as early as this April (read the article we are quoted in, on the new recruiting cycle here). We have received lot’s of questions of how to approach the networking at this stage and have curated the best here as a supplement to our Networking Guide

Q1: How do you suggest approaching Investment Bankers, if I don’t have previous industry experience? 

A1: Ask for an informational interview, say that you are interested in investment banking because of x club you are in (or any other reasons why IB is a genuine career path you want to pursue) and would like to ask if they could squeeze 30 minutes out to talk about their experiences…the key is to show that you have validated your interest in some way, and are now looking for more information.

Q2: What are some of the tips you would give to best prepare for Informational Interviews?

A2: Know the basics of banking. The purpose of the call is to expand on your knowledge not to start from scratch. What does an investment banker do, what the roles of various positions are, etc. Prepare questions that are focused on the banker’s own recruitment process and current experience. Ask what it's like working on a deal versus being staffed on pitch books and marketing materials. What are big standouts about xyz bank, what makes it special?

Q3: How would you suggest finding where in Investment Banking I want to work in? 

A3: Explore and conduct informational interviews with bankers across product and coverage areas. This will also help make your pitch for an info call much more precise as well. Saying hello I’m very interested in investment banking because xyz (experience in IB club, time spent shadowing a relative in IB, books read on the topic) and would love to learn more about the M&A space when networking with an M&A banker is a much better pitch than, just wanting to learn about banking. The more targeted you can be the better. This will also help you understand the nuances of the spaces. Additionally, if you already are involved in a student-managed fund maybe a sector you have explored there can be a good guidepost. This doesn't need to be the answer for what sector you end up in for the rest of your career because you can't know, or plan that out at this stage.

Q4: How would you go about reaching out to a senior level individual (VP or an MD) at the investment bank? 

A4: Same avenues you would use when approaching an analyst - friends, family, alumni base, or you can go completely cold but do your research into what about that MD’s role is of interest to you - this is the same kind of diligence we mentioned in a previous question (you can find a break down of how IB roles are staggered here). Do they have extensive exp in a specific coverage area you are interested in and would love to connect? Do not be creepy with this and list out a person’s work history, just briefly mention that you saw they worked in FIG and you want to learn about FIG. … Linkedin requests will typically go unaccepted by senior level staff so learning a bank's email convention and shooting a direct email is the best way to get on their radars. As with any form of networking, remaining humble and persistent will go a long way.

Q5: What types of questions would be appropriate to ask a VP or an MD? 

A5: What their rationale was in breaking into IB? What they wished they knew when they were in early stages of banking? Why they stayed on when there is typically a lot of turnover? How they make decisions on which banks to work at? What they feel are the qualities that make their best analysts? 

Q6: What are some of the resources I can utilize to learn more about deals that the bank has done, and get insight into those?

A6: Dealbook usually puts out recent deals with language that isn’t very technical, and you can use that to keep abreast of new stuff. If you find a deal that looks interesting then look into SEC docs like 10-ks and S-1s and merger prospectuses to see what role the bank played and more about the deal rationale.

Q7: How do you go about politely making the “ask” after the end of an informational interview? 

A7: The ask at this stage should be if they would be willing to stay in touch, maybe review a resume or give advice as you go through your process or connect with you with someone else in their group to learn more. After a second of third interaction (email or other) it is ok to ask for advice on approaching the recruiting process at their bank. This is different from asking for an interview and is more about how to look at things. If you were recruiting after your summer internship this would be very different and you would go for the ask in your first interaction, and usually if your first call went well enough they will proactively ask you to get involved in their process. However, as a sophomore, do not push the subject in your first call unless the banker does.


The Golden Handcuffs

Why do people get stuck in their jobs? Why do bankers go from IB to private equity? Why does the person who dreams of running a bakery do high finance at all? The simple answer to all of these questions is the Golden Handcuffs

Thinking of PE when you've only been on the desk for 2 months...

Most first-year investment banking analysts are getting settled into their desk after their summer training, and they are already starting to feel the pressure to start planning their next move – usually to Private Equity. Let's talk about what the recruiting cycle looks like for Private Equity for a first-year investment banking analyst.

What questions should I ask my interviewer?

  • Why did you choose this group/bank when you were going through the recruitment process?
  • How much pitching vs execution work does this group do?
  • When on live deals what type of role does the group take, ex. do you only take book running roles, as leads or do you take passive and co-managing roles as well?
  • What is the mix of deal types (M&A vs Equity vs Debt)?
  • Do you do the modeling in house or is it farmed out to the product groups?

The above questions show the banker interveiwing you that you understand what it's like to be on the job and the burning desires of first year analysts. Many analysts complain about being at banks where all they do is pitch work and never get to work on deals, or that they don't get enough experience doing financial modeling. When looking for Private Equity jobs after banking two of the big things that PE shops are looking for is your deal experience and modeling expertise. 

Accelerated Recruiting - the Investment Banking Internship

Accelerated Recruiting is how investment banks hire full-time candidates very quickly after internships and without conducting formal on-campus recruitment. As the name suggest it is considered an "accelerated" process prior to the standard fall on-campus recruitment and is invite-only.

As investment banks strive to fill more and more seats from just their intern classes and remove the need for full-time recruitment, accelerated recruitment is becoming the only way to break into banking or lateral after the junior year internship. The days of on-campus interviews for full-time roles are disappearing at bulge brackets and elite boutiques.

How to Network internally - the Investment Banking Internship

Most interns come into their Investment Banking Internships with the advice to network and get to know others in the bank, and build their professional network. Many times interns may also get placed in groups that they aren't interested in.

Networking is important for both building your professional network and to find your place where you want to be.