Top Investment Banks have highly selective recruitment processes. Receiving an invitation to an interview is already challenging. Roughly 10% to 15% of applicants are being invited to first-round interviews. You need to have the proper credentials. One part of it is your academic background. Most full-timers on the street studied something related to business and finance. When it comes to first-year Analysts, some only have a bachelor’s degree, whereas some have a master’s degree.
You are probably asking yourself whether you are studying for the right degree and are going to the right school. Is a bachelor’s degree good enough? Or do you need a master’s degree? What about grades and GPA? Is there a cut-off grade?
In this article, we will tell you how Investment Bankers look at your academic background and how you should optimize your academic studies to get into Investment Banking. You want to have the right degree with “good enough” grades and then shift all your efforts to interview preparation. You need more specific knowledge than what your average college classes teach you to succeed in your interviews.
Which academic credentials are the most important for Investment Banking?
Type of degree
To be honest, it doesn’t matter. Yes, you’ve read correctly. Investment Bankers do not care whether you have a bachelor’s degree only or a master’s degree. There is a certain bar that you need to meet to get invited to an interview. After that, everyone is equal. The only thing that counts is interview performance. Bachelor and master graduates both receive the same entry-level offers and start as the same first-year Analysts. No differences.
In practice, however, most first-year Analysts start their first job with a master’s degree – at least in Europe. Only the super talented and dedicated to Investment Banking from the get-go manage to land a full-time offer straight after their undergraduate studies. In other words, if you’re smart enough and figured it all out fast enough, you can save yourself a graduate degree. On the other hand, if you need some more time to “find yourself”, you will most likely get hired after your master’s degree.
To recap, Investment Bankers don’t care whether you have a bachelor’s degree or a master’s degree. However, most first-year Analysts do have a master’s degree. This is what we see primarily in Europe.
Degree subject and coursework
The majority of Investment Bankers have studied something related to finance and business. By that, we mean everything related to finance, accounting, business administration or management. Some have also studied economics. Yes, some will have science-based backgrounds, such as physics, engineering or chemistry. However, these are rare occurrences. The majority of Investment Bankers have some sort of business or finance background.
This contrasts with Management Consulting, where candidates with science-based backgrounds are much more common. For entry-level recruiting, Investment Banking requires more specific knowledge about accounting and finance vs. hypothesis-based problem-solving methods in Management Consulting.
The most important courses you can take are accounting, corporate finance and valuation. Accounting is by far the most important technical skill for any Investment Banker. However, don’t go overboard. Most universities do not have courses that go into detail about actual deal-making. It is good enough to take the introductory classes (not the advanced ones) and then focus your efforts on interview prep. It is good enough to take entry-level finance classes to reference them as your “spark” in your interview. Apart from accounting and valuation, most of what you learn in your “Finance” or “Business Administration” degree won’t matter for Investment Banking recruiting. Interviewing requires more specific knowledge, which your university dilutes within its entire curriculum.
What about liberal arts degrees, such as literature or history? Getting into Investment Banking with a liberal arts degree is more common in the United States and the United Kingdom. Keep in mind, this only works if your liberal arts degree is from an Ivy League or Oxbridge. In France and Germany, most Investment Bankers will have studied something related to business or finance.
If you want to do some research, research Investment Banking professionals on LinkedIn. You can see where they went to school and what internships they completed to break into Investment Banking.
Investment Bankers usually have very streamlined and similar backgrounds. They all went to the same schools. They all majored in something related to finance and business. They all got good grades. And they all interned at similar shops.
Your GPA matters the most
Let’s talk about the most important factor: your GPA. Why is GPA so important? Because GPA represents effort over time – aka long-term discipline and grit. This is the first thing a recruiter will look at. Where did you go to school and what’s your GPA? With that said, how good do you have to be to make the cut? Is there a cut-off GPA?
Let’s put it like this: If your GPA dips too low, then, at some point, your application is not competitive enough. Other candidates will outcompete you with better grades and more relevant internships. And this is just about getting invited to an interview. So, do whatever it takes to maintain a minimum GPA of 3.5 (US) or a British upper second-class (2:1). In ECTS grades, it would be anything above a B+. In German grades, stay above a 2.2 – preferably a 1.9 and above. You want to be in the top 20% of your class to maximize your chances.
These are not hard cut-off grades. Your GPA can slip a bit beneath the target range if you have relevant internships to compensate for. But the general rule is to keep your GPA in those corridors. That’s how you are the most competitive regarding your GPA. If you get rejected, you know it is not because of your GPA.
