Types of Interviews in Finance / Investment Banking Recruiting
There are typically three parts to most interviews you encounter when recruiting into a finance job or an investment banking job out of campus:
Behavioral (or fit) interviews where the firm is trying to assess your personality, work ethic and cultural fit with their organization
Technical interviews where they try and assess whether you have the minimum understanding of finance and other core skills for the job
Aptitude Tests — these can occasionally be case interviews, or involve brain teasers. They are non-finance heavy and are meant to test your analytical and problem-solving skills
Note that often the same interviewer goes through all three, or sometimes they assign roles so more senior interviewers (Managing Directors) assess the behavioral aspects and they have more junior team members (Associates or Vice Presidents) who assess the technical and aptitude aspects of the process, occasionally with a case study.
There are also two types of interviews you can encounter when you recruit for a finance or banking job as an undergraduate:
1. On campus interviews & Phone Interviews
These will typically be mostly behavioral questions, and may include a few technical if your resume leads the interviewer to think that you should know them or if you give answers that lead them into them (In my case, my resume showed I won a valuation challenge hosted by a large bank, so I received valuation questions frequently)
These will typically be held at the offices of the bank you are interviewing with, and are typically final round interviews. The standard format is 5 back-to-back 30-45 minute interviews with members of the group at various stages from associate to MD. I have had some where I had 3 back-to-back 45 minute interviews and one with 6 back-to-back 20 minute interviews
Most of the time these interviews will be behavioral heavy, and technicals may be weaved in based on how your resume leads them. Many times one of the interviews is a designated technical interview and the rest are up to the discretion of whoever is interviewing.
Preparing for the Behavorial Interview
The airport test is considered the most important part of deciding whether or not to hire someone. The idea behind this is, would I be able to enjoy being stuck in an airport with this person. The behavioral/fit Interviews are to get an idea of whether or not you’re that person. These are the most important because they outline what your story is: why finance, why this firm, what motivates you, and so on. Typical questions are:- Walk me through your resume?
Tell me about yourself? (your story)
Why finance / investment banking?
Why do you want to get into that specific firm / group that you are recruiting for?
What are your 3 biggest strengths/weaknesses?
What motivates you?
What is your proudest moment?
Most questions are variations of these themes. The idea is to have very crisp 30-60 second answers, but also not seem overly scripted. Your answers should demonstrate a deep level of understanding of what the job entails, and what makes the firm you are applying to different from other large banks. The way to make these answers rich and effective is to network, as I discussed in my previous essay on networking.
Preparing for the Technical Interview
These questions are meant to test whether you did your research on what type of accounting finance questions to expect and to see if you can get though some basic calculations. Technical questions do not typically win you the job as they are just a box to check. They can however lose you a job if you get a question wrong. At entry-level positions in finance and investment banking, questions are typically geared towards basic finance (e.g., CAPM, discount rates, DCF), and basic accounting (how the three financial statements connect). Perhaps the most common question at this stage is something like “Walk me through how depreciation flows through the three financial statements”. If you are getting really difficult technical questions, don’t worry. They are probably just testing to see how you react under pressure. Just walk through your reasoning so even if you don’t get the answer right, they understand that you have a sound problem-solving framework.
Preparing for Brain-Teasers and News Related Questions
Brainteasers are meant to get an idea of how you reason through questions. Instead of getting the right answer you are meant to talk through how you would work through the problem step by step. These are becoming less and less common in interviews.
News related questions are meant to judge how up to date you are with the news and with how news may affect the market. These are occasionally weaved into interviews, more so for group-specific interviews, or when there is relevant news on the bank you are interviewing with in the news. These questions are great to show that you have a real interest in finance, the industry group you want to recruit into or the firm you want to recruit into. So if you have done your research, you will be happy to get these questions.
How to judge how an interview is going and to deal with failure?
If an interview runs longer than the allotted time and feels like a conversation than it is usually a good sign. If an interview shifts to a long range of technicals for no apparent reason (nothing on resume to lead into them) without having gone through the usual behavioral it is typically a bad sign, however the interview may have been structured as a technical interview and is not as telling of a sign as time usually is.
The Hostile Interview
Every now and then, an interviewer would deliberately be hostile to test the candidate and see how they hold up under pressure. One of my interviews with an MD, my third interview with the group, went as follows:
Q1: Why would you never want to work for this bank/group.
A1: uhh well I really do want to work here. This is my top choice.
Q2: Answer the question.
A2: Ok, well maybe because congressman x is trying to pass legislation specifically to break up this bank, which would remove much of what makes this bank what it is.
Q3: Based on that response would you say you are unprepared, or just cannot think on your feet?
A3: I think I answered that question well, considering I not only gave you a valid reason for why this bank would no longer be as attractive and cited a very relevant and timely piece of legislature that is being considered now.
Q4: I disagree, but tell me what you think of the MD you just interviewed with?
A4: I think he’s great. I’ve talked to him before today and he has been very helpful in walking me through the career development process.
Q5: (scoffs) well you are wrong about him, he’s actually an a**hole. He’s only in the office 2 days a week and wouldn’t be able to hold your hand in the scenario you did make it here.
I think you get the picture. The whole interview went like that.
I was informed that I was not going to receive the offer a week later. I knew it was because of the fact that I had gotten nervous during my hostile interview. There was no doubt that the MD did not enjoy my company and would not want to spend time in an airport with me. I moved onto the next interview more prepared because of the interview. It was difficult because it would have been the best job to have had on my resume, however in hind sight was probably not a good fit.
The Most Important Tip for Interviewing in Finance
Your best chance of doing well in a finance or banking interview, is if you have met with the interviewer before, or have spoken to people in that group / firm extensively. This comes back to the advice on networking that I shared in the last essay. Not only does networking get you the interview, but it also gets you a feel for the firm and the group you are recruiting with so your answers are deeper and reflect a more sophisticated understanding. Moreover, if you interview with someone that you have met previously through the recruiting process and made a connection with, that can meaningfully increase your chances of being memorable and doing well in the interview. So don’t forget to network.
Guide Written by Valuation University and originally published on Tapwage