Home » 5 Common Mistakes in Investment Banking Interviews and How to Avoid Them

5 Common Mistakes in Investment Banking Interviews and How to Avoid Them

In this article, I will highlight 5 common mistakes that many smart candidates are still making during investment banking interviews.

If you’re making one or more of these mistakes, you immediately shoot yourself in the foot and strongly decrease your chances of getting an internship or full-time offer.

The good news is that they are relatively easy to avoid…

So let’s get to it.

Mistake #1: Underestimating the importance of fit questions

Many candidates think they’re ready for fit/behavioral questions. Questions like “tell me about yourself” or “why investment banking“.

They assume that their answers are good enough, and spend all the remaining time they have on preparing as many technical questions as they can.

The problem is: usually they’re not ready at all. Having interviewed candidates for my former employers, including Goldman Sachs and Lazard, I noticed that most of the interviewed applicants provide very generic answers to fit interview questions, and then wonder why they don’t get the offer…

When I conduct mock interviews with students, at least 80% fail to give convincing answers to the most common fit questions, even if they think they’re ready.

For “why JP Morgan”, they’ll talk about arcane deal numbers they’ve read the day before, or invent some nonsense reason to justify their interest in investment banking.

It’s hard to understand why our answers lack persuasion power because usually recruiters don’t give any direct feedback on that.

Now, here’s why you need to invest more time and effort into preparing fit questions: fit questions are way more important than technical questions when it comes to securing the job.

Why? Because at the higher interview stages, nearly every candidate knows how to deal with financial questions. They know what to expect and they know how to prepare. This means that the only area in which recruiters can truly differentiate candidates is the fit side, not the technical side.

And that’s why you need to put a particularly strong emphasis on crafting a compelling personal story and having interesting anecdotes for “tell me about a time” type of questions.

Mistake #2: Learning your answers by heart

In the same vein, many candidates have the reflex to try to prepare ready-made answers for each question, and think that it is a good idea to memorize these answers, to learn them by heart in order to be able to recite them during the interview.

No one can blame them for this. After all, the education system in many countries conditions students to learn their course almost by heart so they can spit it out on a piece of paper during exams. It may work to get a good grade, but it will work less to pass interviews…

But when it comes to interviewing brilliantly, memorizing ready-made answers is stupid and inefficient. Three main reasons for this:

If you prepare and memorize ready-made answers, you will look and sound like a robot during the interview. Recruiters will see that what you are saying is NOT a spontaneous speech in response to their question, but a speech learned by heart beforehand. Some politicians are very good at doing this while appearing more or less spontaneous. But you are not a politician, until proven otherwise, and if you want to convey the image of someone natural, spontaneous, and confident, you must avoid, at all costs, falling into the trap of perfectly scholastic memorization of written answers.
Furthermore, if you memorize your answers, you will become too dependent on your responses, and you will find it difficult to detach yourself from the script when you are asked slightly different questions from those you have prepared. In other words, you’ll be more easily destabilized when you’re asked a question you haven’t prepared an answer to. This may affect your confidence level and therefore your performance.
You don’t need to have ready-made answers to questions in order to be able to answer perfectly convincingly the questions you will be asked.

There are specific and proven methods of knowing exactly what to say (and saying it eloquently), while remembering only a few elements of an answer rather than ready-made answers.

One easy way to do this is to memorize short, concise bullet points that capture the meaning of what you want to say. Once you’ve prepared those bullets, train yourself to express your answer in different ways, using different words, at varying speeds. That way, you train yourself to remain flexible while at the same time preserving the gist of your answer.

Mistake # 3: Adopting an overly professional persona

This is something nearly every candidate experiences: the pressure to look and sound more professional than they really are in real life.

For most students, interviews are the first point of contact they have with the professional world. For that reason, it can be hard for them to know how professional they have to be.

Feeling some pressure, some students adopt an “interview persona” that is completely different to the person they are in daily life. And they know it’s fake! But they still do it.

What I noticed is that these highly professional interview personas typically repel recruiters, because they look fake and overdone.

The reason being: one of the most important personality traits investment banking recruiters look for in candidates is authenticity.

If you’re pretending to be someone you’re not by trying to look as sharp and cool as possible, chances are recruiters will call your BS right away and never call you again, or, in a softer case, not like your personality enough to invite you to the next stage.

It’s OK to have professional manners. But try to act like a movie character – it doesn’t work. Focus on being the most competent version of yourself, and remain authentic and candid during the whole interview.

Mistake #4: Forgetting mental and physical prep

The third major mistake made by a significant number of candidates is to think that question prep is the ONLY thing that matters to succeed in interviews, that there is nothing else to do but to invest 100% of one’s time in these questions in order to optimize one’s chances.