But here is the caveat. Don’t go overboard trying to be an A or A+ student. This will hurt your interview prep. You have to work exponentially harder to get those top grades. Keep in mind; your GPA is only getting you the interview – not the job. Apart from accounting and valuation, most of what you learn in your “Finance” or “Business Administration” degree won’t matter for Investment Banking recruiting. Just take some relevant classes to back up your interest in finance and then move on to easier courses for better grades and focus your energy on interview prep.
Taking super hard quantitative finance classes or triple majoring just to tank your GPA is not smart either. Nobody will look at your course curriculum in detail. Recruiters look at your GPA and then move on. They would instead hire the 3.7 candidate who also had good internships.
Target universities vs. non-target universities
We have put target schools as the last point. Out of all the points listed, the reputation and ranking of your school matter the least for the success of your application. What you study, your grades and your internship experiences matter substantially more than the brand name of the institution you’re studying at.
Yes, there are target universities from which Investment Banks preferably recruit. What this means is the bank will most likely have one company presentation per year at that school. Yes, you get to talk to IB professionals who are also alumni, but you still need to apply online just as everybody else does. The bank will hire about 2-5 first-year Analysts from that target university in a good year. That’s about it.
On the other hand, non-target universities may produce one first-year Analyst now and then. This doesn’t mean that it’s not impossible to get into Investment Banking. You just have to figure it out all by yourself. Get your grades in-line, get those relevant internships and you’re good to go.
The internet has leveled the playing field. You all have access to the same content about Investment Banking, whether you are at a target university or a non-target university. And studying at a target university alone does not guarantee you an interview if you have subpar grades and no internships.
To further debunk this myth, do some research on LinkedIn. Take a sample of Investment Bankers and see where they studied. The institutions where they studied at are diverse. Some went to target universities. Others went to lesser-known non-target universities. Regardless of their background, they all now work on the street.
When are first-year Analysts usually hired?
After looking at how Investment Bankers look at your academic credentials, let’s talk about how all plays out in real life. When are first-year Analysts usually hired? If you research LinkedIn, you will see that some made it straight after undergraduate studies, whereas most were hired after graduate studies. This is what we see in Europe. In the US, it’s more common to join with a bachelor’s degree only. If you add in a gap year, which is getting more common, between those two degrees, you’re left with three potential hiring points:
After your bachelor’s degree
During or after your gap year
After your master’s degree
1. After your bachelor’s degree
This is challenging but not impossible. This is the quickest route. This path requires you to get good grades, get good at interviewing and interning, all within a timeframe of three years. You only get two shots at landing the right internships AND performing just like a full-time Analyst. Only few make it that quick. Only the most fiercely determined and equipped with the proper knowledge out of the gate manage to make the cut that quickly. It’s either talent or dumb luck.
If you make the cut after your bachelor’s degree, we advise you to never look back at academia again. You have scored a full-time job – no need for more tuition and more student debt. You are starting to earn money 1-2 years earlier than your peers. You are also starting to advance your career earlier than your peers.
By the time your classmates from undergraduate start to work after their master’s degree, you are already a second-year Analyst. That’s a world of difference. You have 200% more professional experience than your peers, plus more cash and less student debt. You don’t need a master’s degree or an MBA to “find yourself”. It’s work experience over academia.
2. During or after your gap year
A gap year is optional and can make strategic sense if you are: (1) unsure about your career choices or determination for Investment Banking or (2) aware that you still have some weaknesses regarding your on-the-job performance.
You can use a gap year to slot in long-term internships of 6 months to truly practice the craft without any pressure. It usually takes two months until an intern settles into a company. The team will assume that you will return to college next year anyway, so there is no pressure for gunning down a full-time offer. However, given that you have more time to practice, you may end up getting a return offer. Then you can either go back to school knowing that you already have a job or you can directly start working and save yourself the tuition and more student debt.
A gap year is an excellent opportunity to collect relevant internships and position yourself as a stronger candidate. The more relevant internships you have, the more brownie points you accumulate. You are signaling that you are committed to Investment Banking.
3. After your master’s degree
While breaking into Investment Banking with a bachelor’s degree is desirable, not everyone will make it that fast. In Europe, it is more common to enter Investment Banking after your master’s degree. This is the most common path.
During your undergraduate studies, you were messing around to “find yourself” only to realize you need to step up your game if you want to get a decent job. You need some more time to figure out the interview game and are forced to go back for some more schooling. Now, you start to take things seriously and things start to slowly work out.
