Investment Bank Internship versus Accounting Courses

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Investment Bank Internship versus Accounting Courses

Postby ceecee123 » Wed Feb 13, 2013 6:25 pm

My daughter and I have been discussing her future and have been frustrated by some of the advice she has received. I couldn’t think of a better forum to get advice regarding this issue and that’s why I have posted here.

My daughter is currently a junior at HYP (Harvard Yale Princeton; daughter prefers I don’t specify which one) and plays a varsity sport. She is majoring in History but has decided she wants to pursue a career in investment banking. My husband and I strongly recommended that she at least get an accounting degree so she would have a profession to rely upon if an investment banking career does not work out. We also felt that a degree in accounting would be a valuable asset in investment banking and possibly open a door into certain departments such as mergers and acquisitions. She agrees with this logic and took Introduction to Financial Accounting as well as Managerial Accounting this past summer at our flagship state university. Her HYP GPA is a solid B but she received an A+ and an A (should’ve been an A+ but teacher doesn’t go higher than an A) in her accounting classes this past summer. She has applied for multiple investment banking internships for this coming summer but the few she has heard from so far have declined her application (probably due to her GPA).

My daughter has also been considering returning to the state university this coming summer and completing Intermediate Accounting as well as two additional accounting courses. The advantages of this plan would be to put her a full semester down the track towards completing her Masters of Accountancy while also boosting her undergraduate GPA since she has done so well in her previous accounting classes. This would seem preferable to accepting a possibly mediocre internship. However, several recent HYP graduates, who were teammates of my daughter, are currently employed by investment banks and have a far different opinion. They are telling my daughter that it’s imperative she obtain work experience this summer with an investment bank, no matter how trivial, or else the banks won’t feel she is serious about pursuing such a career. Our feeling is that the extra knowledge she will possess from her accounting courses will help her make a more formidable first impression when she ultimately gets an investment banking opportunity. In addition, my husband and I have issues with investment banking being the “ultimate career” and are very Bogleheadish on this matter. In a nutshell we feel that investment banks have demonstrated less than exemplary behavior recently and feel an accounting degree opens up a wider and more “appropriate” range of business possibilities.

We would appreciate any feedback on this matter. Thank you in advance.

Cee Cee
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Re: Investment Bank Internship versus Accounting Courses

Postby jjbiv » Wed Feb 13, 2013 7:16 pm

I would certainly favor the internship approach if she wants to work in I banking. Nothing beats getting her foot in the door if this is her chosen field. In addition, an internship will allow her to make an informed decision about the nature of the work and her interest in the field. There will be plenty of time to take accounting courses later and/or learn skills on the job. Many in investment banking go on to top MBA programs sponsored at least in part by an employer. Accounting is an interesting field in that an individual only need take the requisite accounting courses to sit for the CPA exam. An accounting undergraduate degree (let alone a masters in accounting) is not required to sit for the CPA exam. Your daughter would likely meet the credit-hour requirement to sit for the exam if she completes a history undergrad and the accounting coursework required for the CPA.

I-banks may not be favored by the public but they are terrific places to work and very rewarding financially if such a job aligns with her skills and interests. What does she want to do? I would support her interests regardless of the field -- both accounting and I banking are great, but different, career options.
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Re: Investment Bank Internship versus Accounting Courses

Postby Saleen » Wed Feb 13, 2013 7:53 pm

I cannot speak as to I-banks, but I can speak about my experience as a law student. You should see if they are similar.

In the field of law, an internship or "summer assoiciateship" in your last summer of law school is basically mandatory if you want to start working at a national law firm upon graduation. The large majority of firms simply do not hire graduates who did not participate in their summer program the previous summer, regardless of class standing, intelligence, certain special classes, whatever. The internship at the firm is a prerequisite to being hired after graduation. If this is the case with Investment Banks, the internship is the right choice.

