Getting into Private Banking is tough. Getting to be a Private Banker is even tougher. But in Private Banking, 50% of Private Bankers quit after 24 months. Why? Shouldn?t the stringent qualifying criteria already pooled the best candidates to succeed?

No. 1 Shifting AUM is increasingly difficult

Joining a new Private Bank is exciting. New life, new colleagues, new system, new desk, higher salary with hopefully a 20% to 50% pay raise & maybe sign-on bonus, where all these obviously comes with higher performance targets in Assets Under Management (AUM) & Revenue.

Some reasons why client don?t give AUM quickly:

• How long would you be in your new Private Bank?
• Is your new Private Bank & Team reliable?
• Are you going for higher pay?
• Is your new Private Bank sound?
• Will the AUM transfer result in unnecessary expenses?
• Will there be operational mishap in the transfer?
• Will the new replacement be better than you?

No. 2 Comparing $200 Million & $250,000

The numbers just don?t add up. Risking a $200 Million AUM for a pay check of $250,000 excluding sign-on bonus. Or risking $500 Million AUM for a pay check of $500,000?

Over the years, clients have become less sticky with Private Bankers. Clients have more bank accounts, more Private Bankers, and growing distrust with banks & investments recommendations. And with all these happening at the end of an economic boom, the easy pot of gold are getting harder to find and for clients to risk.

Private Bankers also found themselves struggling between doing their best for clients, their (new) Private Bank and for themselves.

Private Bankers? strengths are in relationship management and access to the high net-worth network. With the extra effort required to assess Private Banks? strengths, weaknesses, internal system & product competencies means the Private Banker now have to determine if their pay check and new Private Bank, would be worthwhile to build or to shift their AUM over.

A wrong move could risk the wrath of their clients and risk losing all AUM, and most importantly ? client?s trust.

No. 3 The 15 Months Trap

Most Private bankers? contract have a 1 ? 6 months garden leave and 3 ? 12 months non-solicitation clause. In other words, you could be away from the job and client for as long as 12 ? 15 months.

Your target starts running the moment you join the bank and the contract to bring in the AUM is usually 3 years. After 6 ? 9 months, somehow the senior management looks at your performance using a straight-line approach.

In all, a Private Banker could be spending almost 12 ? 15 months before AUM starts flowing in. During this period, a crisis can occur, the new Private Bank could be undergoing M&A activities, there could be leadership changes, your customer may diversify holdings into a few Private Banks.

No. 4 Maybe not the Right Private Bank

Then you start to wonder if this is the right Private Bank? Joining a Private Bank is almost like getting into a marriage. Except this union involves 10 ? 50 of your clients.

It is not long before a Private Banker discover they are in the wrong Private Bank. With a competitive Private Banking landscape and many Private Banks, it is apparent why the one you are joining could be the wrong Private Bank for you.

• Unable to provide for your top clients financial needs
• Unable to assist important clients on corporates & business needs
• Half the meetings? time are spent on Revenue & Sales
• Inadequate or Shrinking Product Range
• Inefficient Processing
• Poor Reporting Standards
• Poor Management
• High Turnover of Operation Staffs

This impacts Private Bankers confidence and ability to attract clients and AUM quickly. And just when yesterday the CEO promised the Private Bank is here to stay ? ? it gets acquired.

For decades, Private Bankers rose into position through the banks’ Management Associate Program or as Assistants to Private Bankers for many years, before they inherit a small portfolio to be a junior Private Banker.

With the fast growing wealth in Emerging Markets, Private Banks are aggressively, getting junior Priority Bankers with a decent portfolio, betting on their strong networking ability and youth to develop accounts, and in time to build up a sizeable portfolio.

Here are some ways Private Bankers acquire new clients.

No. 1 Existing Clients

Private Bankers are well associated with millionaires, and sometimes billionaires. This means clients’ friends, families and business associates could be wealthy too.

Referrals by clients are the leading source of new clients for Private Bankers. Clients’ friends could be unhappy with their existing Private Bank, Private Banker or investment recommendations, and subsequently request for recommendations to a good Private Banker. And since turnover rate is high as a Private Banker and as they quit or change jobs, clients would need a new Private Banker. Thus, a referral would come sooner or later.

No. 2 Existing Contacts

As you grow professionally, your network grows too. And your friends and network do get wealthy gradually or suddenly.

As it is not easy to become a Private Banker, finding a Private Banker therefore is not easy too. Many successful Private Bankers manage accounts for only the wealthiest people. So if one has about $5 Million, it is not easy to find a good Private Banker. So that leaves little choice, but maybe with the Private Banker they know.

Unless, they do not want their friend (you) to know their wealth.

No. 3 Business Partners

Private Bankers work with various business partners to exchange businesses and network. Below is a list of businesses which target the high net-worth clients. Some Private Bankers actively work with them to not only grow their network, but also to learn about different businesses and how they can add value to clients’ personal and financial matters.

