Author Archives: schatzi

Mar
27
2023

The “Why Investment Banking?” Interview Question – How to Give a 10/10 Answer

In a sea of overachievers who are equally talented, likeable and prepared, the “Why investment banking?” interview question can be the only differentiating question left for bankers to ask; making it both a popular & decisive question.

Whilst for college students who don’t look like aspiring bankers on paper (i.e. no fin/acc major, business degree or relevant work experience) it’s of epic importance. After all, you guys need to be able to explain why you want to do investment banking when your past decisions don’t suggest anything of the kind.

How do you give a 10/10 answer to the “Why investment banking?” interview question?

There’s a huge selection of points you could make, but keep it short and sharp. Generally a good answer will contain 3-5 solid reasons why you’re interested in IB.

Typical examples like world class education, skills development, type of work, the challenge, real responsibility in billion dollar transactions etc. are all acceptable.

But try not to trot out the same BS as everyone else.

Importantly, avoid reasons that are self-centered in a ‘bad’ way

Let me explain. As a banker interviewing you I’d be OK if you mentioned investment banking attracts you because of the learning opportunities, as this is a selfish reason that also, and ironically, benefits the bank – passionate 24 year olds put in 100-hour work weeks with ease after all.

But if I heard you wanted to do IB simply in order to ‘build your resume’ and/or to secure an exit opportunity I would – in my mind at least – throw you out the freaking door and then proceed to lay a BlackBerry beat down! Being made to feel like a halfway house for financial vagrants, a mere stepping-stone, is not my idea of good times you see. So even though everyone knows investment banking is attractive for the resume & exit oops don’t say it!

What can help you avoid a BlackBerry Beat Down? Well, you would get me extremely interested if you answered the “Why investment banking?” interview question by talking about how you have older friends in banking who have over the years shared with you what it’s really like to be a banker – both the good and the bad.

And then how that’s made you realize 3 specific things about banking which make it stand out above any other graduate job.

Not only will I believe you still love banking despite the war stories, but that you’ve actually given it some thought beyond “I need a salary of Blankfein proportions if I’m ever going to pay off these student debts”.

What I’m trying to say is that a great answer will list unique and specific reasons ‘why investment banking’ and it will connect them to the sources you learned them from whether they be friends, professors, books etc.

Want 6 specific reasons ‘Why investment banking’ that are sure to work? Try talking about how you love the…

  1. Cornerstone role investment banks play in deals and/or the role they play more broadly within the world of business – IBs are to business what the White House is to the world…central hub HQ! And this is why bankers are called masters of the universe. So bring up this point, albeit laced in more formal language and without ever mentioning ‘masters of the universe’!!
  2. Coalface exposure to industry and financial markets, which is unique to IB – there’s not a graduate job on the planet that puts you closer to the action than banking.
  3. Results-driven deal-oriented approach – this point distinguishes banking from so many other professions like law, consulting etc, where players often get paid for simply ‘doing’, as opposed to ‘achieving’. And by specifically mentioning this point you will show bankers that you’ve got the right mentality and that you’re not an increment-fiend like lawyers. PS Once again be sure to phrase this in a more professional kinda way!
  4. Type of people that work in banking – talk about this from both a learning and enjoyment point of view, and most importantly reference people you know in banking (particularly at that bank) to avoid looking like you’re simply shining shoes and kissing ass!
  5. Nature of the work – analyzing, problem solving, real-world focused. If you are going to talk about this then make sure you bring up a handful of examples in passing; eg 10k analysis, spreading comps, deal structuring etc.
  6. The specific industry/product group you are interviewing with – this is a must! By talking about why IB through the lens of that specific group, you’ll really narrow the reasons down to specific, tangible, relatable ones – and that means bankers are more likely to believe you and like you. eg If you say to Goldman Sachs TMT that you want to do investment banking because you find the business/investing side of the tech industry fascinating after working as an unpaid intern at a social media start up over summer, then you’ll hit the “Why investment banking?” question out of the park!

Whatever you choose, be sure you can talk intelligently about it if probed by the bankers.

