Employment Secrets of the Financial Industry, Dream Job Rejection: Why were you turned down by your desired company?

Release time：2020-05-04    

“In recent years, I have been an instructor at numerous job hunting and interview skills workshops, and financial modeling courses and trainings at top universities. Knowing that I have worked at Wall Street, and that I have maintained close connections with colleagues and customers of investment banks and financial organizations at home and abroad, students have been always asking me: how to ace an interview and land that dream job at the desired company. At the invitation of FISF Career Center, I would like to share my personal opinion and tips here!”

Author: Mr. Xu Guoqing worked for Lehman Brothers (New York and Hong Kong) and JPMorgan Chase (Beijing) for nearly 10 years. He received his MBA from the Harvard Business School and his undergraduate degree from Peking University School of Economics. The founder and Chairman of Chainshine Financial Training, Mr. Xu was invited as the first professional tutor at FISF, Fudan University.

When it comes to the methods and channels of getting into Wall Street investment banks, renowned joint ventures, desired Chinese securities companies or preferred financial institutions, most students would acquire the appropriate abilities, relevant industry knowledge, and job-hunting strategies through campus lectures, college career development centers, and the Internet. For many, the abovementioned ways prove sufficient, but for some they turn out to be utterly futile. While there are plenty of job search resources available, I have also noticed that there are some common problems and practical experiences, very few experts mention. These peculiar challenges are somewhat taboo− just like love secrets, they are ineffable. Unsuccessful love stories are all alike. Failed job hunting attempts too. Essentially, they boil down to a few typical mistakes. Thus, in today’s post I will focus on revealing those mysterious ingredients of the perfect job-seeking potion!

1. Independent thinking

Naturally, students with diverse family and educational backgrounds differ in their independent thinking skills. The same holds for financial institutions themselves: while some are thirsty for talent and expect prospective employees to be excellent independent thinkers, other organizations have different priorities. Here are some of the financial institutions and particular positions that are a natural fit for the free thinkers:

A. Private equity (PE) and Venture capital (VC) firms should stand out when analyzing the development potential and risks of prospective investments;

B. Investment banks need to find out the various factors that would affect the valuation of listed companies, as well as the relationships between these determinants;

C. Commercial banks must recognize and prevent financial fraud by identifying and managing credit risk inherent in their products.

In a nutshell, the independent thinkers would not only sift through vast amounts of data to extract the key information, but would also remain unswayed by others’ opinion when evaluating the prospective value and risk of an investment.

Part 1: A real job interview question from a recent interview

On April 7, 2020, a senior manager at the research department of an international investment bank conducted a phone interview with a graduate student of finance at a famous Chinese university. This is what the hiring manager asked:

“If you were an industry research analyst in our department, cover Luckin Coffee! Some time ago, an anonymous short-seller carried out an investigation by using nearly 100 full-time and thousands of part-time staff of the coffee chain. In spite of such an attempt being kept strictly confident, there would inevitably be some rumors and information leakage. If you were just going to write a “buy” recommendation report but you heard some hearsay of Luckin being fraudulent, what options would you have? What would you do and why?”

Luckily, this student has done his homework well. Up-to-date with the international and domestic news and financial information, he replied:

“The short-selling company has used 92 full-time and 1418 part-time employers, which, indeed, is a shock attack. As an analyst, I would suggest the following measures, some of which could be taken simultaneously:

1. Given the optimistic information I received from a recent interview with Luckin, I cannot rely on rumors, Hence, I would complete the “buy” recommendation report and try to release it as soon as possible.

2. I would immediately switch from “buy” to “sell” recommendation report and have it issued in the shortest possible time.

3. I would not rush writing a report, but I would rather seek more information from Luckin.

4. Since I don’t know what to do, I would consult my superior who is in charge of the research department.

As for my very personal opinion, I would…”

As you could imagine, this candidate’s answer was quite satisfactory because it contained not only signs of independent thinking, but also some questions to the interviewing manager. As a matter of fact, the biggest challenge here is that solving the problem depends on options after the facts are revealed.

Part 2: Give it another shot and try your luck

The following example illustrates the existence of multiple roles and options in a given situation. Imagine you could put yourself in different shoes, what would you do then?

During the outbreak of the novel coronavirus (at that time, the epidemic situation in many countries around the world was not clear yet), a financial institution interviewed a student on the phone:

“Do you think the Tokyo Olympics 2020 will be canceled or postponed? What makes you reason like this?”