• Lawyers & Accountants
• Property Agents
• Insurance Agencies
• Private Equity Firms
• Investment Banking Units
• Hedge Funds
• Investment Management Firms
• Trust Services
• Luxury Concierge

No. 4 Business Associations

Businessmen and entrepreneurs have the fastest and highest wealth growth rate. Private Bankers join or work with business associations to tap onto their wide business network.

No. 5 Country Clubs / Other Clubs

A more expensive way is getting Country Club memberships, which can cost anywhere from low thousands to a few hundred thousands.

Private Banking clients are successful and for some clients, have a strong lifestyle preference. Joining Country Clubs is a great way to get to know these clients.

There are other groups such as clubs for Luxury Car, Boats, Watches, Antiques, Paintings… lifestyles associated with the rich.

No. 6 Introducers

Private Bankers work hard to get to know the people who knows the wealthiest people. They often get them to introduce clients to them, with them becoming official introducers. Sometimes, introducers get incentives when they refer clients.

No. 7 Networking

The modern Private Bankers are rarely gifted a large portfolio of clients. For junior Private Bankers and aspiring Private Bankers, they have to spend lots of time on networking.

Getting into the network for millionaires requires some work while getting into the billionaires network is, the odds of becoming a billionaire.

For Private Bankers, the biggest challenge is to find the right Private Bank. This is no easy task given the number of Private Banks around and the competitive and ever-changing landscape.

So how do you find the right Private Bank?

No.1 Review Your Existing Clients

Your clients is what you have now. And before you start your journey of finding the right Private Bank, some questions you should ask yourself on your clients:

• What is the current book size?
• What is their net worth?
• Are you their primary Private banker?
• Are they the top 20% of their field?
• What is their wealth growth rate?
• What stage of life are they in?
• What are the financial needs of your clients?
• Do they have assets or businesses in a few countries?
• Do they have complex family issues?
• Are they the key decision makers?
• Would you be building network & contacts quickly?
• Are you finding new clients?
• Are you not bringing some of your existing clients?

No. 2 Find Your Aspiration

Your clients are important, so are you. Being a Private Banker is a long term career. You would be dealing with clients who are not only wealthy, but also influential and successful.

Understanding how you would want your career to be developed is important. If your aspiration is to be an artist, as a Private Banker, you would be likely able to find time to do so. In fact, some of your clients may have interests in Arts too. But if your aspiration is to be a pilot or doctor, which are time-intensive, your clients would feel that you are not committed to managing their mega-wealth.

And half the time you would be thinking this year may be your last year, you may want to join a Private Bank that has a sustainable Private Banking practices, one that rely less on the Private Banker.

But if you are still finding, it doesn’t really matter. There would be something that you like or dislike.

No. 3 Know Your Preference

Join a fast-growing Private Bank or conservative Private Bank, or work with International Private Banks or Private Banks that focus on selected group of clients? These are important decisions for you to make.

Your judgment would also be affected by your stage in life, your career progression, or if this is your first Private Bank. Coming from a Retail Bank (with Private Banking services), an International Private Bank or Boutique Private Bank would also shape your preference, because of your prior experiences.

Sometimes, it is just getting bored with the existing Private Bank, the people and the routine work.

No. 4 Your Strategy

Perhaps you are driven and wants to be the top Private Banker with the biggest book size. Or you want to be the rock-star Private Banker with the most flamboyant connections?

Top Private Bankers are extremely low-profile, naturally because most Ultra-High net-worth clients prefer Private Bankers to keep a low profile, inviting less gossips and sensitive repercussions – Private Bankers & Private Banks have large amount sensitive and personal information about them.

Deciding the profile of clients you want to build and their financial needs would be important for you:

For example, building a portfolio of fast-growing businessmen means you will have many corporate banking requests, loans & cashflows & capital market services alongside their personal financial needs. In addition, they may see a major opportunity and liquidate 80% of their wealth with you, especially at the wrong market timing.

No. 5 Selecting the right Private Bank

Finding the right Private Bank is the toughest. There is never the right Private Bank that has all the products & services, the same strong leadership and a sustainable banking practice. Just like the financial market, Private banks change according to future economic and financial trends.

But some major considerations could be:

• Join an International, Regional or Boutique Private Bank
• Join a new, conservative, neutral, aggressive or market leading Private bank
• Join because of the people or the team
• Join because of the brand
• Join because of the pay
• Join because of the banks’s strengths or weakness
• Join because of the products & services
• Join because you are bored, sick and unhappy of your old place
• Join because you want a fresher challenge or a less pressuring environment
• Most importantly, join because of clients

No. 6 Talk to specialized headhunters

Private Banking is a niche market with high barrier entry. There are many headhunters working to get you into the right Private Banks. To value-add, they publish industry reports on Private Banks.

