By Joris Luyendijk
We're meeting one forbiddingly cold December afternoon near Waterloo station. He has come into London from his university in the north of England to be interviewed for internships at banks. He wrote in to the blog: "I am a maths student trying to get into mathematical finance, and was thinking you may be interested in the whole grooming and recruitment process, and the university dynamics involved."
He is a slender man in his early 20s, with longish hair. He orders a cider and some garlic bread.
"Why banking? Well, for one, the money is simply unparalleled. £45,000 a year plus bonus as a starting salary, and you know that in 12 years you rise from analyst to associate to vice-president, to director, by which time you will be making hundreds of thousands of pounds a year. Suppose you come from parents who were working on the shop floor. Now, if you get into banking, by the time you're out you will have been able to put your children through Eton and emerge at the top of the food chain!
"Banking is a very quick way of climbing the social ladder. Though I have to say, most students who want to go into banking are middle- and upper-middle class. I am the only lefty in my society, definitely. Occupy is not a topic at my university.
"Among my fellow students, I'm slightly atypical in that I want to work at a bank in order to acquire a skill set that I need to start my own business later on. I have a number of ideas for a trading algorithm, as I believe much of the math underlying current algorithms is quite flawed. How algorithms work, in very basic terms, is that you look for past patterns on the stock market to try to predict and exploit future movements. Suppose there are five major travel agencies listed on the stock exchange. When four of them see their stock price rise, it's very likely that the fifth will go up too. So you write a computer program that makes trades on that assumption.
"The ticket to an internship at a bank is 'the final interview' and there are two routes to get there. In the traditional route you apply online. At that stage there are at least a hundred applicants for each position, usually more. You need to go through six or seven steps. There are all sorts of online tests – which you have to repeat in the bank later to prove that it was you who took that earlier test. There may be a telephone interview, group assessments, and individual presentations … If you survive all these, you get a final interview.
"This is very laborious, and as I said, the odds are heavily against you. The trick is to get fast tracked straight to a final interview. How to do that? You need to make a really good impression, really strike a chord with someone from the bank. You can do this at career fairs, at networking dinners, or at another of the events that banks put on at universities.
"Banks groom students with a mixture of flattery and intimidation. They put on loads of events at universities, and pick candidates from there. The societies at universities play a pivotal role here. You've got two types, those centred around a field of study, say the mathematics society, and those organised around a particular interest – the investment society, sailing society, football society.
"Student-led committees run societies, and being on one of those pretty much secures you a place at a networking dinner, and a final interview. It's a real asset on your CV. Often committee positions get passed on by people to their friends. Banks sponsor many societies; the maths societies by accountancy firms, the law societies by law firms, and so on. They may give them, say, £3,000, and in exchange they get a speaker in for an event, bring in senior management or put on career skills workshops etcetera. This works cumulatively as you can try to grab say 10 or more sponsors. This money typically goes into enjoying a life students wouldn't normally experience. We frequent some of the most expensive bars around my campus.
"Those networking dinners are quite something. You apply for them, and then you get invited. Or you don't. There is some nepotism there, I believe. If your father is partner at a major law firm in the City, it helps.
"Often there'll be one person from the bank for every student. Something to avoid is not showing up. I know somebody who did that, and got blacklisted by that bank. They really don't like that, it makes the bank look silly.
"At one networking dinner I was at the table with a trader at a major bank. She told us what happened on the day of the 7/7 bombings, the terrorist attacks in London. Of course everyone was in a state of panic, her mother was on the phone all worried, everyone was saying how awful it was. Then she got the order: we are going to short sell [speculate on a drop in share prices]. It was their most profitable day in the whole year.
"When I heard this story I was really unsure how to react. Was I supposed to be impressed? Awe-struck? It's quite an odd boast to make, wouldn't you say so? And to tell that story at a networking dinner … Another thing to note is that students don't bother spending too much time talking to the analysts who attend – they don't have the power to progress you to the final interview. As wannabe sycophants, we naturally focus on associates and vice-presidents as a minimum position within the firm.
"My sense is that the most important thing is that the recruiting banker gets on with you. I know somebody who scraped a 'third', which basically means he failed. Still he got in, because they got along so well.