Student A: “I don’t think so because the Japanese Prime Minister officially stated that the Games would be held on time.”

Student B: “I don’t think this is possible as the Organizing Committees for the Olympic Games holds its meeting on schedule.”

Student C: “I guess it depends on whether the epidemic situation in Japan is under control or not. What matters also is the epidemic state in most participating countries, which would affect the time needed for training and preparation.”

After hearing what student C answered, the interviewer further inquired: “What about if a similar event was to be held in China?”

Student C pondered for a moment and replied: “Now, as a student, I believe the decision should not rest on the determination of the leadership and the so-called national reputation only, but on the background conditions I already mentioned.”

“What if you were not a student?”, the interviewer added.

At the other end of the line, Student C cleared his throat and specified: “If I were a staff member of the relevant state department, I would answer according to the leadership’s demand. For example, the Chinese government is determined to win the epidemic war; hence, I have no doubt that the planned event will be held successfully.”

In this train of thought, what kind of institutions would recruit which students? Certainly, you can assume that there are other n-ways of answering.

Part 3: Simulation exercise

I believe that some students would appreciate a few extra questions to be answered independently. Try your best:

1. How would you assess China’s financial reform in recent years? In your view, which are the most notable achievements and challenges so far? Which aspects require further transformation?

2. What should be the right measures and ideal pace of the stock-issue registration system reform? Has the idiom ‘big thunder, little rain’ been applicable here?

3. Do you think the governmental punishments for fraudulent public companies are sufficient to deter such criminal activities? Could you suggest any specific measures for improving the administrative sanctions and criminal prosecution?

How would you answer these questions? What kind of knowledge/ information would you apply here to build your replies and support your point of view? Are your sources of information credible?

Nowadays, it is easy to drown in the endless sea of information: from the internet, with its far-reaching and free distribution channels, to the various media platforms. Data grows like mushrooms these days, but how to pick the safe ones?  Dangerous traps lurk around every corner when: you have insufficient knowledge in some sphere; you have poor understanding of history; you lack independent thinking skills and do not put logic to use; you unconsciously go with the flow of other people’s opinions; you cannot distinguish facts and views, or even ignore facts completely; you speak too soon, expressing your position without being adequately familiar with the situation, and often judging out of context. Therefore, the ultimate question is: as a financial services employee, would you be able to objectively analyze the industry trends or the economic situation of a specific enterprise? Would you adhere to the principles of independent thinking and master the essential tools for robust financial analysis? Would you have a mind of your own or you would be often swayed away by the public opinion?

As a rule of thumb, when interviewed by investment firms, such as PE or VC, students who lack independent thinking generally fail. A core skill within such investments funds is the ability to identify novel/ disruptive technologies and entrepreneurial companies that have the potential to generate high commercial returns. The possibility of generous returns goes hand in hand with the heightened risk of losing the company’s own funds and the trusted investment of its limited partners. Accordingly, investments funds seek employees whose solid knowledge of Chinese and foreign financial institutions, strong analytical skills and expertise in statement analysis and valuation models, would enable them to make the right decisions.

Dear students, pause for a moment to think: do you have the independent thinking skills necessary to lead you on your path to a financial institution?

2. Integrity

A. Project Collaboration

This method, by which teams and team leaders plan, coordinate, control and monitor the projects they are working on, has been generally used by Wall Street investment banks and joint venture investment banks. Generally speaking, although the investment departments undertake numerous projects, which bring considerable income as a whole, it is a mission impossible to determine exactly how much earnings each project brings to an individual employee, team or department. For this reason, under the premise of comprehensive assessment of the total revenue at the end of the year, the salary evaluation teams determine salaries and distribute bonuses by considering multiple factors, such as: contribution of different departments/ employees/ managers in particular projects; teamwork and independent thinking skills; total compensation for the previous year and future development potential in the company, etc. This could not only promote employee effort and contribution, but also aspire workers to be good corporate citizens, and encourage them to continuously improve and become a synonym for talent.

B. Project Management

At present, this is the widespread method applied by domestic investment banks. There is certainly some overlap between project management and project collaboration, but they are not one and the same. Compensation is determined before undertaking a certain project. Fueled by the attractive salary incentives, each member of the team is frantically looking for projects that could be highly valued. In this process, many could simply rely on the rich experience of senior managers, and this might cause a free-riders problem. Furthermore, the result could be burnout of the competent staff. Thus, the questions of self-interest and integrity here are crucial. In actual fact, the CSRC has punished many companies and individuals for serious fraud.

