Hedging Your Bets

If the finance world were run by hoteliers, investment banking would be the space of chain hotels. The Bulge Bracket would be made up of the Four Seasons, St. Regis, and InterContinental. Boutique banks would equate to smaller chains, like the Boscolo, or even specialized arms of the larger chains, like InterContinental Crowne Plaza. But hedge funds would be the true boutique hotels—the ones that make up the more enigmatic side of the industry. Unless a scandal happens there, they are usually less known. They often specialize in a certain strategy or offering, say mud spa treatments or eco-camping. And they are often intimately marked, maybe even still run, by their founder. A hedge fund, like a boutique hotel, is something you start once you’ve outgrown the mainstream. It is also a place that many job-seekers turn to for a career, rather than just a couple-year stint. In short, it’s a place where you should look to make yourself at home.

For those even contemplating hedge fund jobs, the Street of Walls online “Hedge Fund” section (Training->Articles->Hedge Fund) gives information ranging from the general (“What is a Hedge Fund?” link: http://www.streetofwalls.com/articles/hedge-fund/learn-the-basics/what-is-a-hedge-fund/) to the highly specific (“Single Idea vs. Index Shorts” link: http://www.streetofwalls.com/articles/hedge-fund/learn-the-basics/single-idea-index-shorts/). Like with investment banking job-searches, you should start with a strategy (link: link to “Mapping the Street” article). And the first step is to know your options—as well as your own interests.

Historically, hedge funds are much newer than investment banks. The working model for such a fund was created in the late 1940s, but hedge funds weren’t popularized until the 1980s, by Geroge Soros and Julian Robertson. Investment banks, on the other hand, were famous and underwent many transformations even before the Stock Market Crash of 1929. But hedge fund jobs have quickly gained privilege, even within the much privileged finance sector, and they have proliferated into many different variations. There are long-short equity funds (the most common type), event-driven funds, and market-neutral funds. There are funds that focus on energy commodities and ones that focus on retail. The list goes on.

The hedge fund recruiting and interviewing process is both very similar and very different from that in investment banking. Hedge funds tend to hire fewer candidates fresh out of undergrad than investment banks. Instead, they usually look at those undergraduate alums who are about to finish a two-year analyst contract with a bank or at those finishing their MBA.

They also usually do not recruit on a set schedule like larger investment banks. In this way they are akin to the boutiques: They hire only when they need somebody, and it’s usually hard to predict when they will be in need someone. So if you do see an opening, it’s imperative to act quickly.

Thirdly, because hedge funds tend to be smaller and are much more numerous and varied than traditional investment banks, the company culture should play a larger role in deciding which funds you would like to work for. And as noted above, hedge fund jobs often can and hopefully will turn into a long-term career (link: http://www.streetofwalls.com/articles/hedge-fund/recruiting-interviewing/hedge-funds-work/). So, you want to make sure that you can not only stand to be in the same room as your teammates, but that you can see yourself really jiving with the team for the coming years. Otherwise, the job is going to get claustrophobic pretty quickly.

So know what you want (and what’s out there), apply wisely, and turn on the charm. You have to convince them to like you, too.

Mapping the Street

Street of Walls: It’s an obvious play one of the oldest names in and for finance, a play on a locale that’s carved itself not only into the geographical space of lower Manhattan, but more importantly into the center of the global financial conscious. The name also captures what it can feel like for those trying to take up residence on the Street—that you are met with a series of blank walls without doors to enter in through.

It’s not an unfounded feeling. People looking to get into finance jobs are first and foremost up against a wall of numbers: As we mentioned in an earlier article (link: http://www.streetofwalls.com/2012/12/drowning-in-numbers/), Bank of America is inundated with over 30,000 resumes every year for its 100-person investment banking internship program. Meanwhile a recent New York Times’ article (link: http://www.nytimes.com/2013/01/28/business/employers-increasingly-rely-on-internal-referrals-in-hiring.html?pagewanted=2&_r=1&nl=todaysheadlines&emc=edit_th_20130128) released that Deloitte, a major consulting and financial advising firm, receives 400,000 applications annually. These types of skyrocketing numbers are hardly restricted to these two institutions. Finance jobs are just plain and simply some of the hardest in the job market to get into.

The key to improving your job hunt odds is strategy—one that is comprehensive and multilateral. It is not enough just to post on job boards and company websites or to go to every recruiting event for which you can get your name on the list. You have to do both these things, as well as, of course, study for and take the WSAT (link: http://www.streetofwalls.com/wsat/) and keep your LinkedIn and every other social media profile shiny and up-to-date. To help candidates get a feel for what they need to include n their action plan, the “Finance Training Courses” section of the Street of Walls website (link: http://www.streetofwalls.com/finance-training-courses/) provides an in-depth overview of how to find and nail down investment banking jobs (methods apply to most other finance jobs, too).

