Critical Skills Required in Investment Banking

Finance

Critical Skills Required in Investment Banking

Imarticus Learning

January 31, 2018 8 min read

Last updated on January 20th, 2022 at 06:28 am

We spend a lot of time at the Imarticus Learning on developing key Investment Banking skills and if you’ve read some of our prior posts on Investment Banking you’ll see that the skills are not just confined to number crunching or being a whiz kid to excel. You can’t just be good at analysis, you also need to be good at presenting that analysis in a structured manner. You can’t just be a great client management, you also need to be good at teamwork and have a good disposition – you spend a lot of time with your team. And finally, it’s not about just having these many skills, it’s also about showcasing them in the right way in both your resume and during your interview. So today, we’re going to spend some time on looking at three of the critical skills you need in investment banking as well as the best way to showcase those investment banking skills in an interview or in your resume.
Also Read: Different Types of Investment Banking Jobs

1. Problem Solving and Analytical Skills

Are you tired of hearing this? What does it actually mean? It’s essentially connecting the dots to help, ask the right questions, whose answers can either be the solution, or the tools to help you arrive at a solution or a set of solutions. Huh? Okay. One example is analyzing a twenty-year steel price data set and pulling out trends and insights that can then help you understand impacts steel prices, which will help you forecast steel prices for the next five years. Another example is being asked, how many litres of paint are sold in Mumbai every month? You use one data point, and a whole set of assumptions and questions to arrive at a number in a logical manner.
The great thing is you don’t have to be a knot jockey, but you do need to be confident of your abilities to spot trends, do basic math fairly quickly, and be able to use information in an effective manner.

How do I showcase this skill in my resume?

A specialization in Finance or a degree in Engineering puts you in good stead from the get-go. And having prior work experience will obviously mean you already have many instances, but what if you’re a fresher and did history or Commerce in your undergraduate. Well, we’ve got you covered. This is how you showcase problem-solving and analytic skills require in Investment Banking in your resume.

Any sort of summer internship, ideally a financial institution, but it could even be a cafe where you saw how a cafe was run.
Talk about a school or college project where you had to analyse large sets of data, ideally financial data, like an Industry or Company analysis.
Create a phantom portfolio (notional investments in stocks whose performance you track over a period of time) which will also showcase your enthusiasm for the stock market.
A treasurer of a school club where you were in charge of the budget, which will show your ability to understand funding and investing.
An instance where you put up a school/college production.
Case competitions you have been part of.

Try to write one line describing what each experience taught you.
Please see our post on Great Investment Banking Resumes
How do I show off this skill in an interview?

Have ready answers to the following questions:
- What would be the steps you would follow if you had to solve a problem
- Talk to me about a time when you fixed a problem?
- Always use examples to showcase your skill. For instance, if they want to know how you use logic to think through a problem, as an example. For instance, if I had to answer how many litres of paint are sold in Mumbai, I would first….
Practice Brain Teasers.
- For instance: You have 50 marbles (25 red marbles and 25 blue balls) and 2 buckets. How do you divide the marbles into the two buckets so as to maximize the probability of selecting a red marble if 1 marble is chosen from 1 of the buckets at random?
- Answer: First you must assume one of the two buckets is chosen at random and then one of the marbles from that bucket is chosen at random. You want to put 1 red marble in 1 of the buckets and all of the other 49 marbles in the other bucket. This gives you just slightly less than a 75% chance of having a red marble The math works as follows: There’s a 50% chance of selecting the bucket containing 1 marble and a 100% chance of selecting a red marble from that bucket. And a 50% chance of selecting the bucket containing 49 marbles with a ~48.9% (24/49) chance of selecting a red marble from that bucket. Total probability of selecting a red marble is (50% % 100%) + (50% * 49.5%) = 74.7%.

Practice basic calculations like addition, subtraction, division, fractions, and percentages.
Also, practice reading graphs. The recruiter will not ask you to do advanced equations but will expect you to be comfortable with numbers and charts.

