Would you pay nearly $15k to launch an investment banking career?

Investment banking internships are both notoriously competitive to secure and the most direct route to a full-time job in the industry. Goldman Sachs extends offers to only 2% of applicants, while there are 750 applications for every front office position at Bank of America Merrill Lynch.

There is a way of gaining investment banking experience without going through the rigours of the application process – paying for it. There are an increasing number of firms offering internships across all industries, including finance, at locations around the world. Their packages include internships, travel and accommodation for students looking for overseas work experience, but those wishing to participate must find thousands of dollars to do so.

One example is Dream Careers, which works with smaller fund management companies like Bedlam Asset Management and Lionhart Advisors as well as larger financial services firms like State Street and Standard & Poor’s. It charges nearly $9,000 for a summer internship. Meanwhile, Global Experiences demands nearly $8,000 for an eight-week summer internship in London and up to $10,000 for 12-week programmes in the autumn.

Gus Baker, co-director of UK-based campaign group Intern Aware, believes that the concept of paying for internships creates an uneven playing field: “Financial services firms should be recruiting people with a diverse range of backgrounds, and asking for an upfront fee excludes those who can’t afford to pay extortionate fees. Banks should recruit based on students’ potential, rather than their parents’ spending power.”

Overseas experience

The Intern Group, which was set up by former Merrill Lynch fixed income salesman David Lloyd in 2010, is another firm that offers students overseas work experience for a fee. The largest proportion its placements, 18%, are in the financial sector. It costs £2,770 ($4,455) for a one-month summer internship and up to £9,000 ($14,475) for a six-month placement.

The Intern Group is focused on offering overseas experience, so most UK-based students take roles in Madrid, Latin America or Hong Kong, for example. The National University of Singapore provides the largest number of students, it says, but UK institutions like the University of Warwick, The University of Nottingham and The University of Manchester are also involved.

Lloyd tells us that the programme is an “educational one”. “As with any study-abroad programme there is a cost element. It is our aim to create a wide-ranging scholarship scheme in the future, enabling anyone talented to greatly benefit,” he said.

So, why would you pay, rather than applying directly? Lloyd says that: “In many of the countries we operate investment banks don´t function in the very structured/online application way you find in the UK. The banks there know from our experience working together that we provide first-class candidates, and our strong links with them continually open doors for our students that would otherwise be closed to anyone except the most well-connected.”

Again, these roles would be outside of the bulge bracket banks. In Latin America, for example, The Intern Group works with BTG Pactual and BanColumbia, said Lloyd. Meanwhile in the UK and Hong Kong it targets “boutiques and fast-growing finance start-ups”.

The trend of paying for internships is another indication that investment banks’ recruitment processes are skewed towards those from a more privileged socioeconomic background, believes Baker. “If you look at the fact that a lot of banks value the life experience of gap years, for example – you’re only able to go on a gap year if you have the financial resource behind you. Currently, banks are rolling out schemes specifically targeting poorer students, but there needs to be a culture shift to recruit people based on their individual merit.”

JPMorgan, for instance, started an internship programme this year targeted at students from poorer backgrounds, while Credit Suisse has its Steps to Success scholarship and Lloyds Banking Group’s Scholars project resulted in 30 job offers to students from lower-income families last year.

Nonetheless, there numerous examples that it helps to be well-heeled to get a leg up in the financial sector. In May, it emerged that hedge fund Man Group and investment bank Oppenheimer had signed up to a charity event that auctioned internships for £5,000. Meanwhile in 2011, Caxton Associates, ICAP and Arbuthnot Private Bank all participated in the Conservative Party’s Black and White party, where attendees paid £2-3.5k for work placements for their children.