Of course, I have no idea whether this is the case, but it is something that should be looked into.
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Re: Investment Bank Internship versus Accounting Courses

Postby NYBoglehead » Wed Feb 13, 2013 8:06 pm

I know it seems antithetical, but getting an internship at an Investment Bank is much more important in my opinion and have several friends who went this route. Some took summer courses and had higher GPAs, while the ones who were able to get the internship and have their faces seen at the office were the ones who landed the better jobs.
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Re: Investment Bank Internship versus Accounting Courses

Postby Userdc » Wed Feb 13, 2013 8:32 pm

If she can get an internship at one of the "bulge bracket" (top 5-10) firms, she should definitely take it.

At worst it's a résumé builder, and given that those internships are very selective, so it's a signal that she met someone else's high standards (a la her Ivy League degree).

I also happen to think Investment Banking can be a great career. Yes, the pay potential is off the charts, but even if you don't stay in the industry long term, you have the chance to work with and learn from very smart people. The hours miserable, especially at the junior levels, but that does enable you to learn a lot in a few short years.

The exit opportunities are excellent for analyss with several years under their belt - top business schools, other finance jobs, consulting, etc.

If you hate investment bankers so much, know that the percentage of summer analysts who end up in the industry long term is probably less than 20%, so even if your daughter takes the internship, you probably won't have to disown her.
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Re: Investment Bank Internship versus Accounting Courses

Postby TomatoTomahto » Wed Feb 13, 2013 9:00 pm

Mine is another vote for internship. As they said in the old ads: Priceless.

She might ultimately prefer an entirely different career, but if she can get an internship, go for it.
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Re: Investment Bank Internship versus Accounting Courses

Postby nimo956 » Wed Feb 13, 2013 9:15 pm

A summer internship in i-banking is a pre-requisite to getting a job offer post-graduation. Not getting an internship would put her at a serious disadvantage. Also, her major isn't really an issue as long as she has relevant coursework and shows she is capable and interested in the interview.

Edit: I forgot to mention that these i-banks receive so many applications that there are probably GPA cutoffs. I forget where the line is exactly, but it would be very difficult to get an interview with anything below a 3.5 for example. Perhaps this can be overcome if she networks harder than everyone else, maybe doing something like working for free at a name-brand bank doing cold calls during the school year just so she can put that name on her resume.
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Re: Investment Bank Internship versus Accounting Courses

Postby TomatoTomahto » Wed Feb 13, 2013 9:15 pm

P.S. regarding the recent behavior of investment banks and your concern that it might not be a great career for your daughter...

I was a software developer at EPA and NASA many many years ago. I went to work at an investment bank, not for the money , but because they had the best technology and brightest people, and that's what made my world spin. One can argue that it's shameful that an investment bank would have better technology than NASA, but that's the way it was (and is). That particular bank got into ethical/legal troubles and is no longer, but in my decade there, I never worked with anyone that I wasn't proud to be associated with. I hopped out of bed every morning looking forward to going to work. I joked to my friends that I was afraid to buy a lottery ticket because, had I won, I thought everyone would think I was an idiot to keep going to work.

Investment banks have a lot to answer for, but my personal experience is that the "bad eggs" are relatively few in number.
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Re: Investment Bank Internship versus Accounting Courses

Postby 2sls » Wed Feb 13, 2013 9:18 pm

Her friends know how the game is played so she should take that seriously. It's not trivial to get that internship- much harder than getting an A in accounting.
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Re: Investment Bank Internship versus Accounting Courses

Postby Grt2bOutdoors » Wed Feb 13, 2013 10:04 pm

If she really wants that I-banking job at graduation or shortly thereafter, then my advice would be to get the internship now. Accounting is a "noble" profession (and don't worry there have been plenty of shenanigans in that industry as well) but she can get a job in that at anytime. You don't want to enter the I-banking field too much later after school if you could get one of those coveted slots - too much competition from new grads,insiders and the work hours will cause serious lifestyle issues. There aren't that many "old(er)" people working in investment banking - either burnout or forced culling of the crop will eventually get to you, many people at that point will have moved on to other adventures or retirement.
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Re: Investment Bank Internship versus Accounting Courses

