Why Networking is Important

Written by our team of seasoned IB / PE professionals

Networking is the most important part of your overall recruitment process. This, this, this, this, this, and this are a few sources that support this.

Networking is far more important than completing actual application portals, especially for non-target applicants. Online applications for leading banks will often programmatically screen and filter out non-target applicants, particularly without top-tier credentials like GPA and prior experience. Every firm has different systems in place for recruitment, but it is very possible—and actually ideal—to recruit without completing online applications at all. In fact, most online application portals send your info directly to HR, while Analysts and Associates are the ones that actually conduct recruitment and make hiring decisions at most top institutions.

Examples of Networking Criticality

When I was recruiting for IB Summer Analyst positions, I interviewed with four major elite-boutique/bulge-bracket banks and completed zero online applications. I went to a non-target school very few have heard of, but I had decent relevant experience and a high GPA. How'd I break in? I simply networked a lot, made connections with bankers who thought I had what it took, and they manually sent my resume into their candidate pool. This is the best way to enter the formal recruitment process. (We'll cover this in detail in a later post.)

When I received and accepted a verbal offer from a bulge-bracket firm, HR then reached out to me and asked me to complete the application portal simply so I could be in their system. After I completed the application, I received what appeared to be an automated email saying I had been denied from the firm—even though I already had received and accepted a verbal offer. This was because my submission hit the firm's auto-filter as a non-target application. HR then had to manually help me bypass the firm's non-target screen so I could be in their system for paperwork, background checks, etc.

This is a true story from just a couple years ago. While this obviously doesn't happen in most cases, it exemplifies the importance of breaking into recruitment processes through networking, instead of online resume drops from which you'll probably never hear anything except the occasional HireVue that no one will ever watch.

On top of helping non-target candidates break into top firms, networking can further overcome a low GPA, weak internship history, and even poor technical interview performance. In some cases where a candidate botches technical questions but has become so well-liked amongst the group from positive networking interactions, they are awarded the offer regardless. This happened to me as well, as the Senior Analysts who were in charge of my technical interview portion would later admit.

The reason firms would do this is because it's a lot easier to fix technical ability than curiosity, ambition, charisma, and overall personality—all traits that firms critically look for in prospective candidates, given the long hours everyone works in close proximity to each other. I don't say this to diminish the importance of technical preparation. Most successful candidates thrive with both networking and technical questions. Of course, it is possible to break into roles like IB without networking, but only if you attended a top target school, have a best-in-class resume, or get insanely lucky.

I'm mentioning IB specifically a lot in this post, but these basic ideas and principles also apply to other high finance domains like hedge funds, private equity, growth equity, and venture capital. Recruiting from IB into these roles is generally a bit different given that headhunters and recruitment firms play an important role in placing candidates. However, if you recruit out of IB through networking, you can have a chance at breaking into any firm that you want. If you recruit through headhunters, you will be confined to whichever few firms hired the recruiter to help them find talent.

When to Start Networking

One question we often receive is: "When should I begin networking as a candidate?" While there's not a single best time, it's probably ideal to start as soon as you detect serious personal interest in pursuing a path such as IB. Before you ramp up networking efforts, it's usually best to think through answers for basic behavioral questions so you'll be prepared to provide context on your background and articulate your interest in whichever roles for which you are networking. (Again, in a later post, we'll cover in detail how exactly to excel during these networking conversations.)

Do not wait until you have complete, relevant internship experience to start networking. Networking calls or "coffee chats" are an exploratory process. While prospective candidates should be prepared to show well for the conversation, it's also an opportunity for them to learn about the industry firsthand in order to confirm whether or not it might be a good fit. Typically, networking after you have a finalized résumé and are prepared for technical and behavioral questions doesn't leave enough time to foster effective connections.

Your Network Will Compound

Your network also has important implications beyond the scope of recruitment. Believe it or not, there are top-performing M&A MDs out there who can't even walk through a Discounted Cash Flow. I've worked for them directly. However, they bring in millions or tens of millions of dollars in annual fee income from deals originated from the network they've built. Most leading Partners at PE and VC funds also source deals directly from networks they've built up over the years. Not only is networking required to break into transaction-oriented finance roles, but also to excel all the way up at senior levels.

When I was networking into IB, I probably did 40+ networking calls, recruited seriously with around four firms, and received one offer. Afterwards, as a college sophomore that was already locked into a post-junior year summer internship, I began to think that perhaps I could've done like 10 to 15 networking calls to get my offer. Therefore, I thought I had spent way too much time networking. During my networking process, I made 30+ high-quality connections with bankers that didn't lead to anything at all in the moment, which felt like a waste.

I eventually realized this feeling was totally wrong.

I kept in touch with almost everyone I networked with, usually by sending a simple annual email just to check in and share any material professional updates on my end. People who you network with appreciate these notes, given they'll feel like they played a role in your career progression, which is gratifying.

Years after my IB recruitment, I realized almost everyone I networked with went on to work interesting roles across tech companies, PE, VC, etc., as most bankers end up doing. When recruiting out of banking, I had a massive leg up given I was then able to seamlessly lean into my existing network. I did use a headhunter to find the role, but I knew folks at the firm because I networked with two of them back during IB recruitment, and they both put in a good word for me which helped me land the role at a strong growth equity fund.

In short, networking rarely leads to positive outcomes in the short term, but the benefits of your network compound over time. Most students and professionals early on in their career are totally blind to this. If I could go back, instead of doing 40+ networking calls, I'd do 100+ or as many as possible.

Key Takeaways

Networking is more effective than online applications for breaking into high finance roles, especially for non-target candidates
Start networking immediately upon developing interest in finance, rather than waiting until you have a complete resume and relevant experience
Strong networking conversations can overcome traditional barriers like low GPA, limited internships, or weak technical performance
Most successful finance professionals at the senior level (Managing Director, Partner, etc.) derive their value from networks rather than technical skills
Maintain relationships with all networking contacts, as their value compounds significantly over time as people move into different roles and progress up organizational hierarchies
For non-banking finance roles (PE, VC, HF), networking provides way more opportunities than relying solely on headhunters
Networking may take time to pay off—networking calls that don't lead to anything in the short term can still be valuable long-term connections that can yield unexpected opportunities years later if you stay in touch
Check out RecruiterBase to find and make networking connections