After understanding these two types of incentive mechanisms, it is easier to deduce which investment banks pay more attention on integrity and look for honesty in their potential employees.

Flying start

The good news is that since China’s financial reform and opening-up of its capital markets, a growing number of domestic and foreign financial institutions have been progressively demanding and adopting ethical standards. Moreover, the anti-fraud legal regulations and punishment policies have become harsher. A key point, highlighted by the International Advisory Council (IAC) of the China Securities Regulatory Commission (CSRC) at the end of 2019 was the need to further nurture a market culture of “compliance, integrity, professionalism, and stability”. As a matter of fact, the National Association of Financial Market Institutional Investors, the CFA and Chainshine Financial Training have already started compiling a “Handbook of ethics for finance professionals”, which will be released soon. This will additionally promote truthfulness and setting up ethical standards and relevant trainings. More and more executives in the financial sector believe that strict control in the recruitment process will enhance the company’s operational risk prevention, thus, inspecting candidates’ “honesty” should be interwoven in the interview questions.

Honesty is the best policy

As a student, you must be burning with curiosity: how can an interviewer evaluate “honesty”? What kind of question would be asked?

Some interviewers will ask more divergent questions− questions with no specific answers, but rather tools to exercise one’s ability to think broadly about a certain topic, to construct an argument, and to evaluate one’s own stance. Never back down: during an interview you are put under the magnifying glass. Every word you utter is being categorized as “true”, “made-up/exaggerated” or “fake”. Be aware that HR managers’ experience and high emotional intelligence helps them to read between the lines. Some interviewing managers do not ask specific questions to rate an applicant’s integrity. Instead, after the talk, they would give an overall “honesty” score: if the candidate recites his lines too smoothly, he would probably be given a lower grade; if his responses seem basically trustworthy and no evident lies came out, he would be given a higher score. In the best-case scenario, a candidate’s performance would be perceived as ingenious, and he would receive the full mark.

The all-seeing eye of the interviewer. How can we prepare?

My initial answer here would be: “no way to prepare”. The truth is that an HR manager with certain experience would be able to evaluate a candidate’s ethical standards in a few minutes. If you are over-prepared and answer semi-automatically with pre-learned phrases or talk in a very “politically correct” manner, you could even give the impression of being fake.

Still, If I must give an advice in this context, it is to try to develop the habit of communicating truthfully and honestly at all times. When you answer questions, be sincere and simply admit your lack of knowledge and experience or your mistakes. Do not abide by the “fake it till you make it” because quite probably, you will never make it! In case at the end of an interview, the manager’s impression is still “dishonest, all fake”, then your reputation is tarnished. Swallow your pride and forget about entering into this company anymore.

Just remember: after you overcome the mental barrier of answering the first “independent thinking” interview question, the more authentic and straightforward you are, the easier it is to be admitted by a financial institution which values trust and integrity.

Silver linings

Here goes another “positive” interview example related to integrity

A student wrote “love professional mountain climbing” in his CV hobbies and interests section to demonstrate bravery and sports spirit. Ironically, he came across an interviewer who was also interested in alpinism. When asked about the brand of the rope he uses when climbing, the candidate could only reply with embarrassment: “I have only hiked Mt. Elephant … I have never used professional equipment.” Not surprisingly, there was no next round for the applicant after this interview. Better late than never, he immediately deleted “love professional mountain climbing” from his CV.

Will you “whistle”?

After the Dotcom bubble, around 2015 the internet industry in China was flourishing. It was obvious from securities firms’ research report through news channels to online forums that internet is king. An indicative example presents the case of Le.com (LeTv): when its market value reached 100 billion RMB, most investors and even some professional investment groups were blinded by the prosperous future perspective. If we look at Le.com’s financial statements from this period, we can conclude that its revenues and profit were increasing every year. However, if are well-equipped with specialist analytical tool and apply a free cash flow (FCF) method, we would note that the company never created FCF for investors. We all know how the story goes.

In this turbulent moment, if you were an honest investment manager, what would you have done? Would you have written an honest report or would you have followed the heard instead?

Discussing Luckin and Le.com is like beating a dead horse− it is always easy to give advice in hindsight, but can you tell who is the next Le.com or Luckin? If you hear some rumors about a certain company (keep in mind that many times the rumors do come true), would you dare to blow the whistle?

* Mr. Jiang Tao from Chainshine Financial Training also contributed to this article.