Postby vveat » Wed Feb 13, 2013 10:20 pm

I am working in somewhat similar industry and have friends in i-banking. The recruiters in these industries are not looking at what courses you took, they are looking at experience and academics (i.e. GPA). Go for the internship if there is a chance for it.
When I was doing my MBA I had i-banks after me because I was in commercial banking before and had the GPA. However, I found it difficult to get a foothold in my current industry exactly because of lack of relevant experience. What worked for me was my knowledge of language that finally got me an interview with an overseas office, subsequently a summer position in that country, and then my summer performance was good enough to win me a transfer back to US in the same company. And by the way, once I had that summer under my belt, the competitors in my industry were suddenly quite interested in my application. I am mentioning this because you may need to look for similar backdoor if your daughter doesn't have high enough GPA or relevant experience.
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Re: Investment Bank Internship versus Accounting Courses

Postby RupertSM » Wed Feb 13, 2013 10:55 pm

She should take an internship and here's why. Most, if not all, of the investment banks fill their first year "analyst" classes from their prior summer's internship program. For example, by the end of the summer interns are made full time job offers or not. These rising seniors then can start full time the following summer post graduation. Alternatively, these interns may decide to forego their full time offer and interview at other banks or in other industries, etc. However, among bulge bracket firms, 90% of their full time hires are from their intern program, so slots are scarce if you are applying from the outside. Importantly, if you have NO internship it will be nearly impossible without some connection or off the wall academic record to get hired full time by an investment bank. Once hired, most investment banking programs are 2-3yrs in duration and at the end of that time young employees are either asked to stay on as "associates" or must find another opportunity elsewhere. Your daughter, if she went that route, could at the end of 2 or 3yrs decide to pursue an MBA or anything she chooses. Her resume with an I-Bank on it will only enhance her opportunities if she were to apply to business, law, or any other graduate programs.
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Re: Investment Bank Internship versus Accounting Courses

Postby fareastwarriors » Thu Feb 14, 2013 1:55 am

I-banking internship. Go for it.

She can do something else later.
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Re: Investment Bank Internship versus Accounting Courses

Postby ceecee123 » Thu Feb 14, 2013 8:12 am

Wow. Thank you for all the great replies. They have been very helpful.

Cee Cee
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Re: Investment Bank Internship versus Accounting Courses

Postby WendyW » Thu Feb 14, 2013 8:39 am

ceecee123 wrote:They are telling my daughter that it’s imperative she obtain work experience this summer with an investment bank, no matter how trivial, or else the banks won’t feel she is serious about pursuing such a career. Our feeling is that the extra knowledge she will possess from her accounting courses will help her make a more formidable first impression


The friends are correct; if your daughter is lucky enough to land an I-banking internship, she should jump at it. This is the kind of one-time opportunity that is only open to students at elite schools.

She has her whole life to take accounting courses. And nobody's going to get really excited about a little bit of extra accounting knowledge anyway.
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Re: Investment Bank Internship versus Accounting Courses

Postby mgcfo » Thu Feb 14, 2013 8:58 am

Even though I'm biased as I worked for a (what was then called a) Big Eight firm, if she can get an internship offer, she should take it.

Assume she does an internship and finds she does not like it and decides accounting is her passion. The downside is that she spends an extra semester finishing her accounting work, but the upside is that the internship will look great on her resume. Again, a lot of 'what ifs' here, but assuming she ultimately goes down the accounting path and gets great grades along the way, she should not have a problem obtaining a position with a Big 4. While she'll probably have to spend time getting her feet wet in the audit (assurance services) area for presumably the first two years, the Big 4 firms and the next 6 larger firms generally all have M&A practices that she could apply for.

