Investment Banking vs. Management Consulting
Investment banking and management consulting interviews are different. The major difference is that management consulting firms test for strong analytical skills by administering what are called "case" questions. Case questions are scaled-down versions of real business problems that consultants work on, and often they are drawn from the interviewer's projects. The case takes up a good portion of the first-round management consulting interview. If you're interviewing with consulting firms, it is imperative that you read Chapter 10, which explains how to answer a case question.
On the other hand, investment banking interviews do not include case questions. Instead, interviewers spend time on resume and personality questions.
If you're interviewing with both consulting firms and investment banks: Consultants expect you to tell them that consulting is your top choice, and investment bankers expect you to tell them that banking is your top choice. Be prepared with a strong, convincing answer for each. Also, you should review Chapter 6 to understand how to portray yourself differently in consulting and banking interviews.
The Introduction
During the first two or three minutes of the interview, interviewers introduce themselves and attempt to "break the ice" by making comments about the weather or other small talk. They also will describe the structure of the interview. It's important to remember that the interviewers are starting with a positive tendency toward you: After all, you have been selected from a large pool of candidates because they like your resume. The introduction is intended to put you at ease, but don't completely let down your guard-many recruiters say that their impressions (positive or negative) are shaped in the first five minutes of the interview. To make a good impression,
- Shake hands firmly with the recruiter (if your palms are sweaty, wipe them off before entering the interview room)
- Relax-the interviewer is looking forward to meeting you after reading your resume
- Smile, show some warmth, but err on the side of formal rather than informal until you've gotten a sense of the interviewer's style
- If interviewer attempts small talk, make sure to engage in a conversation with him
Put yourself in the interviewers' shoes. They might have to work with you if you are hired, so they want to make sure they like you. This is the major purpose of the personality questions. If interviewers don't like you as a person or you don't really fit in with the culture at the firm, they will find an excuse to reject you no matter how perfect your answers are, no matter if you say what you're supposed to say. Personality questions and resume questions form the core of the investment banking interview since investment banks do not use case questions.
Interviewers also are testing whether they can put you in front of a client without embarrassment. Will you handle sensitive situations with grace and tact? Are you aware of what is appropriate behavior? At every step, interviewers are evaluating whether you'll field a difficult question with poise, because that's what bankers and consultants must do every day with their clients.
You have a big opportunity in this segment of the interview. Personality questions are more open-ended than any other type of question, since they let you choose a response from your life experiences. You can use the discussion to slip in the headlines that you have prepared or address any weaknesses on your resume. Don't let the conversation ramble; direct it the way you want to.
Critical skills being tested include integrity, interpersonal skills (especially maturity, judgment, and tact), communications skills, and the ability to learn.
Be on the lookout for these common personality questions:
Failure Questions: What has been your greatest failure? What did you learn from it? These questions test your maturity, your ability to learn from mistakes, and your ability to handle a seemingly no-win situation. Use this as an opportunity to address weak spots, such as a low GPA-just don't bring up anything that's too negative or personal.
A good answer might be: "My grades dropped during sophomore year, which I consider to be a failure. Afterward, I thought about it and realized that my organization skills weren't where they needed to be in order to handle upper-level courses and that I had overcommitted myself to extracurriculars. [List examples of activities done.] I corrected these problems and my grades increased pretty dramatically the next year. I learned how to budget time better."
Another failure question is: What would you change about your past?
Self-Awareness Questions: What are your strengths and weaknesses? In an-swering these questions, honesty is usually left in the dust. But what do recruiters expect for asking such loaded questions? Few recruiters actually think they're going to find out what your real strengths and weaknesses are; they're testing your awareness of how others perceive you and your skill in answering a hard question.
Self-awareness is important because it is crucial to working well with people. If you brag profusely about your strengths or reveal profound weaknesses, you are demonstrating a lack of judgment and a lack of awareness of how you come across to others. So how do you respond? Try to express an old idea in a new way. Rather than say that your weakness is that you are a perfectionist, say "I tend to set expectations for myself and for others that are very high." Don't worry if your answer is somewhat clichéd--interviewers can't fault you for answering a tough question with tact, because they would do the same thing.
No matter what, do not imply that you are weak in areas that the firm finds important. Do not say that you are weak in math, analytical or interpersonal skills, work ethic, or confidence. Pick a weakness that has positive implications for the company. Err on the side of creating a driven, workaholic image of yourself rather than a laid-back, lazy image: "My greatest weakness is my tendency to overcommit to projects, which usually leads me to spend less time with my friends than I would like."
