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Overview
Aside from which school you go to, the most important factor determining if you can graduate with a great finance job is your prior work experience.
With recruiting timelines being pushed up earlier and earlier, firms have less and less information to evaluate you with. Grades have become a flimsier metric to rely on because you’ll only have results for introduction level classes.
The most important factor to get an investment banking internship is work experience, particularly one's freshman and sophomore internship. This has been amplified in recent years as accelerated recruiting for investment banking now happens in sophomore year.
So you need to focus a great deal of your energy in your freshman year cold e-mailing, reaching out to people, and ensuring you have something finance-related to do during your freshman summer.
But it can be incredibly hard to find a relevant paid job. Most financial institutions use the internship program as an extended interview process, with the goal of eventually converting interns into full-time hires. A freshman intern has such a low likelihood of converting into a full-time employee that many investment banking firms don’t even bother hiring freshmen.
In the unfortunate event you can’t find any relevant paid finance job, you shouldn’t be discouraged. You should focus your energies into a productive outlet.
If you're really just trying to improve your finance technicals, you should check out our Valuation and Finance Starter Kit.
Remember, you need to be doing something with your time. You need to have something to put on your resume. It’d ideally be a paid job, but if it’s not, here are some good alternatives:
Offer to Work (for Free) at a Search Fund
A search fund is a structure set up to purchase a single company (tends to be small companies purchased for a few million dollars).
Incidentally, search funds have become a great haven for ambitious finance students with no existing skills. Almost a third of all my friends who ended up in finance in Canada interned at a search fund at some point.
Search funds are often run by early 30’s professionals with prior finance / consulting experience. This makes them a valuable career resource to you and it makes them more receptive to hiring a student. The early stage of a search is very labor intensive, as it requires lots of canvassing, cold calling, and going through databases to find a suitable investment target.
If I were a freshman and I couldn’t find a conventional job, I would patrol the Internet for search funds and reach out to every single person offering to work for free and to work remotely. A lot of MBAs from Harvard and Stanford leave finance to start search funds so you should be able to find at least one person willing to take you on.
Here are some directories to get you started:
Search Fund Partners (fund of funds)
I specifically recommend search funds (vs. all finance boutiques in general) because I think your recruiting success rate is going to be higher with search funds. Search funds in the middle of a search are running short sprints that last for just a year or so, which makes them exactly the kind of company that needs an intern.
Start a Blog about Investing
If you get shut out from all jobs and even the search funds aren’t returning your e-mails, I think the next thing you should consider is to start a legit-looking blog about investing. To be honest, if you can’t even secure a search fund internship, you should revisit your cold e-mailing approach…
But the next thing I’d recommend is to start a finance blog.
Creating a blog is going to show initiative, continuity, and highlight your genuine interest. Don’t get hung up on how good the specific content is because no one will keep you accountable for your stock pitches. Just start writing and try to have a handful of posts that make it seem like you take it seriously (like… 5 to 10 long-form articles).
If you consistently post coherent stock pitches or market commentary on a website you built yourself, you’ll definitely impress people. Don’t over-complicate things, just write your investment thought process in a clear and straight-forward manner.
I know several hedge fund analysts who started blogs in college and the fact that they had an investing blog would constantly come up in interviews. It doesn’t even have to be a blog really, it can just be making a couple of polished stock pitch presentations that you can show to people you are networking with.
If you’re worried about your thoughts being embarrassing – don’t be. Honestly, no one cares if a student has bad investing takes.
Here are some good investing blogs that you can use for inspiration:
Write Articles on Seeking Alpha and Value Investors Club
If you want to have a higher chance of getting your ideas read, you might benefit from posting your ideas to an active online community like Seeking Alpha or Value Investors Club. I think both of those communities are large enough to be recognized by most people in finance. The built-in voting system can also give you more external goals to strive for and put on your resume.
Start a Solo Small Business
It might seem overly ambitious to say you should start a business if you can’t find a job. But the beautiful thing about a start up is that people expect you to fail and you really don’t have to make much success out of it. Remember, the ultimate goal here is to have high-quality talking points and to communicate people that you are a hard worker.
There are tons of easy small one-person businesses you can start in the matter of a few weekends.
You could start an e-commerce / dropshipping business for less than $500. Or you could tutor high school kids. Or you could freelance on Fiverr. Just file for incorporation and you have instant resume padding.
Invest Your Own Money
If you have the spare capital, you should try to open up a personal account (“PA”). Do your research and take a few positions that you believe in. It’s kind of funny, but once you’re in the real world working for a financial institution, you won’t be able to manage your PA as actively, so the best time to get familiar with trading public stocks is in college.
I think it’d be very reasonable to add a line on your resume (under Interests) declaring that you manage your own PA, which stocks are in it, and what the return has been. If you’re bold enough to include a stock name, you’ll very likely get asked about it in some interviews.
If you’re strapped for cash, you could open up a paper account (with ThinkorSwim for example).
Take Courses or get Certificates
I really think that all of the other options are better, but I suppose you could always get an online certificate / accreditation to express your interest in finance. Again, I don’t think there are any great certificates that will materially impact your chances of landing a job, but a certification is still better than nothing.
I got two certifications in my freshman year (Canada Securities Course and the Bloomberg Essentials) because I was desperate to show that I liked finance. It was kind of a waste of time, but I guess they did stay on my resume for a handful of years. Here are some certifications that might be interesting:
Network Aggressively and Systematically
This should be a given, but if you’ve got nothing else going for you, you need to be dialing up the networking intensity. I normally try to speak with 1 person per week when I’m actively recruiting, but if you’ve got no paid finance job, you should be speaking with 2 people per week in the industry.
Relatedly, if you couldn’t land a summer internship, you could begin networking for a fall / winter internship that you could do concurrently with school. I know many people who completed online internships throughout the school year in order to further pad their resume. You only have to do this if you didn’t have a summer internship.
Conclusion
It’s important to not be discouraged if you can’t find a good finance internship in your freshman year. I know a handful of (semi-target) people who worked in retail / food service their freshmen year who were still able to land great bulge bracket offers coming out of school. They made up for it with stellar extra-curriculars, great grades, and diligent networking. Even if you don't have a full time internship, you need to be working as hard as if you did.
If you aren’t able to get a good finance internship, you need to make sure the rest of your resume is as flawless as possible. And it’s always better to be doing something.