RPC Newsletter’s Advice Column – Best of January 2022
Each week, members of the RPC executive team answer reader-submitted questions about careers, finance, and more. To get your question answered, please fill out this anonymous Google form.
I’m a U1 at Desautels and I have an interview coming up this week. I don’t know where to start my preparation, do you have any tips?
Drawing parallels to the romantic world, obtaining the first interview is like going on a first date. The fact that both parties have agreed to meet implies the existence of mutual interest, and the meetup serves to confirm or infirm that first impression. In the corporate world, the firm wants to know if you’re the right fit for the position and you want to know if the firm is the right fit for you. With that in mind, there are three main pillars to interview preparation:
Research and reflect. You should perform research on the firm and the role using the firm’s website, newspaper (New York Times, WSJ, etc.), job-search website (Glassdoor, Indeed, etc.), and forums (Reddit, Wall Street Oasis, etc.). Getting a grasp of the firm’s lines of business and the role’s responsibilities enables you to reflect on your past experiences and identify specific examples of how your unique skills and background make you the perfect candidate for the position and why it is the next logical step in your professional journey.
Preparing your answers. Interview questions fall into three main buckets: behaviourals, technical, and in-touch. For behaviourals, prepare answers for the most common questions (“Tell me about yourself”, “Why this firm?”, etc.) and focus on structure and concision. For technicals, understand the theoretical concepts exhaustively and practice articulating your train of thought while solving problems. For in-touch questions, be up to date and develop an informed opinion on the latest news and trends affecting the firm and its lines of business.
Practicing your answers. This step is the most important as mock interviews are to interviews what practice tests are to exams: the best way to study. You should initially practice your answers alone, then with a friend, and lastly with an upperclassmen / professional. To maximize the practice sessions’ ROI, replicate real interview settings (time length, formality, etc.), demand questions likely to come up, and ask for constructive feedback from your mock interviewer. Do not be afraid to revisit steps 1 and 2 when polishing your answers’ content and delivery – it’s an integral part of the learning process.
Good luck and keep us posted!
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Do you have any advice on how to network? Is it as important as online recruiting guides make it seem?
Networking is a key element of the recruiting process that is often misunderstood. Contrary to popular belief, it is not about “playing a game”, manufacturing transactional relationships, and accumulating LinkedIn connections. At its core, networking is about forming genuine relationships with professionals to learn more about their roles and experiences. Strangers can become points of reference, warm contacts, and even close friends that can provide advice or vouch for you during your recruitment process (~85% of jobs are never posted and filled via word-of-mouth!). Here is a brief overview of a typical networking cycle:
Preparation: Using tools such as LinkedIn, list firms you are interested in working at and identify employees you could contact. The warmer the connection (e.g., alma mater, family friends, etc.), the higher the response rate. However, don’t be deterred from contacting “random” people – you never know who might be willing to help. RPC recommends using Excel or similar software to track your networking journey and input key information such as who you contacted, when you contacted them, etc.
Cold Emailing: Find the email address of the identified employees using an online database such as RocketReach. Then, redact a concise and personalized message similar to this introducing yourself and outlining clearly what you seek (e.g., scheduling a phone chat). The secret ingredient to inducing responses is professionalism: the email should be free from grammatical errors, be sent from a professional email address, and scheduled within reasonable working hours. If you do not receive an answer, we recommend following up after seven days, twice maximum.
Phone Chat: The initial chat is the most important step of the process as it is your opportunity to make a great first impression and establish a beyond-superficial connection with your contact. The best general principle is to prepare thoughtful questions (i.e., personalized and that cannot be easily answered on Google) with the intent of not using them. In practice, this translates to having general themes directing the call but prioritizing the natural flow of the conversation.
The Ask: At the end of the conversation, you should ask for advice about “how to best position yourself during the recruitment process”. This is a universal code for “can you help me get an interview”. In most cases, the professional will provide you with general guidance about how to navigate the recruiting process. In the best cases, they will connect you with their colleagues or even pass your resume along to the hiring manager.
A network is like a tree; it needs to be watered if it is to grow. Simple actions such as updating your network about your recruitment process can go a long way in giving them the satisfaction of knowing they helped someone. Lastly when you finally land your dream job, do not forget to pay it forward and keep the wheel turning. For more information about networking, consult this excellent Wall Street Oasis post.
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What is the difference between the “buy-side” and “sell-side” and how can I know which career path is most appropriate for me? For reference, I am a U0 thinking of majoring in finance.
The simplest way to understand the difference between both “sides” is through the lens of a company raising equity or debt capital to fund its operations. The provider of capital is the “buy-side”, while the intermediary connecting both parties is the “sell-side”. Typical the buy-side includes hedge funds, private equity funds, venture capital funds, etc. and the sell-side includes investment banks, sales & trading desks, equity research providers, etc. You should consider the following factors when exploring careers:
Type of Work: Both buy-side and sell-side roles include performing research and analyzing information, but the nature of their process is different. On the sell-side, the research is client-driven and the output of the analysis is a recommendation to the client. On the buy-side, the research is self-driven and the output is an investment decision. Furthermore, the two sides have very different levels of “skin in the game” involved. On the sell-side, it is low as you get compensated for giving the advice, not for the outcome of the advice (although providing high-quality advice is important for repeat business!). On the buy-side, it is high as one bad investment decision (for which you are responsible) could decimate your fund’s performance and your / your investors’ net worth.
Salary: While the average buy-side and sell-side salaries are similar, buy-side roles possess a higher ceiling due to the scalability of their business models. Indeed, since the manpower required to make an investment is approximately standardized regardless of its size, the per-employee financial returns (measured in $) generated by a great investment (measured in %) will scale proportionally to the amount invested initially. Contrarily, sell-side deals are time and labour-intensive, implying that additional revenues generate additional costs and that there is a limited amount of deals that can be undertaken simultaneously.
Career Advancement: Finance roles generally follow an “up-or-out” (generate fees/returns or get fired) culture. However, the sell-side usually offers a more structured and less risky path for career advancement because employers are extremely institutionalized, and employees have modest skin in the game. Inversely, buy-side firms follow flatter organizational structures and reward personal performance. This means fast promotion or demotion based on your reputation, investment returns, and luck.
As there exist many exceptions to the factors listed above, the best way to navigate the professional finance landscape is to consult primary (networking, internships, etc.) and secondary (interviews, forums, etc.) sources. Above all, do not feel anxious if you do not know exactly what you want to do as a U0. Discovering the career path that suits you best is a lifelong process, and asking thoughtful questions like this one is a great first step.