In describing your strengths, you have the opportunity to shore up weaknesses by highlighting unexpected qualities. If you have a very technical and dry resume, you can say: "My greatest strengths are my creativity and ability to get along with people." (Of course, back it up with some persuasive exampies.) In any case, you should highlight a few strengths that match qualities that the firm is looking for; be selective rather than reeling off a laundry list of qualities that interviewers won't remember.
What concerns you most about working in investment banking/consulting? This is another version of the "weakness" question because you potentially have to reveal something about yourself that doesn't fit the job. Take the response you've prepared as a "weakness" and use it here: "I have a tendency to overwork and leave little time for my friends and family, which I feel bad about. I know that I'll do the same thing in banking because of the long hours." Come up with an answer that interviewers would forgive because they can relate to it: Most investment bankers feel guilty about not spending more time with friends and family.
Other self-awareness questions:
- How would your friends describe you?
- What do you consider to be your three greatest achievements? (Use "I" here, not "we," to highlight what is attributable to you. Use this question to highlight specific strengths that match what the firm is looking for)
A bad answer might be: "A friend in my class took the final exam before the rest of the class and then offered me the answers. I thought about it and decided not to accept the help." This is a bad answer because you shouldn't be even hesitating--this is not an ethical dilemma because the right decision is very clear-cut.
Another ethics/sensitivity question is: A client pulls you aside and tells you that he doesn't like working with women and wants you to replace the women on your team with men. What do you do?
Fun Questions: If you were trapped on a desert island for two weeks and could choose any two people in the world to be there with you, who would you choose Ten Common Interview Gaffes?
Here are ten surefire ways to get yourself rejected:
- Not answering the question asked. This disease is rampant among candidates, who out of nervousness veer off the subject or forget to complete their answer.
- Not understanding the job offered. This is the undergrad-who-wants-to-be-CEO syndrome, where a candidate thinks he's going to be leading meetings instead of crunching numbers. Interpreted at best as ignorance, at worst as pompousness.
- Verbosity. Perhaps out of a fear of silence, this candidate just can't come to a close. One idea leads to another, which leads to another. Agonizing to listen to.
- Spewing tons of information without any structure. A close relative of verbosity. Comes up with a good range of ideas, but disjointedness leaves the interviewer's head spinning.
- Not seizing an opportunity to make a point. Given some great openings to sell himself but he just sits there. If you want to hunt with the big dogs, you've gotta get off the porch. Show some drive and initiative.
- Talking about something personal. Never talk about your family values, love life, deepest feelings, religious beliefs, political leanings, or other sensitive topics.
- Crudeness/offensiveness. Here's a good example of this. When asked, "What was your most memorable experience?" a candidate replied, "Losing my virginity." "Why?" asked the interviewer. "Well, wasn't it for you?" Don't assume the interviewer shares your preferences or sense of humor.
- Letting an early mistake ruin the whole interview. Some candidates act like all is lost when they've made one mistake. But everyone makes at least one mistake during an interview. Forget about it and move on; you'll win even more points.
- Thinking professional means cold. Not smiling or trying to build a rapport with interviewers is a mistake. If they don't like you as a person, they'll reject you no matter what. Try to like interviewers--they'll notice it.
- Arrogance. Acting as if you're going to get an offer (perhaps because someone has led you to believe this) will get you axed.
Other fun questions:
- If you had all the money in the world, what would you do besides banking/consulting?
- What do you do for fun?
- What did you do this weekend?
Focused on your accomplishments and professional interests, resume questions form the heart of the investment banking interview and the warm-up of the consulting interview. Interviewers are looking for whether you can communicate a lot of information concisely, why you've made your life choices, what you've accomplished, and whether you've been able to develop insights from each experience. Know your resume well; be able to explain each choice and provide a few in-depth examples and learnings for each experience listed. Try to show a clear, logical path of career decisions that are linked together by some type of interest or plan.
In each response, use the time-tested "CAR" approach to make sure you've hit important points:
- Context: Briefly set the stage for the example you are going to give. Often people spend too much time on this rather than on what their action were.
- Action: Communicate what you did.
- Results: Explain the results of your action to show interviewers that you made an impact.
Decision-Making: Why did you choose to go to [your university]? This type of question tests your decision-making process and your values. It is important to show some logic in your answer. A rambling answer will be taken as a sign of a rambling mind. On the other hand, if you're asked about a decision that should involve some emotion, don't be overly analytical or you'll seem stiff.