Talking to them could get you some insights into who’s moving, what’s going on and where should you head to base on your profile, your portfolio and your experience.

No. 7 Talk to People in the Private Banks

There is no better way to know more by getting inside-information. Get someone you know or you could get a referral to, to find more about the Private Bank you are interested in. They could be someone in the Private Bank or someone whom had left.

Don’t just talk to the Private Bankers, Team Leaders, but talk to the Assistant Private Bankers, the Product Specialists, the Operational staffs, KYC & compliance team.

After all, it takes a big team and everyone’s support to provide top notch private banking services to your clients.

Slideshow embed The interview process for full-time and summer internship positions in wealth management starts either on campus, when you sign up to meet with the recruiter, or after you’ve sent in your resume and are contacted for your first interview. Generally, the first interview is somewhat informal, especially at the college level, though you should always act professionally.

Most large firms target 10 to 12 campuses for full-time entry-level recruitment efforts, usually in September or October of the final school year. After first-round interviews, the human resources department sifts through all the resumes and interview notes to find those candidates they want to bring into the office.

Second interviews also happen in the fall, and candidates are often flown to New York, or wherever the main office is, for the occasion. If there’s a third interview required, they will typically occur during October or November. Soon after second- or third-round interviews, you’ll have a yes or no.

The interview process for summer internships usually occurs later than that for full-time positions.

Interview questions

The interview is a very detailed dance at most private wealth management firms, with the questions well thought out and structured, and the answers scrutinized carefully. Especially for entry-level positions, a good interview can be the top deciding factor in hiring. “I don’t care necessarily what their degree is in. I want to know what makes them tick,” says one frequent HR interviewer at a private wealth management firm.As with most Wall Street interviews, you can expect a series of very general questions as well as some questions to determine your financial acumen. However, you’ll find that the interview can be more personal at times, with your interviewer asking about hobbies and social matters. You’ll also be given some situational questions unique to private wealth management.

You won’t find some of the bluster or bravado that you might have experienced interviewing for trading desk jobs or investment banking. Private bankers are still masters of the universe, but that universe is the client, and the client is treated with deep respect. The customer-focused aspects of the business will come through in a very professional, genial interview, for the most part, though the questions can and will be tough.

Sample Interview Questions: General Questions

Why do you want a career in private wealth management?

While private wealth management has grown in popularity as a career choice in recent years, it’s still perceived as a smaller cousin to the other Wall Street opportunities. Investment bankers chart the fate of major corporations, while traders can have millions of dollars riding on their actions. Private wealth management? Why would you want to hold Aunt Matilda’s hand while working with her on a boring fixed income portfolio for her and her cat? Or for that matter, is the allure of catering to an ultra-rich movie star or famous CEO your primary motivation? (If so, best to back away slowly right now. Those jobs are the most important in any PWM firm, and you just won’t get those clients for many years.) Show that you understand what private wealth management is, what attracts you to the job, and the opportunities you see there for your own career growth, as well as the growth of the industry itself.

So what led you to this company?

You should familiarize yourself not only with the firm you’re interviewing with, but also a number of other private banks as well, for comparison’s sake. At a private bank that’s part of a Wall Street firm or financial giant, certainly the reputation of the company is a factor, since you know you’ll get exposure to the best in the business. For smaller firms, it’s time to talk about the entrepreneurial spirit and the personal touch. Check out the latest private wealth management rankings in magazines like the Robb Report, Worth, or Euromoney. Go through the firm’s web site for more details. Know what you’re talking about.

What are your greatest strengths?

This is a good place to emphasize not only your financial know-how, but also your personal side. Private wealth management firms want to see someone who’s patient, compassionate and cognizant of the responsibility they have in managing someone’s fortune. They want someone able to take complex issues and break them down so that average people understand them. Don’t get too touchy-feely, but definitely emphasize interpersonal skills.

What are your greatest weaknesses?

Never answer this question with anything remotely unflattering. Impatience is going to be a problem for your candidacy. A lack of social graces will doom you. If you failed math, that’s probably not ideal either. Saying that you don’t have weaknesses could sound a little too cocky–fine for the guys in the boiler room, but private bankers need a bit more circumspection than that. A difficulty with English lit classes or a propensity toward too much coffee would do nicely, but don’t try to be overly witty, and be careful that your answer can’t backfire on you.

What skills do you have that make you a good candidate for our program?

Time to get specific with class work, job experience and those interpersonal skills. Be sure to highlight those items mentioned on your resume, and go into those experiences in greater detail. Good problem-solving and analytical skills are important, as is an ability to network and come up with new projects or ideas. You want to present yourself as someone with some good, raw skills in economics and finance, but also as someone who can work a room, listen quietly when need be and act compassionately.

What motivates you?