Special note for those of you with non-banking experience

If you have work experience in accounting, consulting etc. then tell the bankers that whilst your time at KPMG or BCG or wherever you worked was a terrific experience, it didn’t offer…[reasons why you love IB].

This is a hidden opportunity to further explain your story, point out why you want to change into banking now and assure them again that IB is what you truly want above all else.

Any comparison you make should be delivered subtly though. Not because your interviewer might have worked at KPMG or BCG, but simply because it looks unprofessional to blatantly badmouth others. Negativity in any form doesn’t look good.

Special note for aspiring investment banking analysts

PS for those of you who get this question in an investment banking analyst interview (ie not a summer internship interview), you’ll need to push your story of why IB even harder to convince bankers to take you on. This is because bankers hate offering permanent spots to candidates who might quit the minute things get tough.

Passion is a banker’s best insurance policy against this – so make sure you show it guys!!

If you want to go one step further and really impress the bankers with your answer, then tell them how you became interested in IB years ago and point to the real life things you’ve since done that have confirmed your passion; studies elected, college clubs joined, people met, friends talked to, books read, jobs taken.

Showing a long and considered journey to get into investment banking is the idea here.

What’s the final secret to a magic answer here?

Recognize the downers of banking, not just the uppers. Bankers you see, want to hire students who aren’t being drawn to banking based simply on Hollywood-hype or CNBC-glamor. They want to know you are realistic about the job, prepared to do grunt work, and yet still super passionate.

After all, the Jimmy Cramer fan club and the Gekko Wannabe students will never be able to hack it when they find out what investment banking really involves – and this sort of drop out costs the banks a bomb.

So with all that in mind, during your answer briefly mention how your friends in banking have clued you in on the realities of the job too – the long hours, sacrifice and other downers which we’ll talk candidly about in the Inside Investment Banking System when it comes out this fall.

Of course, don’t end your question on a downer – meaning be sure to follow up any reality checking with your 3 main reasons why IB repeated in very very short form, kind of like “…but of course banking is an easy choice for me, because of…”.

Now that you’ve conquered the “Why investment banking?” interview question, check out our advice on other common investment banking interview questions and answers now.

Mar
26
2023

Review Before You Renew Your Insurance Policy

With many aspects of our financial lives; it’s quite common to just “set it and forget it.” This can work out well when we’re setting up a savings plan that automatically transfers money from a checking account to a savings account; but in the case of insurance; this strategy can end up working against you. Just because you have insurance doesn’t mean you’re covered. So much can change within the span of a year; and unless you take some time to review your coverages; you may be surprised when it comes time to use them.

This topic is so important that we’re writing a series of blogs on what to look for when reviewing various kinds of insurance policies.

What to Do When Reviewing Your Insurance Policies

Review Coverage
Do you understand what your policy does and doesn’t cover?

Assess Your Situation
Is this policy appropriate for your lifestyle today? Your insurance agent can’t insure what they don’t know about; so help them help you minimize surprises when you have to file a claim.

Need Help Reviewing Your Policies?
Keep yourself ahead of the game by partnering with a qualified insurance agent to help you with your insurance planning. Insurance might be considered a commodity by some; but advice is not. With in-depth product knowledge and experienced-based insight; a professional insurance agent can help you build a custom plan that works best for your situation.

Have You Reviewed Your Home Owners Insurance Lately?

Most people don’t give much thought to their home owners insurance coverage until a tree destroys their roof or a basement transforms into an indoor swimming pool. The fact is, a periodic checkup on your house insurance coverage can make for a healthier policy and a healthier wallet. Home insurance coverage is more expensive than ever thanks to a rising number of claims – but every year just passively renewing your policy could cost you more than it needs to.

Here’s why, when and how you should review your home owners insurance coverage:

Why? To make sure you have what’s right for you before you have a loss
When? Periodically (at renewal) or whenever you know there’s been a significant change such as a remodel, purchase or sale of an expensive item
How? Set up an appointment with your agent to go over your policies.