I've never worked in investment banking, but I'm assuming the first couple years are similar to those in a Big 4 -- mainly grunt work at the outset, long hours, lots of travel, and dealing with frustrations that it seem like a thankless job. But looking back, I have no regrets with those long and difficult hours in public accounting while I was raising a young family.

One last suggestion ... my oldest son works for a national firm and travels a lot during busy season. But he didn't start studying for the CPA exam until he started working for his firm. Working long hours and then coming home to study for the exam is not easy, especially if married. If she decides on accounting, have her try to plan her schedule where her last semester has just one class - the CPA review course. I'm assuming every university still has these courses. Then she can sit for the exam afterwards and hopefully pass all four parts. Then, she can focus on work without having the added stress of studying and passing a difficult exam.
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Re: Investment Bank Internship versus Accounting Courses

Postby tractorguy » Thu Feb 14, 2013 12:02 pm

I'm going to add my voice in favor of the internship option. I believe this is the way to go even if she decides that she doesn't like investment banking and picks a different career.

I worked in a totally unrelated field (heavy equipment engineering) and was in a position to hire new college graduates. I always strongly preferred new college grads with work experience. So many don't have any these days. Work experience gives a student a demonstrated track record of being able to meet the daily commitments required to hold a job. School life and work life require different skills. I have met (and unfortunately hired a few) students who were capable of excellent grades but who couldn't be counted on to come to work every day. This is one reason why you have a strong chorus of replies that are telling you that companies prefer to hire from their intern pool.

The other benefit to her is that a summer internship gives her a chance to look at the company and job with no long term commitments and with much less invested in the career. Would you rather she found out that she hates investment banking after a 3 month internship or wait until after 4-5 years of college and a year of working?

IMOP, college students should always find summer jobs or coop opportunities in their target field if possible. I think its a failing of the U.S. university system that they don't encourage this.
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Re: Investment Bank Internship versus Accounting Courses

Postby johnep » Thu Feb 14, 2013 12:18 pm

I recommend internship. Worst that can happen is she decides it is not for her and will have to take accounting classes later. It also gives bank an opportunity to evaluate her in a work situation and she will get to know people who can potentially help her in future. As others have said, work experience for new college grads is important and can improve her chances of getting a good job. Best wishes.
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Re: Investment Bank Internship versus Accounting Courses

Postby Steelersfan » Thu Feb 14, 2013 2:18 pm

As a person who did some summers in school and some working, I vote for the internship as the way to go, no matter what the industry actually.

As a person who directed the hiring of a lot of kids straight out of college (that was our company way when I was in charge) I vote for the internship.
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Re: Investment Bank Internship versus Accounting Courses

Postby Bogle101 » Thu Feb 14, 2013 2:29 pm

I graduated from an Ivy League school and now work in investment banking. I also go back to my old college to interview cadndidates for internships or first year positions. In my opinion, a summer spent interning with a major bulge bracket bank is an important part of an undergraduate's resume and I would side on the advice that the other students have been giving your daughter. Just because a few unscrupulous people in banking have been in the press, casting such a large net over the rest of the industry would be misleading. Just like in life, most people are decent and honest, whereas a few really bad apples spoil it for the rest.
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Re: Investment Bank Internship versus Accounting Courses

Postby bigred77 » Thu Feb 14, 2013 3:25 pm

Junior Year is a little late in the game to decide IB is the route you want to take. It is very competitive (even at HYP) and not everyone gets in.

The GPA is hugely important in the recruitment process. She needs to go through her OCR (On-Campus-Recruiting) and if she is applying to the firms website cold she stands no shot. The next thing to do is network. Look up the alumni listings from her school and start cold calling/emailing people to set up informational interviews. She has to develope her "story" and address the following: less than perfect grades, the history major, why she wants to pursue high finance, how dedicated she is to this to withstand a 2 yr analyst stint being treated poorly while working about 80 hrs a week and being on call 24/7.

I will note that most Bulge Brackets have already selected their summer interns for 2013. Even if she went all out now in an attempt to get a summer internship its going to be VERY difficult.