Yes, greed is good. You can certainly say that the entrepreneurial aspects of the job appeal to you. The money is good, but that’s a given for any job on Wall Street. The concept of really helping people to better their lives is a good one, as long as you can pull it off without sounding corny. Something to the effect of, “I do feel like I’m a self-starter, very entrepreneurial, and the opportunity to build a client base, a business really, is very attractive. And yes, money helps. But with this firm, I find the notion of working with people who have worked so hard for their money, helping them manage it and have a better life, that’s really compelling.”

What are some of your outside interests?

Not that you’ll have time to pursue them once you get a job, but feel free to discuss whatever you do to blow off steam, challenge your mind, improve your health or just relax. The interviewer is looking for a more balanced person, since they tend to have better interpersonal skills and can more easily relate to a client’s complex needs than someone who goes to school then day-trades the rest of the time.

Are you a risk taker?

Very tricky question, this one. High-net-worth clients may have become rich by taking big risks, but now that they are rich, that desire to put it all on the line over and over understandably wanes. Most clients want to ensure they and their families have plenty of money to live on for years to come, and aren’t about to chase massive returns. The best answer is to discuss risk as a part of life, and that yes, sometimes you have to take risk–even enjoy it, at times. However, you should note that there are solid, well-informed risks and stupid risks. You prefer the former.

Where do you want to be in five years?

You really want to say “right here” without really saying that. If you’re an undergrad, it’s perfectly OK to mention that you might want to pursue your MBA, but otherwise, you should say that you want to be in private wealth management in some capacity, working with clients and helping them with their financial issues.

The Role of the Investment Banker

The investment banker acts in a capital markets advisory capacity to corporations and governments, rather than dealing directly with individual investors. Investment bankers help their clients raise money in the capital markets , provide various financial advisory services, and assist with mergers and acquisition activity. Thus, when the capital markets are doing well, investment bankers tend to do well since they can generate more revenues from all the activities that they undertake.

Arranging Finance

If a large company wants to build a factory and is looking to issue bond financing to finance its expansion, it may seek the help of an investment banker. Similarly, if a government wants to finance the building of an airport, highway, or other large municipal project, it may work with an investment banker to issue bonds to raise capital. In such a case, the investment banker would plan the bond issuance, price the bond issuance so that there is enough demand for the bonds, work with the issuer to manage the documentation required to issue the bonds, and help sell the bonds.

The investment banker also plays a role when it comes to arranging equity financing. Suppose a company decides that it needs more money to grow and decides to raise the funds by going in for an initial public offering, or IPO. An investment banker would put together a prospectus explaining the terms of the offering and the risks it carries, manage the issuance process, and help price the offering. The shares should be priced just right. If they are priced too high, the public may not be interested in buying them. If they are priced too low, the investment banker may be leaving some money on the table that it could have generated for its client.

Underwriting Deals

In the course of arranging capital markets financing for its clients, investment bankers also typically undertake the underwriting of the deals. This means that they manage the risk inherent in the process by buying the securities from the issuers and selling them to the public or institutional buyers. Investment bankers buy the securities at one price and then add on a markup in the sale price and thereby generate a profit that compensates for the risk they take on. This spread is the underwriting spread. Typically, a lead investment banker works with a group of investment bankers, called a syndicate, to underwrite an issue so that the risk is spread out among them.

Sometimes, the underwriter merely acts as a go-between in marketing the deals and puts in a best effort to market the securities, but does not take on the underwriting risk. In this case, the investment bankers have the option to sell securities and get paid, on a commission basis, for the actual amount of securities they sell.

Private Placements

Instead of taking on the cost of a public offering, sometimes investment bankers help their clients raise capital through private placements. For instance, they could place an offering of bonds with an institutional investor such as an insurance company or a retirement fund. This is usually a faster way to raise money since there is no need to register this sort of offering with the regulator. The government considers institutional investors to be more sophisticated than individual investors so there are fewer regulations for private placements.

Mergers and Acquisitions

Another area where investment bankers play a role is when a company is looking to buy another company. That’s one way for businesses to grow, beyond growth generated organically from sales. If a company decides that it wants to acquire another company, an investment banker offers advice on how to go about the acquisition, including the pricing of the offer. This involves valuing the targeted company and coming up with a price that represents its value. On the other side of the deal, companies putting themselves up for sale also need investment bankers to evaluate asking price and offers. Sometimes, mergers and acquisitions can involve lengthy battles.

The Bottom Line

In a capitalist economy, investment bankers play a role in helping their clients raise capital to finance various activities and grow their businesses. They are financial advisory intermediaries who help price capital and allocate it to various uses. While this activity helps smooth the wheels of capitalism, the role of investment bankers has come under scrutiny as there is some criticism that they are paid too much in relation to the service they provide.

When corporations and municipalities want to raise capital to fund their operation, they go to an investment bank for assistance. An investment banker works with these entities to underwrite, or find buyers for, securities like bonds or stock to raise the capital the organization needs.