The first step is to map out your playing field. Know each and every bank (link: http://www.streetofwalls.com/finance-training-courses/investment-banking-overview-and-behavioral-training/2-top-investment-banks/), from the Bulge Bracket to the line-up of boutiques, that could reject you but also just might accept you. And for every bank that does present you with a possible door handle, learn the organization behind that door well so well you could through its house blind. The most foolish interview mistake is to not have a solid answer for: Why work for [insert bank or firm name here]? There are people on the other side of each interview. Just like you, they like to be flattered—and not just taken for a ride.

The strictness of the financial recruitment and interviewing process veritably assures that wherever a company can catch you unawares, it will. Though knowing the company itself is important, to get the job you will have to have—and have proven that you have—the aptitude necessary for the position. Skills tested by the WSAT—from logic to economics—align with those that interviewers seek and assess in their interviewees.

So yes, you may have to camp out on the Street for awhile until you are able to persuade someone to take you in. But be confident that with the right acquired skills and an airtight strategy, a door will open eventually.

Social Media: User or Being Used?

Rarely a week goes by without a new controversy being introduced around Google or Facebook’s use of users’ private information. Such news makes it clear that though social media at first seemed mean to entirely benefit users, its advantage has increasingly become skewed (at least more openly so) toward companies. In the job market, this transformation chronologically coincides with companies paying less and less attention to job boards and increasing the value of networking, both in the social media sense and the traditional one. Individuals looking to become analysts, for example, now—or rather again—need to focus just as much attention on investment banking networking as on online resume postings.

We’ve discussed this latter trend before (link: http://www.streetofwalls.com/2012/12/job-boards-dead-alive-or-obsolete/), but a recent article by Phyllis Korkki in the Job Market section of The New York Times introduced yet another aspect to the social media recruitment paradigm: In certain industries, companies’ HR departments are taking search initiatives via social media networks. In other words, rather looking for a candidate’s online profiles only after the individual has applied for a position, recruiters are starting to look online for individuals who have yet to apply but whose web presence indicates that they have what it takes to fill a certain position. Street of Walls experts have not yet seen this trend within the financial job market specifically, but that does not mean it isn’t coming—or that the lessons of this new recruitment paradigm aren’t applicable to finance and investment banking networking as well. Anyone currently looking for a job, even and especially on Wall Street, needs to start making his- or herself searchable now.

Street of Walls breaks down invest banking networking tactics here (link: http://www.streetofwalls.com/finance-training-courses/investment-banking-overview-and-behavioral-training/investment-banking-networking/), including tips for building your web presence. The perfect place to start is with the alumni network for your undergrad or graduate school. Almost every university now has a website and online social network for its alums. Use it.

A LinkedIn is another primary necessity for job-seekers, because it is tailored for use by professionals. Its group functions are an especially vital and often overlooked tool for current job candidates. Whether via an alumni or other special interest group, if recruiters can easily find a connection between you and someone from their company, it can only help you out.

Equally important to note is that when it comes to job recruitment, the old adage “all press is good press” is wrong. If a friend's Facebook or blog post detailing a night of your drunken revelry together is easily searchable, it is not a good thing for you as a potential hiree. Have friends—if they must refer to you in such posts—use a nickname or partial name for you, and do not post searchable photos that show you in a poor light (i.e. doing a keg stand).

These days it is just not an option to not be online. So whether you are currently a social media master or still taking your first steps into the virtual networking world, continue to build on what you have. Hone that expertise or accelerate those steps to a run—your job search will thank you.

Where To: Finance

Reading articles in the Wall Street Journal and the business section of The New York Times, one might be tempted to think that “finance” is a secluded little world located in Manhattan’s lower half. The New York Stock Exchange and Wall Street are, after all, actual places in New York City’s Financial District, and many of the most important banks, like Bank of America, have their headquarters in Midtown East. But it is a fallacy to think that finance jobs only exist in New York’s most famed borough. Indeed, a recent AOL Jobs article reported findings that placed San Francisco newly atop America’s financial period.

San Francisco is especially prime territory for hedge funds, because of the large amount of venture capital available in the area. Its financial market also without question benefits from the tech boom nearby in Palo Alto and Mountain View. And San Francisco as a city has plenty of attractions of its own, particularly for young, entry-level job-seekers. Its weather is milder than in New York, its atmosphere more relaxed, and its restaurant scene booming (just look at any food blog or newspaper Dining&Wine section). Yahoo! Finance also recently reported that San Francisco is among the top 10 cities in the Untied States for current overall job growth. The west-coast hub seems primed for ongoing growth.