2. Attention to Detail

And we are not talking about perfection here. Attention to details means being able to plummet 30,000 feet to land in the thick of the forest and make out the leaves. If you’re making a financial model, it’s ensuring that all your links are in order, but also understanding the impact of changing your terminal growth rate from 3% to 4% (that’s a high number so you should really think twice in the event you’re actually planning to do it). So it’s the ability to spot important things and articulate the impact. For instance, if you are doing preparing your client for due diligence, attention to detail would mean questioning a trend you don’t understand like inventory ageing that looks fine at first but gets messy when you start to ask questions. It would be looking at the documentation for 450 acres of land but finding only 443 acres clearly laid out in the documentation. What happened to the 7 acres? These are the things that can derail a transaction. ‘That’s lawyers job isn’t it?’, you ask. But an investment banker wears many hats and legalese and accounting are two very important ones.

How to demonstrate in your resume:

Choose a work situation where your attention to detail helped save a deal or get new business or solve a specific problem.
If you are a fresher, then talk about a research project where you were able to spot a trend that significantly improved your final product.

How to demonstrate in an interview

Expand on the above
Also choose an emerging story in the media, like the current PNB Nirav Modi scandal, and pick out an inconsistency that has not occurred to anyone else. Even if it has, it will show your ability to spot a trend and connect the dots using information.
Sometimes the interviewer might ask you a trick question and your attention to detail will enable you to spot it. So always take time when answering questions and do not assume the interviewer is always right.

3. Research

The holy grail of Investment Banking and Equity Research. Without research, we don’t get information that enables us to give solutions. You have to use all your analytical skills and attention to detail to ensure your research is effective. A good researcher uses his time wisely. In Investment Banking we aren’t writing a thesis and don’t have four years to procure our information. Therefore a good investment banker needs to be able to define the problem and project clearly to understand the scope and audience. There’s no need to find out why the company began in 1942 if all I have to do to is do a one-page profile.

How to demonstrate in your resume:

Showcase a report/project you did in a job or at university which required you establish the purpose, understand the audience and outline the scope. Make sure you point out examples where you were particularly resourceful when information was not forthcoming.

How to demonstrate in an interview:

Expand on the above
Always ask questions of the interviewer and mention the places where you would get information for facts you are assuming for the purpose of the interview. For instance, if you are valuing a private company, talk about how you would go to the ROC website for a companies tax returns. If you are talking about an industry, talk about your preferred sources of secondary research such as the industry association website and reports published by reputable consultancy firms like McKinsey and PWC.

Related Article: How to Become an Investment Banker

Written by

Imarticus Learning

Last updated on January 20th, 2022 at 06:28 am

We spend a lot of time at the Imarticus Learning on developing key Investment Banking skills and if you’ve read some of our prior posts on Investment Banking you’ll see that the skills are not just confined to number crunching or being a whiz kid to excel. You can’t just be good at analysis, you also need to be good at presenting that analysis in a structured manner. You can’t just be a great client management, you also need to be good at teamwork and have a good disposition – you spend a lot of time with your team. And finally, it’s not about just having these many skills, it’s also about showcasing them in the right way in both your resume and during your interview. So today, we’re going to spend some time on looking at three of the critical skills you need in investment banking as well as the best way to showcase those investment banking skills in an interview or in your resume.
Also Read: Different Types of Investment Banking Jobs

1. Problem Solving and Analytical Skills

Are you tired of hearing this? What does it actually mean? It’s essentially connecting the dots to help, ask the right questions, whose answers can either be the solution, or the tools to help you arrive at a solution or a set of solutions. Huh? Okay. One example is analyzing a twenty-year steel price data set and pulling out trends and insights that can then help you understand impacts steel prices, which will help you forecast steel prices for the next five years. Another example is being asked, how many litres of paint are sold in Mumbai every month? You use one data point, and a whole set of assumptions and questions to arrive at a number in a logical manner.
The great thing is you don’t have to be a knot jockey, but you do need to be confident of your abilities to spot trends, do basic math fairly quickly, and be able to use information in an effective manner.

How do I showcase this skill in my resume?

A specialization in Finance or a degree in Engineering puts you in good stead from the get-go. And having prior work experience will obviously mean you already have many instances, but what if you’re a fresher and did history or Commerce in your undergraduate. Well, we’ve got you covered. This is how you showcase problem-solving and analytic skills require in Investment Banking in your resume.

Any sort of summer internship, ideally a financial institution, but it could even be a cafe where you saw how a cafe was run.
Talk about a school or college project where you had to analyse large sets of data, ideally financial data, like an Industry or Company analysis.
Create a phantom portfolio (notional investments in stocks whose performance you track over a period of time) which will also showcase your enthusiasm for the stock market.
A treasurer of a school club where you were in charge of the budget, which will show your ability to understand funding and investing.
An instance where you put up a school/college production.
Case competitions you have been part of.