In addition to underwriting securities, investment bankers can usher corporations through complex processes like initial public offerings or mergers and acquisitions. To do this successfully, they must be well-versed in the behavior of financial markets and in the legal requirements that investment banks and their clients must meet for each process.

What kind of training is required to become an investment banker?

Investment bankers come from a variety of backgrounds, but a strong foundation in mathematics is important. Prospective investment bankers may have bachelor’s degrees in finance, accounting, or mathematics, for example, but may come from other fields like computer science or physics as well.

Investment bankers receive a great deal of their training through their employer. Recent graduates of bachelor’s degree programs typically start in analyst roles and complete a training program before they begin their job. These training programs can last several weeks and introduce new analysts to principles of accounting, risk, markets, financial statement analysis, and financial modeling. Analysts also learn negotiation, communication, and presentation skills. After they complete their initial training, analysts often take part in continuing education that is also provided by their employer.

A good way for those interested in the field to gain experience and make professional contacts before landing a job is to complete an internship. Investment banks regularly take on undergraduate and graduate interns and provide them with training and mentorship. Interns typically perform the same kinds of duties that analysts and associates perform, including gathering data, working with financial models, and interacting with clients.

While entry-level investment banking analyst positions require only a bachelor’s degree, many investment bankers pursue graduate degrees. Master of Business Administration degrees (MBAs) are most common among investment bankers, but other graduate degrees, like law degrees, can be useful as well. Many schools offer graduate programs in financial mathematics, and a master’s degree in this field can also be valuable for investment bankers.

Are there any certification or licensure requirements?

Once they are employed, investment bankers must register as a representative of their bank with the Financial Industry Regulatory Authority (FINRA) if the person is employer in the US. Depending on their job responsibilities, investment bankers must pass an examination on a specific “series” in order to qualify for registration.

Investment bankers can also pursue voluntary certifications like the Chartered Financial Analyst (CFA) credential offered by the CFA Institute. To become a CFA “charterholder,” one must have four years of investment work experience and complete the CFA program, which is a three-part course of study that covers investment valuation, company analysis, and portfolio management. CFA candidates must pass an examination at the end of each of the three levels of the program. The CFA program takes two to five years to complete.

How long does it take to become an investment banker?

One can become an investment banking analyst directly after earning a bachelor’s degree, but it can take two or more years of working experience plus a graduate degree to advance to associate status at an investment bank.

What are the long term career prospects for investment bankers?

Investment bankers often start their careers at the analyst level and, with experience and additional education, advance into associate positions. Others enter the field as associates after working in another industry and earning a graduate degree such as an MBA.

With experience, associates can become vice presidents at their banks, supervising analysts and associates and interacting more directly with clients. After some time as a vice president, investment bankers may then become directors or principals at their bank and further focus on building relationships with new and existing clients. One of the highest positions an investment banker can reach is managing director, and at this level they work almost exclusively on bringing in new business.

As investment bankers move up the hierarchy of their bank, their base salary increases, but their potential for bonus earnings increases much more.

How can I find a job as an investment banker?

To land a job as an investment banker, you must concentrate heavily on networking while still in school. Large investment banks recruit prospective analysts and associates from top business schools, and often fill these positions with interns who have worked with them as summer analysts or associates.

If you do not attend a highly-rated business school, you will need to work hard to build a network on your own by reaching out to family members, friends, acquaintances, professional associations, and your school’s alumni. As your network grows, you will increase your chances of meeting someone who can offer you an opportunity to interview for a position.

How can I learn more about becoming an investment banker?

You can learn more about the requirements and training process to become an investment banker by visiting the websites of large investment banks like Goldman-Sachs and J.P. Morgan. These companies detail the various programs they offer for undergraduate students, graduate students, recent graduates, and experienced professionals.

If you are currently in college, you may be able to find someone in your school’s alumni network who can talk to you about becoming an investment banker. Learning more through this process can also be a good way to build your professional network.

If you’ve tried applying for a job in an investment bank, you’ll know that getting in isn’t easy. Front office investment bankers still earn considerably more than almost anyone else, except footballers and ‘celebrities,’ and banks are accordingly inundated with applications.

If you want to achieve a career in financial services – particularly in M&A or sales and trading, you’ll need to be good. But you’ll also need to know the processes that will get you in the door. Banks are bureaucracies. There are tried and tested routes into their jobs. Some involve graduate programs, but graduate programs are not all there is. Before you give up on your chances of working in banking, read through the list below.

1. Apply during your bachelors degree

Banks hire students with bachelors’ degrees onto their analyst programs. These programs are incredibly competitive: only the best of the best get in. However, 80% (or more) of the people who get hired as full time analysts will previously have worked for that bank as summer interns – meaning that the real moment for getting into an investment bank is during the summer internship in the penultimate year of a university course.