10 Questions to Ask During a Home Insurance Coverage Review

1. Is our dwelling coverage adequate? The amount of dwelling coverage should be enough to cover the cost of rebuilding your home in the event of complete loss. This insurance is based on replacement cost of dwelling not market value and it does not include land. If the dwelling is underinsured, you may get penalized. Does your insurance agent know about your home addition, or newly renovated kitchen or bathroom?

2. Do we have an all-risk or a named peril policy? When choosing disaster insurance, you basically have these two choices. The primary difference between them is that a named peril policy covers what is “named” (included) in the policy while an all risk covers everything except what is excluded. Typically, an all-risk policy offers much more comprehensive coverage.

3. Do we have replacement cost or actual cash value coverage on our dwelling and contents? Replacement cost coverage and actual cash value insurance refer to the amount of money your provider will pay out if your home or its contents are damaged or destroyed. Replacement cost coverage doesn’t deduct for depreciation while actual cash value insurance does.

4. Do we need building ordinance or water sewer backup coverage? In the event of a claim, your insurance company may deny paying for increased costs or demolition expenses incurred due to local building ordinances that call for the destruction of a dwelling. This coverage is particularly important for homes older than 25 years. You’ll also want to consider coverage for water and sewer backup.

5. Do we have or need a property inflation adjustment on our policy? While most insurance companies automatically adjust your policy to keep pace with building cost inflation, you should check into this. You probably have seen your premiums go up to cover the rising cost of replacement but the annual increase for this is usually minimal.

6. Do we have or need special coverage for other structures on our property? Most policies automatically provide this coverage. However, if you have a swimming pool, tool shed or detached garage on your property, you need to double-check that they are adequately covered.

7. Do we have adequate contents coverage? The value of your clothing, furniture and other belongings adds up quickly. These items are typically insured as a percentage (50% to 75%) of your dwelling coverage. It is very important to understand how much and what is and is not covered.

8. Do we have or need special coverage for any of my personal items? What kind of coverage limits does your policy have with regard to jewelry, fine art, musical instruments, etc.? Is an appraisal required to get this special home owners insurance coverage? Without it, your engagement ring may not have enough, or any, coverage if the diamond falls out of its setting.

9. Has our insurance company changed our policy coverages or added any new discounts? While they are required to notify you of policy coverage changes, it’s a good idea to ask just in case you missed the notice. There may be ways for you to save money on your house insurance coverage. Whether it’s changing deductibles or installing protective devices, you’ll want to find out what you’re missing.

10. Is my liability coverage adequate for what I need to protect? Your home owners liability coverage protects you against the financial uncertainty arising from injury (or property damage) caused by you or a resident family member. Usually, your liability coverage will apply if the injury or property damage occurs on or away from your property. If you don’t have enough liability insurance, then your assets could be at risk. The liability coverage on your home owners policy can help you protect your retirement accounts, investments in stocks and bonds, checking/saving accounts, home and other real estate equity. It is very important to discuss the assets you need to protect with your agent to determine the level of liability coverage that is right for you.

When it comes right down to it, one of the best ways to stay educated about your home owners insurance policy is to ask the right questions of your insurance agent. Don’t assume that just because you have home insurance coverage that you’re fully covered.

Mar
25
2023

Using Personal Finance Books As Motivators

There is no question that many people struggle with their personal finances. It seems like more and more you hear about the average credit card debt going up, with people having more and more problems paying their mortgage or saving for retirement. It is not a huge surprise, because the culture seems to promote spending money, and makes it seem like you are an outcast if you do not try to “Keep up with the Joneses.”

However, there is a segment of society that people can turn to if they are looking for support and ideas and how to get out of this endless cycle, and that is personal finances books and websites. There are hundreds of books (probably too many) promoting the benefits of strong personal finance, with suggestions on how to live your life in a way that helps you plan for the future and make sure it is secure. These types of books can help in a couple of different ways.

One, they give you ideas to help you live more frugally and responsible with your money. They can also help you figure out the best places to put or save your money, since this is often an area where people feel overwhelmed. Oftentimes, you might want to start a retirement account, but you don’t know how, so you simply do nothing. With the right materials, you can find out that it is not nearly as hard as you think it is, and you can get it done. It can help you realize that doing things 85% correctly is better than not doing anything at all.

