3 Keys to Acing an Investment Banking Interview

Investment banking is a fast-paced industry that needs the best of the best when it comes to its employees. Investment banking interviews are tests that firms use to find out who is actually prepared, in every aspect, to take the heat.

Therefore, every student I know who is interested in getting a job in investment banking spends tens, if not hundreds of hours studying and preparing for their interviews. There are 3 major keys that will make you stand out if you take them into account during the big moment:

  1. Technical questions are “table stakes”

When most people prep for investment banking interviews, they’re usually spending the majority of their time on learning the technical questions. This makes sense, because technical questions actually have right and wrong answers, and are pretty much graded on a pass/fail basis. So if you don’t know how to answer a technical question, it becomes pretty obvious very quickly. Nobody wants to look like a fool during an interview, so everyone crams for technicals like they’re cramming for final exams. Also check out WallStreet Mastermind for more in-depth info about acing IB interviews.

With that said, knowing how to answer technical questions is actually just “table stakes.” This means that it’ll give you a seat at the table, but it won’t be the reason you win the game. In other words – knowing how to answer technical questions won’t necessarily get you hired, because every other worthy candidate will know their technicals as well. But NOT knowing your technicals will get you eliminated, because there are simply too many candidates who know their technicals inside and out these days. Investment banks don’t need to deal with candidates who couldn’t even bother to learn basic accounting and corporate finance concepts.

2. Behavioral questions are where the battle is won.

Technical questions are “table stakes” When most people prep for investment banking interviews, they’re usually spending the majority of their time on learning the technical questions.

If and when you’ve nailed the technicals, you’re now just on a level playing field with all the other serious candidates. But your technical skills are not going to be so far superior than everyone else’s that it alone just gets you hired.

The way to really separate yourself from the competition, is to have really awesome behavioral answers. Because behavioral answers are open-ended, there is technically no standard “right” or “wrong” answer. Instead of being graded on a pass/fail basis, your behavioral answers get graded on a “curve.” This means it’s not about whether your answers are “good” or not on a standalone basis; it’s about whether your answers are BETTER than your competition’s answers.

Most of the time, if I ask someone how good their behavioral answers are, 9 out of 10 people will tell me it’s pretty good. And of course they think that, because they were the ones who came up with those answers in the first place. But if I then ask them whether they think their behavioral answers are better than their competition’s answers, they have no idea because they don’t really know what their competition is saying. This presents two problems: 1) people are usually overconfident about their own answers, and 2) people usually have no idea where they stack up relative to other people, which is the whole basis for grading their own answers.

Now, even if you knew that some of your behavioral answers weren’t good enough, the next logical question would be: “well how do you make your answer better?” Here again, most candidates have no idea how to improve their own answers. This is hard to do because whatever mistakes your answers have in the first place, won’t look like mistakes to you. If they did, then your answers wouldn’t have been your answers in the first place. Your mistakes are always hidden in your blindspots.

If and when you’ve nailed the technicals, you’re now just on a level playing field with all the other serious candidates. But your technical skills are not going to be so far superior than everyone else’s that it alone just gets you hired.

3. Be humble enough to understand that “you don’t know what you don’t know”

The challenge with both you technical and behavioral prep really just comes down to this one thing: you don’t know what you don’t know.

Let me explain.

Typically, when it comes to any subject matter, there are three categories of “knowledge”:

  1. We know what we DO know (i.e. I know I can speak English)

  2. We know what we DON’T know (i.e. I don’t know how to fly a plane, so I would know I need to go and learn it before I attempt this)

  3. We don’t know what we don’t know (and therefore we do nothing)

You see, when we don’t know what we don’t know, it becomes really dangerous because we can’t fix something if we don’t know what’s wrong with it.

For example, on the technical side, maybe you thought you’ve already learned everything there is to know about the DCF. But little did you know, there was this advanced concept that you hadn’t learned yet. Because you didn’t even know about its existence, you also don’t bother to go and learn it.

Then on the behavioral side, you’ve come up with all the stories you want to use. You’ve read them out loud, both to yourself and to a couple of upperclassmen friends, and everything sounds good. You memorize the answer. And then you go into that interview that you’ve worked so hard to secure. The interview ends, and you answered every behavioral and technical question smoothly, without any mistakes. You walk out feeling good about your performance… only to later get a call saying that you’ve been rejected.

At this point, you’re completely baffled as to why you got dinged. A few days later, you have another interview with a different firm, and you go in with the same answers again, since you have no idea what you’re supposed to fix. You get rejected again. And now you’re starting to panic… guessing at what changes you need to make, and not being sure about your own answers.

Like I said – all of this happens because “you don’t know what you don’t know.”

The solution to all of this? It’s easy. Get someone who is an expert, whose technical and behavioral skills are way ahead of yours, to point out the things that you can’t see yourself. And by expert, I don’t mean just someone who’s maybe gone through the process themselves once. Especially for something so subjective like behavioral questions, you don’t want someone to give you advice just based on their own personal experience. That is a sample size of one, and what worked for them may or may not work for you as you are a totally different candidate.

Instead, get someone who has a LOT of experience with interviews, has seen a lot of different candidates’ answers, who can help you 1) accurately calibrate how your answers stack up against the overall candidate pool, and 2) identify the ways you can improve your answers wherever you’re falling short.

And that’s it! Getting an offer in investment banking is a big goal many are trying to accomplish. It’s your responsibility to look for ways to stand out in the time you perform the interview. Take your time, speak slowly, be confident but humble and let your personality shine. All of this united to a good preparation with proper help from the right people, will get you the job of your dreams.

Never give up on the first try

Here’s the thing. The moment you give up, you become a failure. But when you keep trying, keep going, you are never a failure. It doesn’t matter how many times you fall. You only need to get things right 1 time in this life and everything else just falls in place.

And the journey to getting things right, that’s what defines your life. It’s the journey that makes your life enjoyable, it’s not the destination. It’s the ups and downs that make the memories. Sure, that trip to Bali would be memorable.

But the most memorable thing will be how you hit rock bottom and managed to crawl your way out of that hole and become one of the success stories. You become your own hero.