In turn, a lot of banks are making accelerated offers for summer internships to students who completed ‘spring weeks’ or ‘sophomore internships.’ If you really, really want to get into a bank out of university, you therefore need to start applying for internships from the moment you arrive on campus.

2. Apply before or during your Masters in Finance

These days, banks also like to hire juniors with Masters in Finance qualifications – especially for positions in risk or sales and trading.

If you have a Masters in Finance, you’ll still join a bank as an analyst. Therefore, you’ll still need to complete a summer internship. With most Masters in Finance courses only lasting for one year, it’s advisable to complete this internship during the summer before the Masters even begins. In other words, you’ll need to apply for internships during the final year of a bachelors degree.

3. Intern, intern, and intern again

It used to be the case that students completed a single summer internship during which they received an offer to join an bank full time, or they didn’t.

Not any more.

Nowadays, some of the best students applying for jobs in investment banks have completed multiple internships (spring weeks included). More importantly, some have continued to work as interns even after they’ve graduated. And some have received offers to join full-time at the end of these internships.

Most banks now offer ‘off-cycle internships’ to students or ex-students who are available outside the summer months. It’s not uncommon to come across analysts in investment banks who’ve completed several of these off-cycle internships before settling into a full time job.

4. Apply during a top MBA

If you really can’t get onto banks’ analyst programs, you could always apply for the next notch up. The associate programs.

Banks mostly promote existing analysts to become asssociates. However, they also hire associates from outside. Specifically, they hire them exclusively from the world’s top business schools. If you want to get an associate job in an investment bank, you’ll need to have completed a top MBA.

As with analyst programs, banks hire full time associates after summer internships. For this reason, it’s a good idea to study a two year MBA so that you can complete an internship during the summer of your first year.

5. Apply after completing an ACA qualification

This only really applies in the City of London, and then only during strong hiring markets. When things are going well and banks are short of experienced analysts to work in their M&A and equity research teams, they often raid the Big Four accounting firms for talent. Some banks, like Rothschild, hire newly-qualified ACAs as a matter of course.

6. Apply after a PhD

The proportion of investment banking employees with a PhD is surprisingly small. Typically fewer than 5% of people at leading investment banks have a PhD qualification. Those who do have PhDs have usually studied specific subjects, like quantitative finance, maths, signal processing, or machine learning. PhDs go into careers in quantitative finance or quantitative risk.

Historically, banks like UBS ran programs specifically targeted at PhD hires. Now, you’re more likely to get in by approaching quantitative finance recruitment firms.

7. Apply after time in the army

Banks like J.P. Morgan, Barclays and Goldman Sachs run specialist programs for hiring ex-military veterans. Time in the army isn’t a sure-fire route into an investment banking job, but it’s definitely an established route in.

8. Apply after time in law

Before he became a trader and worked for Goldman Sachs, Lloyd Blankfein was a lawyer. On Wall Street, law was traditionally a good route into front office investment banking division (IBD) jobs. Robert Kindler, global head of M&A at Morgan Stanley, spent 20 years at US law firm Cravath Swaine & Moore before moving into M&A in 2000, for example.

9. Apply after some time on consulting

Banks hire in outsiders to help them work on strategy. If you’re a strategy consultant who specializes in the financial sector, you may be able to get an internal strategy job in an investment bank. However, you’ll need to have a top name strategy firm on your resume.

10. Apply through your ‘network’

Ok, networking and nepotism aren’t as big as they used to be in investment banking – particularly since the Chinese ‘princelings’ scandal. But having family, or friends, or alumni, to vouch for you still helps. One of Goldman Sachs’ top M&A bankers in the UK is the son of Martin Sorrell, the advertising mogul. Both of his brothers have worked for the firm too.

Overwhelmingly, private equity firms hire:

• Investment Banking Analysts at bulge-bracket and elite-boutique banks, as well as a few In-Between-a-Banks.
• Undergraduates for junior-level roles (common in some markets, such as Brazil and Portugal).
• Professionals who already work in PE at different firms.
• And smaller firms also hire IB Analysts at middle-market and boutique banks.

It is possible to get in if you’re not in one of these categories, but it is not probable.

If you get into the industry and you’re not in one of these categories, then:

• You’re outside the U.S. / U.K., in a market where it’s more feasible for non-bankers to get in. Examples include Russia, India, Central & Eastern Europe ,and Portugal .
• Or you’re in a closely related field where you work on transactions – examples include Big 4 valuation/advisory, direct lending, corporate development, and real estate. Consulting might qualify, but it’s still a challenge in major markets.
• Or you’re aiming for new or smaller funds that do not have highly structured recruiting processes.

On-Cycle and Off-Cycle Processes

First, note that there both on-cycle and off-cycle processes; they differ in timing, steps, interviews, and hiring criteria.

The on-cycle process is the one that begins for Analysts at bulge-bracket and elite-boutique banks in New York in October, i.e. a few months after they begin working.