Other cities that AOL Jobs found to be good places to look for finance jobs include Denver, Nashville, Miami, Chicago, Portland, and the smaller town, Paramus, in New Jersey. Stamford, Connecticut is another spot with close proximity to New York City that is known both for housing those with finance jobs in the city and for providing such jobs, as well. And San Diego is another California locale with its fair share of hedge funds, including Torrey Pines Capital Management. This list of cities literally strings across the whole of the United States; finance is not only a coastal industry.

Nor do the financial opportunities stop at America’s two coastlines. London and Hong Kong have long been established as global financial centers. Especially if you have already invested time in learning Mandarin, the latter is an ideal place to look. Frankfurt, Germany is another solid player on the international finance scene. Its Deutsche Börse financial marketplace made bids in 2011-2012 to take ownership of the New York Stock Exchange (NYSE), which was ultimately blocked by The European Commission for fear of the monopoly the merger might create. And Switzerland, home to some of the most prosperous cities in the world, is also famed for its banks. UBS is based in Basel and Zürich, and Credit Suisse is likewise headquartered in Zürich, a city with a population of around 375,000.

There is no denying that New York City remains the stock exchange—and thus general financial—capitol of the world, but it is far from the only place to start (or continue or end) a career in finance. New York City is also a city where it can be easy to get burnt out—a city that never stops to take a breath. And while finance is a high-powered industry everywhere, many of these other locations offer a less highly powered environment. If this appeals to you, then do not be afraid to check out opportunities in different cities—across the United States and across the globe.

Connections Aren’t Everything

Undoubtedly, in terms of getting finance jobs, it helps if your father owns a hedge fund or your aunt is president of a major bank. And if your father does own a hedge fund or your aunt is such a president, you probably are not scouring the web for job advice. But for those who are looking for any tip they can get to land a job in finance, not having such a connection does not mean that you will never get a job. Though it may not always seem like it, for finance jobs what you know really does matter more than who you know.

The first testament to this statement is the interview process. Interviews for finance jobs, especially those at Bulge Bracket banks, are notoriously rigorous and require a large amount of technical knowledge. Interviews usually begin with the basic questions about the candidate’s background and his or her choice to apply to the specific firm. Next there are more job-specific questions. I.e. if you are applying for an analyst or trading position, you might be asked about your own stock portfolio or queried about the day’s Wall Street Journal news. And then, especially in second- and third-round interviews, there will be a series of more extended logic and scenario-based questions. These might be back-of-the-envelope calculation questions, such as: “How many ping pong balls could you fit into a 747 jet?” Or they can involve industry-specific scenarios, such as having the candidate decide whether to long or short a certain stock. Getting these second and third types of questions right is crucial to landing a job at a bank or other financial firm, and any candidate would be hard-pressed to lie his or her way to a suitable answer. You have to know your stuff—and know it well.

Once in a job in the finance realm, where you may be working on multi-billion-dollar mergers and acquisitions or with multi-million-dollar funds, it is even more vital to have the correct technical know-how. Even small mistakes can have large consequences, especially when dealing with other people’s money. Candidates who rely solely on who they know will find themselves easily caught in the big, stinking puddle of what they do not know.

To digress a bit, I once had a friend whose grandfather had donated a building to an Ivy League school and whose older sister had then been denied from that university. She was by no means dumb, but she perhaps partied a little too hard in high school and took a couple things for granted. Of course getting into a finance company and getting into college are much different (case in point: in the first instance they give you a salary, in the latter you pay to be allowed to stay), but the example goes to show that even if you do know someone, it is not always a guaranteed in. You have to have the goods to make the institution behind that someone believe in you.

So even though “networking” is the word on the tip of every career counselor’s tongue, candidates cannot only focus on this aspect of the job-hunting. Studying is equally, and probably even more, important. Nor does the importance of learning and improving on your skills stop once you have landed a job. The American dream of “making it” through hard work, sheer determination, and a good bit of knowledge acquisition is not entirely dead.

Job Board Overload

Want a job in finance? Job boards—on major agglomerative sites like Monster.com, on finance-specific agglomerative sites like eFinancialCareers.com, and on individual firm and bank sites—list plenty of finance jobs. The problem is that each listing, no matter where it’s listed, is pretty much guaranteed to have application overload. I.e. job boards and companies with job boards are seeing numbers that would be impossible for even the largest of Human Resources teams to sift through, and HR departments are not exactly known for having eyes to spare.