You should be demonstrating your strength, not stating it: Don't say "I always think very logically and by process of elimination I chose Swarthmore." A better answer would be "I knew I would get a good education at any of the schools I was considering. So I differentiated the schools based on nonaca-demic factors. My priority was to find a school whose culture and people I really liked. I visited the schools where I had been accepted, and felt that Swarthmore's culture was the best fit for me. People had a great respect for academics but were well rounded." This answer communicates your thought process-and it also tells the interviewer about your priorities, which is the other purpose for decision-making questions.
Other decision-making questions:
- What is an example of a difficult decision you have had to make?
- If you are given an offer, how will you decide whether to accept it or not?
A mediocre response would be "I was captain of the cross-country team and I worked with my teammates to win the NCAA championships. I very much enjoyed being with my team." A more insightful response would be "I was a member of the cross-country team. Though cross-country is often perceived as a very individual sport, it actually involves a lot of teamwork. Your time and placing is combined with the six other people on your team to result in a team score, so if you drop out or perform poorly the whole team loses. As you're preparing for and running the race, you support other runners because in order to win you all have to win. I really believe our close teamwork allowed us to win the NCAA championships." This answer is better because it shows a good understanding of what teamwork is about. A lot of people confuse teamwork with leadership, reeling off their list of captain, president, and championship credentials without fully explaining how this involves teamwork.
Another teamwork question is: What was it like to play on the football team (or other sport)?
Leadership: Give me an example of a situation in which you demonstrated lead-ership. Like the teamwork question, the leadership question rests on whether you really understand what leadership entails. Here's a review: True leadership involves persuading people, not forcing them, to do things. Portray your leadership in terms of persuasion, not dictation. This is particularly important to consultants and bankers because they often need to persuade people they don't manage (peers or clients) to help them. Leadership also involves being willing to take responsibility when necessary.
The problem with leadership questions is that often they are traps designed to test your balance between team player and leader. Answering them too confidently can make you sound arrogant and dictatorial. Good examples are relationships in which there is no established hierarchy, and therefore true leadership skills are critical.
"Three classmates and I were working on a group economics project that constituted the major portion of our grade in the class. We were floundering and disorganized, because we hadn't structured our work, divided up tasks, or figured out a timeline. I recognized the cause of our problems and decided to do something about it. I talked to my friends, convinced them that we could do better if we made some process changes, got us more organized, and acted as the "check" to make sure everyone was getting their work done on time. We ended up getting an extremely high grade. I consider this leadership because I stepped up to the plate to lead us in a direction and persuaded my friends to make a decision." This answer is good because it's humble yet shows the candidate is able to lead a group out of danger. As a bonus, the answer also shows that the candidate has good organization skills.
Other leadership questions:
- I see here on your resume that you "Led basketball team to five wins." What about this experience constitutes leadership?
- What would you do if a client on your consulting project team tells you he doesn't like the goals of the project and refuses to give you information that you need?
A good answer to the question above is "Though I like [my school] a lot, there is one problem that I've noticed. The academic advisory system is meant to help freshmen and sophomores make major academic decisions, such as choosing a major. But too often this system fails students, and they are left with no one to turn to for advice. I think that this is because those who have been assigned to advise them, junior faculty members, are often too overloaded with other responsibilities to spend quality time providing guidance. A better system might be based on juniors or seniors providing advice. They would understand what new students are going through, having been there themselves, and they could provide advice based on experience." This is a good answer because it is a harmless topic, demonstrates an understanding of key factors in the situation, and offers a practical and defensible solution.
Other resume case questions:
- I see here on your resume that you worked as an intern at the SEC. What do you think of the SEC's recent censure of the National Association of Securities Dealers?
- Have you ever had to make a strategic decision?
- Walk me through how you accomplished XYZ on your resume.
These questions test on the spot your ability to communicate important points concisely or persuade someone. The key here is to remember to structure your answer (you may want to give the interviewer a few key headlines before plunging in), stay as high level with your points as possible, perhaps stopping to give a few well-selected details, stay on track, and summarize quickly at the end of your answer.
- Teach me something. You have five minutes.
- Sell me the lamp on this desk.
These questions look for evidence of business knowledge and interest. Business questions are particularly important in investment banking interviews, especially for those who are economics or business majors. Investment bankers like people who really want to be investment bankers; remember to show enthusiasm for finance, the securities markets, and the role of an investment banker!