This is a common but tragic mistake. To be successful in an interview is not just a matter of showing that you can answer questions correctly…

You must show that you possess certain qualities, specific qualities recruiters are looking for, including: critical thinking, excellent communication skills, and an ability to synthesize, among others.

If you only focus on interview question prep, you may be able to develop these qualities indirectly (e.g. thinking about presenting your story and background in less than 1 minute could help you train your ability to summarize).

But if you really want to dramatically sharpen the key skills and qualities they are looking for in their top candidates, only working on questions will NOT be enough.

Eloquence, critical thinking, the ability to improvise, intellectual flexibility, are all qualities that will have a decisive impact on the outcome of the interview, and it is essential to work on them separately if you really want to impress recruiters and annihilate your competition.

Here are some exercises that will help you sharpen those critical qualities ahead of an interview, and help you truly stand out among other candidates:

Read every day for at least one hour. Choose intricate, intellectually-demanding books (not necessarily finance-related, it can be philosophical books, for instance). Doing this every day will sharpen your critical reasoning skills, expand your vocabulary, and may help improve your verbal fluency.
Organize debates with your friends or other students to train your ability to think on the spot, sharpen your communication skills, and persuade others of your key ideas. If you do this 2-3 times ahead of interviews, I guarantee that you will feel far more at ease during the interview.
Introduce yourself to a few strangers and try to engage in small talk more often. This will help you break the ice more easily at the beginning of your interview and make you appear as a more social person (and they will evaluate you on that as well)

Another aspect that is often neglected is physical health. I know it sounds cliche, but there is no denying that a good diet coupled with regular sports practice has a positive impact on cognitive performance, which has been empirically demonstrated.

Therefore, maintaining a good level of health and energy should also be part of your preparation plan.

So skip the Domino’s pizzas and start running or working out 2-3 times a week, if you’re not already. The cognitive benefits of exercising have been demonstrated by multiple clinical studies.

In short, preparing questions is only the tip of the iceberg. If you really want to maximize your chances, you must invest your time in other types of preparation that may seem useless at first glance, but which will greatly influence your chances of success.

Mistake #5: Thinking it's only a game of competence, when it’s clearly not

If you retain only one thing from this article, retain this: it’s not the most skilled people who win the jobs, but the people who are the most skilled at SHOWING they have the skills to do the job.

And there is a massive difference between the two. You might be very skilled for the job but not get the job if you’re bad at selling yourself. But you might get the offer if you’re great at selling yourself, even if you’re objectively not the best candidate in the pack.

Succeeding in interviews is not only a game of competence, it’s also a game of seduction.

You have to seduce, convince, and persuade the recruiter that you are the best among hundreds of candidates. But you don’t have to factually be the best to convey the impression that you are the best.

I’ve seen countless highly talented candidates who I know could have been absolute rock stars in investment banking, but who were rejected by the top banks because they didn’t market themselves well enough.

They were extremely competent, but they were not very skilled at showing their incredible competence. Conversely, I’ve met candidates who I believe were fairly average in terms of skill set, yet who managed to land top spots at bulge-bracket investment banks because they were so incredibly convincing.

So working on your skills to become a highly competent person is great, but it’s not enough. To get the best offers, you also need to work on your persuasion and sales skills.

My final piece of advice to you

If you’ve read me this far, it means that you truly care about optimizing your chances of success. You care about getting the right information to beat your competition.

In case you have an interview in a few days and are pressed by time, I’d recommend focusing on fit questions (including a compelling story for “tell me about yourself”). These are the most important interview questions and they take the longest time to prepare.

Once you feel prepared enough on behavioral questions, start preparing yourself for technical questions, and make sure you genuinely understand the underlying financial concepts (e.g. enterprise value, IRR, time value of money, etc). Never memorize answers by heart which you don’t truly understand.

Read financial newspapers everyday to broaden and enhance your financial literacy, and speak to a few industry insiders every week to learn more about their jobs (and expand your network by the same occasion).

Make sure you practice a few brain teasers so that you don’t get caught off guard during the interviews.

If you wish to obtain advanced preparation on investment banking interviews, I’d advise you to check out our premium online course on this page.

This course had been made by top investment banking professionals form Goldman Sachs, Lazard, and Perella Weinberg Partners, and contains the 125+ most commonly asked interview questions at bulge-bracket investment banks.

This includes fit questions, technical questions, financial culture questions and brainteasers.

For each question, we provide examples of high-performing answers, and we help you build your own high-quality answers based on your unique background. Learn more about our comprehensive online course here.

A word about the author

Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.

He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.