If she can't find an internship the Accounting Courses are an OK back up plan but I would reccomend she start learning about the IB recruitment process now.
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Re: Investment Bank Internship versus Accounting Courses

Postby arthurb999 » Thu Feb 14, 2013 3:50 pm

most companies are trimming thier IB divisions....
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Re: Investment Bank Internship versus Accounting Courses

Postby huntertheory » Thu Feb 14, 2013 4:51 pm

Take the internship. If she's serious about taking extra classes, she can do it during the semester as a minor or electives. You absolutely need to get into the real world and actually do, at least in this industry. Accounting is not theoretical physics where time in the classroom may actually be more beneficial than at school. The people at the bank will not care that she took some extra accounting classes when deciding whether she is in some pure M&A group or is a coverage banker for the energy industry or winds up on an equity desk or doing leveraged finance. The accounting classes will primarily help her in interviews when the interviewer asks, "Why does a history major want to be an investment banker?"

I will also agree with bigred and others that this seems a bit late in the game, and I also think it's important that she evaluate *why* she wants to go into I-Banking. (Which is another reason why the internship is a good idea.)
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Re: Investment Bank Internship versus Accounting Courses

Postby huntertheory » Thu Feb 14, 2013 4:53 pm

tractorguy wrote:IMOP, college students should always find summer jobs or coop opportunities in their target field if possible. I think its a failing of the U.S. university system that they don't encourage this.


I agree with this. I don't think parents realize how vital it is, and too many schools -- even the infamous HYP -- don't do a good job preparing people for this. You can always do the internship and then choose not to return to that employer.
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Re: Investment Bank Internship versus Accounting Courses

Postby DetroitRed » Thu Feb 14, 2013 5:03 pm

The other well-traveled career option at HYP besides investment banking is to work in consulting. If she doesn't get an i-banking internship, why doesn't she look into that. Though I don't believe the Big Three: McKinsey, Bain and Boston Consulting - have very big internship programs. Also, it's very hard to get hired by the Big Three but there are other good consulting firms out there.

The litigation consulting firms have hired a lot of HYP folks since the downturn started. I wouldn't recommend going that route. It's very specialized. You're basically helping Ph.D. economists write reports (often you're representing a large corp that's having anti-trust problems -- nothing wrong with that but you'd be locked into a pretty specialized skill set very early in your career).
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Re: Investment Bank Internship versus Accounting Courses

Postby lightheir » Thu Feb 14, 2013 7:25 pm

Piling on, but it's the right advice for someone interested in i-banking.

Do the internship.

When she's fresh out of HYP, she's got great market value and will likely be able to land a spot at a very good firm. Where she goes from there is up to her. However, make no mistake - ibanking is a small club and they really want to see you buy into their work and culture before letting you into their inner circles of partnership. They'll commonly make the young folks toil for ridiculous hours as lower-paid analysts just to see who sticks and who doesn't.

Also, with the HYP background, a degree in accounting can always be achievable, including many years down the road. The i-banking internship, however, will not be there. The window for optimal entry into this small clubby field is short, and she should take advantage of it if she is interested in ibanking. (9 of 14 of my HYP college blockmates when into i-banking or private equity, so I heard quite a lot about it as they moved up through the ranks.)
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Re: Investment Bank Internship versus Accounting Courses

Postby market timer » Thu Feb 14, 2013 8:30 pm

I'm not sure how likely it is that she'll get an i-banking offer with a 3.0 in history from HYP without connections, but if she gets it, by all means take it. Otherwise, an internship at an accounting firm may be a good fallback. Others have mentioned consulting, which is a good option. I'd strongly recommend interning somewhere.
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Re: Investment Bank Internship versus Accounting Courses

Postby ceecee123 » Fri Feb 15, 2013 8:24 am

Thank you everyone for the great replies. This has helped my daughter tremendously. She will definitely pursue the internship route.

Cee Cee
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