One of the biggest worries I have heard from newbies in the financial sector and aspiring students applying for internships and jobs is whether they know enough. The concern seems to be that there is a baseline expectation of what a first-year analyst at an investment bank knows, and the aspiring financier worries that she does not meet that baseline.
In reality, investment banks tend to focus on things beside knowledge when it comes to first-year recruits, with grades, school quality, and the student’s interest being much more significant factors. Often HR professionals will look for a genuine passion for finance amongst applicants, so that the most important interview questions for aspiring analysts are often the most banal. A good answer to the question, “what’s the most interesting financial news story you’ve read in the last week?” will be much more valuable than a correct answer to the question, “what is the formula for calculating the IRR of a firm’s capital investment?”
There is a simple reason for this; an applicant who is genuinely interested in and passionate about finance will learn the necessary skills on their own, whereas an applicant who has a B.S. in finance but actually hates the industry will do a competent job of inputting formulae into spreadsheets and double-checking math, but he probably won’t endure the two years of 80-120 hour workweeks that remain the norm in investment banking. A genuine and innate interest is what keeps many young financiers alive through the wringer that is the first two years of investment banking, and it is also what makes them often better at their job over the long term.
For this reason, if one has to choose between having an in-depth knowledge of the nitty-gritty of corporate finance, remembering IFRS rules on fixed capital accounting, versus having an in-depth knowledge of why SPACs have grown in popularity and why they may (or may not) be causing a bubble in certain sectors, one would probably be better off choosing the latter. Sure, SPACs may not be as crucial to financial markets in ten years–just as ten years ago having some knowledge of the cascading effect of MBSs was much more important than it is today–but knowing about SPACs now shows an interest in the financial markets of today, rather than a slavish (and limited) devotion to the rules of the game–especially since the rules often do change. And that’s why banks would be much happier to hire someone who is constantly looking to learn more, rather than someone who has already learned what they think they already know and can finally rest a bit.