Many people need some time to truly find their “determination” for Investment Banking before they can focus on plowing through all the necessary preparation and collecting the relevant internships. A master’s degree in finance can help you rebrand yourself as the “finance guy” while buying you some more time to work on your GPA, interview prep and internships.
You DON’T need an MBA, CFA or PhD for Investment Banking
CFA – There is only one reason to take the CFA: If your bank requires it for your promotion. You only need a basic understanding of financial statements. Everything else you’ll learn on the job or you will have Auditors conducting financial due diligence.
MBA – First off, an MBA is super expensive. If you have the choice, save yourself the MBA and try to make more money for your company. However, there are scenarios where an MBA makes strategic sense on the surface. But make sure to run the numbers in terms of tuition vs. expected increase in earnings and how long it will take you to pay off your student debt.
With that said, an MBA is a networking opportunity or a sabbatical for experienced professionals on a prestigious campus. It is also an opportunity for re-orientation. So, if you are around 25-30 years old, an MBA might be a viable and expensive option to re-position your career. Diverse backgrounds enter MBA programs and are usually streamlined into either Investment Bankers or Management Consultants.
PhD – A PhD does not give you any bonuses if you want to work on Wall Street. All you need is a bachelor’s or a master’s degree, at most an MBA. Investment Banking is a real estate agent for companies, aka a relationship business. Your job as an Investment Banker is to build relationships and help them find funding (ECM/DCM) or sell them (M&A). No need for a PhD. It will be harder for you to enter Investment Banking since you have spent years acquiring a skill set that is not useful (aka it does not make more money for the bank).
Savvy finance students can skip it all – master’s degree, MBA, CFA and PhD. However, most hires have a master’s degree because only a few make the cut right after their bachelor’s degree. Please, if you get an offer as an undergraduate, take it and don’t sink the time and tuition into a master’s degree just to “find yourself”. After two years of Investment Banking, you’ll have actual work experience, which always trumps academia.
Work for a reputable firm under a high-ranking employee and have them do the cheerleading for you. Get staffed on deals that go through because you can talk about them in interviews or any form of interaction. Wall Street is a sales job based on relationships. Complex math is not needed. If you believe advanced technical skills will give you an edge, you have missed the point.
If you don’t believe it, research all professionals within Investment Banking, Private Equity, Hedge Funds or Corporate Development on LinkedIn. “Will my degree help me generate money for the firm?” If the answer is a no, don’t bother.
Where does it leave us?
Investment Bankers don’t care about whether you have a bachelor’s or a master’s degree. If you appear competent enough in your interviews, you will get the job. Keep in mind that only a minority of graduates manage to break into Investment Banking after their bachelor’s degree. Most full-timers are hired after their master’s degree. This is what we see in Europe. In the United States, it is more common to get hired straight after your undergraduate studies.
The majority of Investment Bankers have studied something related to finance and business. By that, we mean everything related to finance, accounting, business administration or management. Your most essential classes will be accounting, valuation and corporate finance. Introductory classes are more than enough. After that, you should focus on interview prep.
Your GPA is the most crucial criterion. This is the first thing your recruiters will look at. GPA is so important because it represents effort over time. Try to maintain a minimum GPA of 3.5 (US) or a British upper second-class (2:1). In ECTS grades, it would be anything above a B+. In German grades, stay above a 2.2 – preferably a 1.9 and above. You want to be in the top 20% of your class to maximize your chances.
Yes, there are target universities from which Investment Banks preferably recruit. However, this only means 2-5 candidates of the entire class per year. Target university only means that the bank holds a company presentation every year at the university. Studying at a target university alone does not guarantee you an interview. Your GPA and internship experiences are more important than the brand name of your school.
If you are lucky enough to get hired after your bachelor’s degree, take the offer and do not look back to academia. You will have more time to earn money, pay less tuition and have less student debt. You don’t need a master’s degree to “find yourself”. However, if you are a late bloomer to the Investment Banking game, you can use a master’s degree to rebrand yourself and buy yourself some more time for interview prep. Most people are usually hired after their master’s degree.
And no, you don’t need more schooling than that. You don’t need an MBA, CFA or PhD. Investment Banking is a relationship business. Complex math is not required. If you believe advanced technical skills will give you an edge, you have missed the point. Work for a reputable firm and let your work experiences speak for you. It’s work experience > academia.
Additional resources
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