Another way that these books can help is to provide you with encouragement and motivation. If you are at home on a Friday night because you don’t want to spend the money it takes to have a night out on the town, it can get you down, and make you feel like you are missing out on life. However, if you have these books as motivation, it can help you realize that you may be sacrificing now so you can live a more rich life later. It can provide that spark that you need to make those financial changes in your life, and make sure that things are staying on the right path for you to reach your financial goals. This is especially true if you do not have friends that are helping you on that path.

For those struggling with personal finance, there are many great personal finance books that can help you to reach your financial goals, and help you live a life without financial worries.

Mar
24
2023

Business Plan Software – How Do you Know Where to Even Start Creating Your Business Plan

Every business in its conception has the same chance at success. The determining factor however depends highly on the business owner and their ability to plan strategically from day one how they’re going to transform their business from an idea, into a highly successful business within its industry.

Many people have the idea that starting a business is a simple matter of having a product, putting up a sign, and away they go…as if the business is going to run by magic just from their grand idea. That’s wishful thinking and it’s really too bad that it’s not like that, but the truth is that if you want a business that’s successful and not another failure like the majority of them, then you’re going to have to do some detailed planning before you even dare to venture out.

Most businesses that fail do so because of the lack of a good, detailed business plan. Your business plan is essentially your blueprint to get your from point A to point B, as well as to take care of all the turns and obstacles in between. In essence it’s like the difference in the individual who has well defined written plans for life as opposed to those who languidly float along through life. Which individual do you think is going to have the most success? Well, studies have actually shown that the person with the written plans has a much, much higher chance of success. Same goes for a business!

Now the part that actually gets most people is not that they’re all lazy and just don’t want to take the effort to design a plan, but the fact that they simply don’t even know where to begin with the creation of their business plan. They have no idea what needs to be included and what doesn’t, or even how to format it so that it’s not just a mess of papers in a binder that they’ll never look at again.

In fact, the best business plan should be one with all of the essential elements as well as one that’s fluid and not static, because if there’s one thing that’s for sure in life it’s change, and that change usually comes from twists and turns and obstacles in the road of life itself, and your plan has to have a way to take in account for those changes.

There are a number of things that you can do to actually learn how to create an effective business plan that’s going to get results. You could go to the library and do tons of research, or you could even spend the same countless frustrating hours at home online, and be shuffled from website to website trying to figure out which information is right. However one of the smartest things that a person can do is to take the quick and easy way out and invest in business plan software that is known to get results.

Of these, probably the best, most used, and most trusted business plan software available is Business Plan Pro from a company out of Palo Alto California called – appropriately enough – Palo Alto Software.

Business Plan Pro is a software designed to help you in as easily and smooth a process as possible to create an effective and efficient business plan that gets results, either with making your business a tremendous success (who doesn’t want that?) as well as setting you up with the best possibility of getting funding for your business if needed. No lender, capital venture firm, or even Angel Investor is going to even consider giving your business funds if you don’t have a well thought-out business plan. It’s that simple.

The software basically gives you exactly everything that you need in a simple step-by-step format to create your business plan, whereas it takes you by the hand, asks you simple questions about your business, and as you answer them it guides you to the next step in the process. It doesn’t get much easier than this.

You’ll have access to over 500 different business plan templates so that you can duplicate the most effective ones for your industry.

As well, and this is a huge part of planning a business since your customers are the life force of your business, you’ll be able to access market data for your business as well as cross check for nine thousand other industries. This is powerful stuff alone.

You’ll be able to print out your completed business plan so that you can refer to it over and over, as well as have it on your desktop to quickly make changes when necessary as previously mentioned.

Having business plan software is easily one of the most important steps that a business owner could possibly take for the probability of success of his or her business, and with Business Plan Pro you’re getting the best of the best. In fact, Amazon.com frequently lists it on their top ten bestsellers list…and it’s the same software that 50% of top Fortune 500 companies use for their businesses. If it’s ideal for these businesses, why wouldn’t it be for yours?