Interest: Why are you interested in consulting/banking? This is probably the single most common question asked in the interviews. It is therefore worth investing some time in. You are being tested on your interest in the industry and the company. Take an hour and reflect: How did you initially become interested in the industry? What are the benefits of taking the job, and where might this experience lead you in your wildest dreams? Develop some real excitement that you can project during the interview. Also, how can you portray your past experiences as a long-term chain of events that have led you to your current interest? Once you've developed a storyline, you can use it repeatedly. Nobody will expect you to have a different answer each time the question is asked. This is a topic in which the more directly you answer the question, the better.
A good response for a consulting interview might be "I am an economics major here at Duke, but I have concentrated on theory rather than applied economics. I have increasingly felt over the past year that I would like some 'real-world' business experience-I'd like to learn more about how companies make operations and strategic decisions. I've talked about management consulting with some of my friends who are doing it now, and my sense is that as a consultant I will really learn about how companies operate." Other reasons for wanting to be a consultant: exposure to many different industries and issues, learning curve is steep during your entire experience, large degree of client interaction, you like to think about strategic and operational decisions that companies make.
A poor response might be "I heard about it from all my friends, who were applying, so I decided to submit my resume. Since then I've talked to other friends who are in the industry and I think the work sounds really interesting." Even if it was, don't make your interest sound impulsive or random; make it sound thoughtful and logical.
Reasons for wanting to be an investment banker: You're interested in finance and securities markets, you like the transaction-oriented nature of banking because you like to see concrete results of your work, you will gain strong computer modeling skills, you will be exposed to a variety of companies, you will work with high-level clients.
Other questions that test your industry interest and research:
- What brings you here? Why are you applying to our firm? (Have some reasons that are tailored specifically to the company you're interested in.)
- What other firms are you applying to? (It's a good sign if you're applying to several companies in the industry, since this means you're really interested.)
- What other industries are you considering? (Be careful-don't seem too scattered. You don't need to tell bankers that you're applying to consulting, and vice versa.)
- Follow-up question: Which would you prefer, investment banking or consulting? (If you want a job, tell bankers you'd prefer banking and tell consultants you'd prefer consulting.)
- What do you think a banker/consultant does every day?
- Why do you think you would be good at banking/consulting?
- What do you think you would enjoy most about this job?
- I-banking: In which investment banking department do you see yourself? (Tests to see whether you've done some research.)
- What are some differences among consulting/investment banking firms that you have noticed, and which are important to you? How will you make a choice among firms?
A response to the last question would be "The government affects interest rates through two main methods: increasing or decreasing the money supply, which in turn affects interest rates, or directly changing the rate at which the government lends money to major financial institutions."
Other business knowledge questions:
- What do you think are the major strategic issues in the XYZ industry in which you worked last summer?
- What do you think are the major strategic issues banks/consulting firms face?
- What do you think of the Morgan Stanley/Dean Witter merger [or other situation in the investment banking industry]?
In the last few minutes of the interview, interviewers will ask you if you have any questions. You are still being evaluated-this is not a time to rest! While the quality of your questions probably won't make or break the interview, it does make a difference when interviewers are uncertain about your interest in or understanding of the job. Poor questions are seen as a sign of little interest in the job and, even worse, of bluffing: Your until-then enthusiastic performance will seem rehearsed rather than genuine if you end with cliched or very basic questions. Resist the temptation to succumb to fatigue during this last segment of the interview. Nothing is worse than when you ask a question and then stare at interviewers blankly, repeating "uh-huh" and not truly listening to the interviewer's response. That's when they know you are killing time and can't wait to get out of there. Develop questions specifically for each interview. The best questions are those that are neutral, are tailored to the firm, show that you have thought about the job, and genuinely interest you. Good questions for a first-round interview:
- In your opinion, what major changes will occur in the banking/consulting industry over the next few years?
- How will your firm adjust to these changes? How is your company's approach different from others?
- Could you describe a recent project you've worked on? A typical day on the job?
- It helps me to hear about others' career decisions. What other options were you considering, and why did you choose to join the firm?
- What types of people perform best at the firm? How are analysts evaluated?
- How much client contact would I have? How would this evolve as I progressed?
- Could you describe the project staffing process at your firm?
- I read in your brochure that you assign people to [industry/product/ functional groups]. How is this assignment made? How much interaction is there among groups? (This type of question is tailored to the specific company.