It starts and finishes very quickly, with the mega-funds interviewing everyone and handing out offers in a single weekend in January, and middle-market firms finishing in February/March.

Headhunters have a ridiculous amount of power in this process.

If you finish the on-cycle process and win an offer, the position will start next year.

So, you may interview in January of 20X1, work in banking for another 1.5 years, and then begin the PE role in July or August of 20X2.

The off-cycle process is for everything else: Roles outside of New York, including those in other countries, roles at smaller firms, and roles available to anyone not working at an investment bank.

In the off-cycle process, you start working immediately after winning the offer, which makes a lot more sense than waiting for 1.5 years.

Off-cycle processes tend to take more time – months rather than weeks or days – and interviewers evaluate your “fit” and critical thinking abilities in more depth.

Case studies and modeling tests in on-cycle processes tend to be time-pressured ones where you have to get the answer as quickly as possible, while the ones in off-cycle processes require more thought and a real investment thesis.

In some places, the typical process is in between these extremes.

For example, many headhunters in London begin contacting candidates in January/February rather than October, and they present both “start immediately” and “interview in advance” opportunities.

Larger funds there stick to more of a set schedule, but it is not as structured as it is in NY.

What to Expect in the On-Cycle Recruiting Process

To summarize:

• August: You start working as a first-year IB Analyst.
• October: Headhunters, begin contacting you.
• December: You have to schedule your first meeting with headhunters by mid-December, and you need a very specific idea of the PE firms you’ll pursue (industry, geography, deal type, and size). You will have almost no real deal experience by this point, so you’ll have to spin pitches and early-stage assignments into sounding impressive.
• January: You get invited to networking events held by PE firms. Then, the mega-funds kick off recruiting on Friday night one week, interview each candidate 4-5 times over the weekend, give each one a 2-hour modeling test, and notify the winners by Sunday/Monday.
• February/March: Middle-market funds start and finish recruiting in this period; they still tend to conduct 4-5 interviews and one speed-based modeling test, but they take place over a longer period, such as a week or several weeks instead of 48 hours.

What to Expect in the Off-Cycle Recruiting Process

The off-cycle recruiting process is the opposite of the on-cycle one:

Rather than picking firms based on specific criteria, you should spread as wide a net as possible because the companies that show the most interest may be completely random.

Rather than starting and finishing in 48 hours or 2-3 weeks, off-cycle processes can last for many months as you meet everyone at the firm multiple times.

These processes are all about your own networking efforts, including LinkedIn/email and any referrals you can get from co-workers, former co-workers, and alumni.

But in the off-cycle process, this would be a mistake: It’s far too specific a goal, and it will artificially limit your options.

Instead, find every boutique and middle-market fund you can, and reach out to Senior Associates and Partners at these firms to present yourself.

Competitive tension is incredibly important because the first question anyone will ask you is: “Who else are you speaking with?”

If you can’t name several other, similar funds, the person will immediately lose interest in you.

Even if you’ve just exchanged emails or LinkedIn messages with someone, spin it into sounding more important: “I’m currently speaking with Firms X and Y, and I have an interview with Firm Z tomorrow.”

You can call informational interviews “interviews” because they do turn into real interviews.

Interviews and Interview Questions

Private equity interview questions fall into five main categories:

• Fit/Background – Why do you want to do private equity? What do you know about our firm? What are your long-term goals, and how do we fit in? What are your strengths and weaknesses?
• Market/Industry – Which industries do you find interesting? Which companies would you invest in? Which markets do mainstream investors view incorrectly? What makes a market appealing or not appealing?
• Technical Questions – These are similar to the ones in IB interviews, but sometimes there’s more ‘critical thinking’ involved. For example, they might ask you why two companies with similar growth profiles and margins might trade at very different multiples, and what it means for their investment profiles.
• You’ll also get questions on “quick IRR math” for leveraged buyouts, which we cover in this YouTube video. You will not receive questions exclusively on LBOs; accounting, valuation/DCF analysis, and even merger models could still come up.
• Deals/Clients – You’ll have to walk through at least 1-2 deal/client experiences in-depth, explain what you did, and point to the value you added. Did you find a major mistake in due diligence that saved your client money? Did you find a way to position your client that resulted in new buyers or more qualified interest?
• You should also prepare critical views of all your deals: If you were a PE firm, would you have acquired your client? Why or why not? Interviewers often turn your deals around and ask questions like that.
• Case Studies and Modeling Tests – Modeling tests can range from 30 minutes (“paper LBO models”) up to 1-3 hours, or even several days to a week. The main categories are as follows:
• Very Quick Tests – They might give you 30 minutes and ask you to build a simple LBO model using pencil and paper, with approximations and mental math.