Try to write one line describing what each experience taught you.
Please see our post on Great Investment Banking Resumes
How do I show off this skill in an interview?

Have ready answers to the following questions:
- What would be the steps you would follow if you had to solve a problem
- Talk to me about a time when you fixed a problem?
- Always use examples to showcase your skill. For instance, if they want to know how you use logic to think through a problem, as an example. For instance, if I had to answer how many litres of paint are sold in Mumbai, I would first….
Practice Brain Teasers.
- For instance: You have 50 marbles (25 red marbles and 25 blue balls) and 2 buckets. How do you divide the marbles into the two buckets so as to maximize the probability of selecting a red marble if 1 marble is chosen from 1 of the buckets at random?
- Answer: First you must assume one of the two buckets is chosen at random and then one of the marbles from that bucket is chosen at random. You want to put 1 red marble in 1 of the buckets and all of the other 49 marbles in the other bucket. This gives you just slightly less than a 75% chance of having a red marble The math works as follows: There’s a 50% chance of selecting the bucket containing 1 marble and a 100% chance of selecting a red marble from that bucket. And a 50% chance of selecting the bucket containing 49 marbles with a ~48.9% (24/49) chance of selecting a red marble from that bucket. Total probability of selecting a red marble is (50% % 100%) + (50% * 49.5%) = 74.7%.

Practice basic calculations like addition, subtraction, division, fractions, and percentages.
Also, practice reading graphs. The recruiter will not ask you to do advanced equations but will expect you to be comfortable with numbers and charts.

2. Attention to Detail

And we are not talking about perfection here. Attention to details means being able to plummet 30,000 feet to land in the thick of the forest and make out the leaves. If you’re making a financial model, it’s ensuring that all your links are in order, but also understanding the impact of changing your terminal growth rate from 3% to 4% (that’s a high number so you should really think twice in the event you’re actually planning to do it). So it’s the ability to spot important things and articulate the impact. For instance, if you are doing preparing your client for due diligence, attention to detail would mean questioning a trend you don’t understand like inventory ageing that looks fine at first but gets messy when you start to ask questions. It would be looking at the documentation for 450 acres of land but finding only 443 acres clearly laid out in the documentation. What happened to the 7 acres? These are the things that can derail a transaction. ‘That’s lawyers job isn’t it?’, you ask. But an investment banker wears many hats and legalese and accounting are two very important ones.

How to demonstrate in your resume:

Choose a work situation where your attention to detail helped save a deal or get new business or solve a specific problem.
If you are a fresher, then talk about a research project where you were able to spot a trend that significantly improved your final product.

How to demonstrate in an interview

Expand on the above
Also choose an emerging story in the media, like the current PNB Nirav Modi scandal, and pick out an inconsistency that has not occurred to anyone else. Even if it has, it will show your ability to spot a trend and connect the dots using information.
Sometimes the interviewer might ask you a trick question and your attention to detail will enable you to spot it. So always take time when answering questions and do not assume the interviewer is always right.

3. Research

The holy grail of Investment Banking and Equity Research. Without research, we don’t get information that enables us to give solutions. You have to use all your analytical skills and attention to detail to ensure your research is effective. A good researcher uses his time wisely. In Investment Banking we aren’t writing a thesis and don’t have four years to procure our information. Therefore a good investment banker needs to be able to define the problem and project clearly to understand the scope and audience. There’s no need to find out why the company began in 1942 if all I have to do to is do a one-page profile.

How to demonstrate in your resume:

Showcase a report/project you did in a job or at university which required you establish the purpose, understand the audience and outline the scope. Make sure you point out examples where you were particularly resourceful when information was not forthcoming.

How to demonstrate in an interview:

Expand on the above
Always ask questions of the interviewer and mention the places where you would get information for facts you are assuming for the purpose of the interview. For instance, if you are valuing a private company, talk about how you would go to the ROC website for a companies tax returns. If you are talking about an industry, talk about your preferred sources of secondary research such as the industry association website and reports published by reputable consultancy firms like McKinsey and PWC.

Related Article: How to Become an Investment Banker