Of course, this isn’t a problem unique just to finance jobs. For almost any job in almost any industry the demand far exceeds the supply. With 12.2 million Americans still unemployed and an unemployment rate hovering at 7.8%, according to an early January 2013 Bureau of Labor Statistics release, this is hardly a surprising quandary. But just as people in finance jobs tend to deal with more money than almost anywhere else, so are their numbers in terms of job board overflow larger than almost anywhere else. Thousands, even tens of thousands of people, might apply for just one job. Why? The pay is good, the living (supposedly) easy (even though this living “easy” often requires 100-hour work works), and the prestige and chances for advancement higher than in many other careers.

The problems with job boards are ample, the solutions—not so much. Who is responsible for coming up with the solutions? Agglomerative job boards are making great traffic with so many applicants, but if they want to keep the business from the job listers’ side, it might be up to them to make the change. But banks and firms might have to change their approach to looking at and comparing applicants, as well. In other words, they cannot expect job boards to happily solve all of their recruitment problems for them. And in part, they haven’t. Traditional on-campus recruiting at “top” schools and networking have increased importance in the hiring process once again.

The dilemma is perhaps scariest from the point of view of the applicant, though. Applicants spend time creating usernames and putting together profiles and uploading their resumes on numerous sites, and once they’ve pressed “apply,” there is no actual guarantee that that resume will be opened on any Human Resource personnel’s computer screen. And if the applicant did not attend a “top” school, then he or she must work even harder than applicants who did attend one to make networking connections offline—because just one in, just one currently employed Associate or Vice President or Project Manager, could make all the difference in his or her future.

In the current situation, then, companies risk not finding the diamond in the rough, because they do not have the time or capabilities to comb all that rough, and the applicants who are those hidden diamonds enter the job arena at the risk of not being found and thus not having a way to pay their future way. One, or preferably all, side has to give in and start thinking creatively, start making a change. Or maybe it will be up to a fourth party—one who could revolutionize the job board or sweep it away with an altogether new system. As with most things, only time will tell.

Turning the Corner onto Wall Street

Applying for finance jobs is a bit like applying for college: You have your reach, target, and safety options. Except it isn’t as likely to find a “safety” firm as it is to find a safety college. Of the estimated 1.5 million people graduating from four-year colleges, hundreds of thousands will try to go into finance. It takes a lot of time, effort, and savvy to get Wall Street to notice you—the one, individual you—back.
 
A generation or two ago, money-making jobs students hoped to land fell more into the medicine and law categories. Nowadays people want to make money, and they want to do so right out of college—not after another four years of medical school, plus residency, or after three years of law school. The two industries with the most stable right-out-of-college promise seem to be finance and tech, and many tech jobs require specific skill sets, like engineering or computer science, even at the BA level.
    
On the finance side, even those who do elect to (or find the need to) attend an MBA program, it is a year shorter than law school, and many first-year MBA students already have two years of Wall Street analyst salary lining their pockets. And most finance firms are not major-specific in their career recruitment; experience and personal skills matter more than a “business” concentration. Especially for those who already have student loans taking bites out of their bank accounts, finance starts to sound like an ideal industry choice.

But don’t finance jobs equal sitting at a computer all day digging through Excel spreadsheets? Most any job today requires some face-time with a computer screen. And while yes, most finance jobs do involve a close relationship with Microsoft Excel, there is also a lot more to the story. Most positions involve a great deal of research—whether it’s of stocks, commodities, companies, or industries—and an even greater deal of analytical thought. Being an analyst is not simply a matter of plugging numbers into Excel formulas.

So let’s start with the reaches. In investment banking, these would be bulge-bracket banks—the world’s current nine most-profitable firms. This list includes Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. These are also the banks with the most stringent and hardest-to-breach recruiting processes. If you make it in and get an offer, congratulations. If you don’t, welcome to a very large crowd. Target banks might be more boutique ones. These are smaller banks with smaller staffs, so they are not necessarily looking to hire x number of analysts for every graduating class like Goldman would. Their recruitment cycles are thus less stringent, and especially if you are able to make a personal connection, it may be a slightly easier in.
 
This breakdown is only for investment banking. Each finance sector—from sales and trading to consulting to private wealth management—has its own hierarchy of companies. As with applying for college, if you only shoot for the ones at the very top, you might end up staying at home for the next four years. And as much as you might still appreciate mom’s cooking, that is not the most desirable option. 
Wall Street is no easy street to find a parking place, but once you do get one, you will know you have earned it and deserve it. And after a couple of years, you will be able to park a very nice car.