Here is our advice for associates / consultants trying to work their way up within a Private Equity firm:

Do the hard stuff

Establish yourself early as the person who takes on the tough tasks. Everyone wants to work on the hot new deal, but those who take on the details in a messy turnaround get noticed faster. In the associate role, you’ll never get credit for the winners, but you will get tons of credit for helping fix the losers. Plus, you’ll be left alone doing it because most people don’t like to get their hands dirty. So you’ll get more authority and a high degree of autonomy, which is a nice combo at a young age.

Focus on private equity portfolio companies

As a general rule, make your portfolio CEOs and CFOs happy first, then your PE boss. You’ll learn way more about what really matters about business (and your own career) from management teams than you will from your PE co-workers. Find an exec in the portfolio who can be a good mentor and make him/her look really good. That feedback gets back to your bosses quickly, so it’s a win-win for you.

Play nice

The upside about a PE role vs. banking is that you get put in positions of influence regularly (that’s why you quit banking in the first place, right?). The downside is that you get put in the position to look really bad regularly, too. Most everyone you meet outside your firm — bankers, lawyers, management teams — probably expects you to come across as a pompous “jerk”.

Bite your tongue and bide your time

There are going to be lots of times when you know better than the people around you. It might even be most of the time. If you find yourself in a hierarchical firm where there are set roles and little room to influence from the bottom up, just sit tight, get some good experience and make a move to somewhere else when the time is right. PE can be a great jumping off point for lots of jobs in finance and even at real companies, too.

Think long and hard about whether you really want a private equity career

Just like in consulting or banking, the entry-level associate job in PE has little to do with the job you do as a partner. Take a look at the jobs above you and be honest with yourself. Is that how you want to spend the next 20 years of your career? Just because PE is the sexy job to land out of investment banking, that doesn’t mean it suits you as a career. While you might have the skills to process a deal, do you have the interest in finding them, fundraising, managing investors and managing a fund?

Private Equity as a cradle-to-grave career is a pretty new concept. There’s much to consider as a 24-year old just entering the industry. PE firms often hire the same sort of people — investment bankers and analysts. The lack of diversity might not make for an industry with many people you’d like to hang out with at a barbecue. And private equity executives are notoriously bad at managing people in their own business. So the chances you land at a firm with a thoughtful approach to human resources are pretty low.

However, it’s a great job if you want to learn about business, quickly see the impact of your decisions and meet all kinds of entrepreneurs along the way. Take it from an art history major: If you stick around long enough, you can actually start to get pretty good at it.

Career paths in private equity are comparatively straightforward, but what complicates matters is the point at which you enter the industry.

Say you work for a couple of years as an analyst in investment banking. You will be brought into a private equity firm as an associate. This role is all about the number crunching – ensuring that you’re managing the companies in a private equity firms’ portfolio in a way that extracts maximum value, assessing the financials of possible investment targets and looking at the numbers behind a potential ‘exit’ from an investment. This is a role that you stay in for two to three years before being promoted to associate.

If you come in after an MBA, you usually start out as a senior associate. A lot of MBAs going into private equity will have already spent a couple of years in investment banking anyway.

Everyone is part of the deal process though. One of the key components of the recruitment process in private equity is the ‘fit’ test during the job interview. Fundamentally, people spend a lot of time together in comparatively small teams. This means everyone has a view.

‘One of the key components of the recruitment process in private equity is the ‘fit’ test during the job interview’

“You will be interacting with senior members of the company on a regular basis and one of the reasons we hire analysts is for the fresh perspective they can bring on deals and projects,” says Guy Hands, founder and chairman of private equity firm Terra Firma. “If you have a great idea that you feel would contribute we want to hear it!”

Private equity is often viewed as a destination, rather than place to open up new career opportunities. Part of the reason for this is that you need to remain committed until you start to see ‘carried interest’ and that’s where the big money is.

“It is generally better hours than investment banking, except during the crunch time on a deal, and a much more all-encompassing and rewarding job,” says a former investment banker who’s now a director in a private equity firm. “You are not selling services or staring at a spreadsheet all the time and it’s generally very interesting. It is a long-term commitment – you won’t see serious money for the first 10 years as a junior.”

‘You are not selling services or staring at a spreadsheet all the time and it’s generally very interesting’

Associates typically have five years’ industry experience and you’ll spend another couple of years’ as a senior associate before making it to director or principal. If you have ambitions to make it to managing director or partner, bear in mind that this will take a minimum of 10-15 years. These are the people who will originate deals.

General partners are industry veterans and usually have at least 15 years industry experience under their belts.

Exit options still exist. It’s not unheard of for private equity professionals to make the move back to investment banking, but this is usually done early in a PE career if a former banker decides the buy-side is not for them, or economic conditions are really bad for private equity firms.

More common is for private equity executives to be asked to join the management team of a portfolio company when an investment is exited. Others will join in a business development role, advising a former portfolio company on their next strategic move.

Or, if you find yourself stuck at partner level unable to make the move up to managing partner, it’s not uncommon for them to leave and set up on their own.