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History students who know what bookbuilding is

I was chatting a little while back with a former boss and mentor of mine on the topic of why it is that professions such as engineering and medicine, for example, require people to be so extensively trained and certified in the classroom before being let loose as practitioners, whereas finance and banking do not.

“Because people can die,” was his pithy assessment.

He had a point. It is undeniably true that investment banking is not a life-and-death business (although I’ve worked with people here and there who might attempt to convince you otherwise). Because of this, Wall Street - as an industry - has the luxury of being able to make entry-level hires from across the academic spectrum, including many who have received no formal education or training in finance whatsoever prior to beginning their career as an investment banking analyst.

The myths and misunderstandings on this point are remarkably durable and pervasive, however. So let me attempt to clear a few things up:

Investment banks do not care about what you know already.  Really.

What investment banks care about is your ability and appetite to learn, and whether or not you’ve given yourself enough exposure to the relevant subject matter to know with conviction what you’re opting into.  This is something I’ve taken to describing over time as ‘informed interest’, and it is this, rather than simple knowledge, that banks are screening for when they interview you.

In fairness, one major factor that contributes to the misperceptions around banks’ presumptive insistence on finance and economics degrees is that, well, most of the applicants do indeed come from the two academic tracks. Depending on how you count certain types of dual degrees, or minor concentrations, as much as three quarters of the applicant pool at most of the top banks comes from a finance or econ track.

This shouldn’t really be a surprise; chances are that most finance and econ students decide to apply to banks, whereas the same cannot be said for history students. And if most of the applicants come from a particular academic path, it follows that most of the hires will, too. The important thing, though, is that the academic distribution of the group that’s hired in most banks is very similar to that of the pool of applicants - suggesting that your academic concentration in fact has little bearing on your chances of getting the job.

So, why exactly are investment banks so open to candidates from all academic tracks? And why are they so interested in informed interest above deep knowedge when they hire you?

Three reasons:

  1. Intellect is far more valuable than knowledge in Wall Street hiring.  Whatever hard knowledge, techniques, rules or methods in finance are required to perform the role, all those can be taught or learned on the job. The smarts to figure things out? Not so much.

  1. If intellect, rather than knowledge, is what truly has currency when a firm is hiring its latest class of analysts, why would it limit the pool to just those studying one or two specific subjects? Last I checked, university finance and economics departments did not have a monopoly on intellect.

  1. There’s a compelling argument to be made that one of the greatest factors afflicting the finance and investment industry today is ‘sameness’. In other words, the tendency for most people in these industries to come from similar backgrounds, with similar educations and similar worldviews - leading to groupthink and a marked lack of original and contrarian thinking. Academic paths are just one part of the antidote, but they’re an important one.

So if your academic focus is history, or neuroscience, or modern languages, or biology, or environmental sciences, or international relations, or engineering, I can tell you that I’ve either hired or worked with lots of people who followed the same academic path as you and went on to superbly successful careers on Wall Street and in the City.

So can you. You just need to prove that you understand what you're getting into first. 

Jonathan Jones is the former head of investment talent development at Point72 Asset Management and a former head of recruiting at Blackrock and Goldman Sachs.

AUTHORJonathan Jones Insider Comment

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