Financial modeling training may be a waste of time

In Uncategorized | 6 minutes read

I remember this one crazy afternoon back in my college days...and no it was not filled with Jordan Belfort-esque 8 balls and coed infused debauchery – get your mind outta the gutter!!

This one afternoon I guzzled down 3 red bulls and pumped through 5 interview Q&A guides by the likes of Vault and Wetfeet (yeah wooohooo college indeed!).

It was INTENSICO!!  And worse yet, I’d been doing this all week – reading guide after guide.

300 questions and answers later, I was spent.

But the BIGGEST problem?

I couldn’t remember half the questions and I definitely couldn’t give you a decent answer to even a quarter of the questions.

It was just toooooo much to take in.

Now the really annoying part…

Guess what I learned after my first 5 banking interviews…and something that I’ve been able to confirm since I broke into banking all those years ago…

Technical interview questions – the type of mind-f**k “How many tennis balls fit in a 747?” or “How would you build a model for company xyz?” – are NOT anywhere near as important as you think.

“F**KY F**K F**K!!  “F**KY F**K F**K”!!”

That was pretty much my internal monologue again and again once I found out I had spent – nay waaaaaasted – 200+ hours studying endless technical questions.

If you’ve been doing the same, then let’s pause for a second and you can get your freaky cuss on.

Done?

Disturbed all the other people in the library enough?

Okay, so that statement is all well and good, but I imagine you’re probably wondering, hoooow is this possible??

Well, first up you should know that you WILL in fact get asked about DCFs, financial statements and all the other gorgeous near-sexual-to-bankers technical finance areas – and more so today to weed out everyone but the all-stars.

So don’t for a minute think I’m saying you shouldn’t practice technical questions.

What I’m really saying is that their importance doesn’t, and never will, justify spending the vast majority – like 80% – of your prep time on all things technical (like I did!!).

If you do spend all your time on tech questions, you’ll end up spending f**k all time on these other hugely important Q&A areas, which are just as important;

  • About You questions
  • Market-Industry-Business questions
  • Bank questions
  • Fit questions

And that is BAAAAD because as Monkey #4 on the IIB team says;

“Bankers care more about “Tell me about yourself” or “Why do you want to do investment banking?” questions than they ever will about your answer to some crazy brainteaser about cargo planes and tennis balls.”

Monkey #4 drinks a lot (I’m talking Hank Moody at his self loathing best in Californication styles), so his follow up explanation needs to be paraphrased and it goes something like this…

No one can teach Dustin Hoffman’s Rainman to be ‘cool’, but they can teach Charlie Babbit how to run his freaking car business better.

Said with some more panache…

Finance skills can be taught.  Personality and ‘fit’ can’t.

ANOTHER reason prepping for technical questions isn’t as important as you think – and thus why you shouldn’t spend 100s of hours on it – is because your basic smarts will have already been summarily tested by the resume screen.

i.e. you’re already in the ‘smart basket’ because of your good grades from a good school.

Also, don’t forget being able to answer a few technical questions well is not going to blow any banker away, because these answers are somewhat easy to learn, memorize and rehash (with enough red bull of course!).  Bankers know you’ve already seen the questions and that you’re just spouting someone else’s answers.

Nooooow, compare this to personal and fit questions…

They require HUGE amounts of individual thought because there are no recommended answers floating on the Internet specific to YOU, YOUR past and YOUR achievements.

Instead they require an almost messianic devotion of time to self-reflection, story boarding your life, structuring answers and rehearsing.

Bankers freaking appreciate that!

So why would you have your priorities flipped upside down in preference of technical questions over about/fit/business/market questions?

Thankfully, there is middle ground – all you need to do is B-A-L-A-N-C-E your focus.  Split it evenly between technical and personal/fit questions.

This is the #1 thing we tell our younger friends applying for internships.

And if they’re pondering giving up their dreams of a Playa Grande, Costa Rica, adventure in order to study technical questions for 10 hours a day, we screeeeeeeam it at them!

The point here is NOT for you to ditch the technical questions prep.

It’s just to make it clear that even in today’s world (where technical questions are increasing in both volume and difficulty) never spend the overwhelming majority of your time on tech Qs when the hugely important, head-scratching, self-searching fit questions are still so important.

Buuuuuuuut, why do popular sites on IB recruiting focus so much on tech Qs?

Well, for a starter, tech Q&As advice sells better.  Hahaha, serious!

Student anxiety is the #1 target in the recruiting advisory business.  And if you guys are all so nervous about the tech Qs, then advice on this is what you’re going to lust after and pay for most.

Also, roughly 90% of the advice out there expounding the importance of technical questions is usually tailored to graduate students with internship experience, MBAs and experienced hires.  And that’s fair enough.

But if you’re just a college student trying to break into banking, then you’re not going to get ridden so hard on the tech front.  I mean half of you probably have little finance studies anyway – eg accounting major, math major, economics major, arts major etc – let alone banking experience.

For you lucky people, it is quite likely that your interviews will be so skewed towards fit and general intelligence that whether CAPM means capital asset pricing model or capital asset protection management doesn’t really matter.

So as Mr T says, don’t be a foooooool, B-A-L-A-N-C-E your interview Q&A prep!!  (he doesn’t say that at all, but you get the point).

P.S. This lesson was extracted straight from our very popular Inside Investment Banking Course.  If you’re serious about breaking into banking, check it out now.

Screw financial modeling…you only need 6 skills to break into banking

If you’re an over excited wannabe Excel Monkey then you’ve probably tried just about everything to break in…from studying financial modeling till 3am to trying to memorize 100s of complicated technical interview questions.

But here’s the thing…

You’re wasting your time!  If you want to learn how to impress bankers, get interviews and land job offers straight out of college you simply need 6 skills.