"This is something that gets me: the banks recruit the very best brains, but for most of the work at those banks, you don't really need the best brains. It's different with the maths people, as these are very specific skills. But in many areas in banking, it's as much about networking, endurance and relationships as opposed to just being brilliant. So banks drain the best minds, then they don't even put them to use. These are the people who should be designing the next must-have gadget, going into medical research or just generally being a rocket scientist. It's such a very easy decision if you're a student, to be offered this kind of money – especially if you're laden with student debt.
"Another time a friend of mine was in a group of students being given a tour at an investment bank in London. A vice-president brought them to an empty floor and said: 'Last week we fired everyone who was working here'. He said nothing more, just continued the tour. I am not sure it was true, but that's not the point. They wanted that group to think it was true, and then such a story gets spread around back home at the university.
"In the assessments I have observed a clear difference between American and European banks. The Americans love it when people are like 'I am gonna punch the other guy down because I'm the best'. Europeans are emphasising with team work much more, it seems.
"Advice for others entering this process? Well, I am not an unmitigated success, I have to say. You need to learn to bullshit, it's the most convincing person who gets the job. And you need to be able to write about yourself in this smarmy way, to hype yourself up. As the people at Career Advice said: 'Always use 'I' in your answers and especially mention your component to any teamwork you did.'
"At my university most people don't brag about the number of job interviews they got. There is competition, absolutely. I am in a small subset of people with similar skills, and they are all going for the same internships as I am. You start to work out what's your angle over someone else. I am only friends with people who are applying for different departments than me.
"Have you heard of trade-ups? When one banks wants you, suddenly they all do. So it's all about getting that first offer. Then what some people do, is they call up another bank and say, look, I've got this offer, are you going to make me a better one? This is how you trade-up. I am sure there are people who bluff, because how many banks are actually going to check if you really have that other offer? Personally I wouldn't do that, the risk of being found out and getting blacklisted is too big. Besides, I am not dishonest enough.
"The dynamics of trading-up can be quite something. Goldman Sachs is the most sought after bank, an internship there is simply dynamite on your CV. Goldman interview really late, and so what happens is people get an offer from them while already having secured one from another bank. Then they will cancel that other offer, making that other bank look crappy because suddenly they have to go find a new candidate, or call previously rejected applicants. I would not be surprised if Goldman does this on purpose.
"The whole recruitment process is not something I care to remember. It's draining. Ever had a six hour interview? With no break? After four hours I had to ask to go to the toilet and have a coffee, as I was almost falling asleep. You put your heart and soul into an application, push away your lectures, do all that research about the bank, and then you get told 'no'. By now I'm ready to leap the first offer, I'm so sick of this.
"As I said, I am quite unusual in that I am actually really interested in the things I am going to do for the bank, in terms of maths, and that I want to work there only for a limited period of time – before going back to university to do a Masters and a PhD, and then start my own business. Previously I actually turned down a few offers for more actuarial positions, when people at those firms told me: 'Look, we've heard all that before. Trust us, once the money starts rolling in, you'll forget all about that PhD and just stay on.'
"Banks simply have fantastic opportunities that universities don't. They arrange for special classes by the best academics, they get the best lecturers in. They have the most expensive subscriptions to databases, for instance, Bloomberg terminals. Universities can't afford that, so they can't effectively teach all sorts of things. Increasingly banks are sponsoring universities, and universities are offering courses in financial mathematics; there's so much easy money there as it isn't particularly draining on academic staff and each student will pay £15,000 minimum.
"I'm certainly sceptical about going into the industry; recently a friend of mine completed an internship where they worked him into the ground. After repeated 19-hour days – primarily due to an unsympathetic line manager punishing him for not mastering Microsoft Excel overnight. He changed from trying to break into the fast-paced financial world to reconsidering his original medicine degree!
"I can see why quants worry about becoming 'mad as a fish', as this other guy you interviewed put it. Maths is an addiction, you may call it that. I dream about maths, would love to get my name to a theorem – creating something of my own, every mathematician has that. But I stay applied, as we call it. That way I remain moored to reality – unlike some of my professors."
