This year, hundreds of Columbia students will engage in a soul-sucking ritual endemic to late-capitalist America: recruiting for investment banking. This recruitment process is the first step on the conventional path of bright-eyed Ivy Leaguer to Wall Street vest-wearer: freshmen and sophomores network with bank employees throughout the fall, apply to summer analyst positions in the winter, and, if successful, candidates go through a multi-round interview process in the spring.
The job itself theoretically involves helping companies raise capital, issue shares, and complete mergers and acquisitions, but the day-to-day for interns largely consists of countless hours making Excel models and PowerPoint decks to support the full-time employees engaged in this larger mission. Landing one of these coveted internships during one’s junior summer is instrumental for getting an investment banking job upon graduation, since banks hire the majority of their associates from the interns they’ve already recruited.
Unfortunately, two forces are currently combining to make the recruitment process more difficult. The massive disruption caused by artificial intelligence, which has been felt first and foremost in Big Tech, has attracted more applicants to pursue Wall Street jobs. Simultaneously, banks themselves are utilizing new AI tools in the creation of financial models and decks. As this work is traditionally done by interns and young associates, this has led banks to hire fewer people in entry-level positions. Goldman Sachs’ hiring data illustrates both these patterns. In 2022, the bank hired 3,000 summer analysts out of 236,000 applicants (a roughly 1.3 percent acceptance rate), but—just three years later—that number shrunk to 2,600 summer analysts from over 360,000 applicants (a roughly 0.7 percent acceptance rate).
Hoping to capitalize on the crowds of wannabe Patrick Batemans who would kill for the chance to work 100-hour weeks at J.P. Morgan, over 10 distinct preprofessional finance clubs have been formed at Columbia in the last 10 to 15 years: LionFund in 2011, 116th Partners in 2015, and Global Research Consulting in 2019, to name a few. These clubs claim to help students’ recruiting efforts by offering students exposure to financial work, networking opportunities with people already working in the field, and more direct avenues of mentorship, such as mock interviews.
For instance, LionFund requires students to “present at least two investment pitches per semester, vote on investment decisions, and monitor current investments,” and boasts “one of the strongest and most extensive alumni networks among clubs at Columbia.”
Knowing all of this, many students at Columbia correctly observe that recruitment is competitive and that finance clubs could be a useful resource in this process, but they incorrectly infer from this that a student must first gain admission to a finance club to be a competitive candidate in the real job search. This belief naturally leads to an application process for Columbia’s finance clubs which is almost as competitive as getting a real finance internship.
Of course, the competitiveness of the application process to finance clubs strengthens the belief that joining the club is a necessary first step. This follows the prestige-above-all logic that attracted students to Columbia and finance in the first place. The unfettered growth of this self-feeding cycle is what leads to clubs like 116th and Partners boasting around a 2 percent acceptance rate and a multi-round interview process, all for the privilege of what feels like a finance job that pays you $0.
It’s also important to recognize the incentive that finance clubs have to perpetuate the narrative that students need to be in them in order to be successful. It’s a lot “cooler” to be in a club with a 5 percent acceptance rate than one with a 50 percent acceptance rate, so finance clubs communicate with prospective applicants with the implicit understanding that club acceptance is vital for Wall Street success, further deepening the influence of this collective mindset with every new club-recruitment cycle. Nevertheless, the fact that Columbia students fervently believe something does not itself make it true, requiring direct assessment of what the tangible benefits from finance-club membership genuinely are.
Given the common wisdom that a finance club is the prerequisite for finding employment in the world of finance, rather than just an honest space to learn more about what finance is, the result is droves of students half-heartedly applying to them. But what actually is the use of being in a finance club, other than the self-esteem boost from surpassing the ultra-low acceptance rate? To answer this, Sundial spoke with an investment bank recruiter, who reviews resumés and conducts interviews for a middle-market investment bank, under the condition of anonymity for this article.
His first point challenged the extent to which the “early work experience” provided by finance clubs actually benefits students’ resumés. “I value internship experience above club participation,” he told me. “With an internship, you went through an actual recruiting process to earn the position, and the scope and responsibility of the work are generally much greater.”
Finance clubs do offer members the opportunity to engage in projects like company due diligence and preparing investment theses, which applicants can list on their resumés to demonstrate prior experience. As freshman-summer finance internship listings on popular platforms such as Handshake continue to dwindle, the benefit of clubs has become comparatively more attractive. But, although the recruiter conceded that club experience on a resumé is “better than nothing,” students chasing finance clubs for their work-experience benefit should remember that this is a marginal benefit at best. Thus, dedicating more time and effort to the internship search, such as by engaging in a more-thorough cold-emailing strategy, may be a more-effective means to gain work experience prior to the recruitment process.
It is worth noting that, in the common perception of Columbia students, not all finance clubs are created equal. Student investment funds like LionFund and 116th and Partners are seen as the cream of the crop, boasting single-digit acceptance rates and high placement into elite firms, leading even more students to strive for acceptance into these “prestigious” organizations than the rest of Columbia’s finance clubs. Investment bank recruiters, however, are not Columbia students, and thus generally do not know or care about which groups are considered “good” and “bad” in the minds of a couple thousand college kids. For example, the recruiter mentioned that “We don’t know every club at every school. I don’t necessarily know exactly what a particular club does, how much each member contributes, or what resources they have.”
Ralph Waldo Emerson once wrote that “people only see what they are prepared to see”—the student body at elite schools like Columbia is naturally self-selected to have lots of ambitious people who are hyper-focused on ascending the all-important ladder of prestige. This environment can lead people to falsely believe that the hierarchy of finance clubs is more determinative than it really is, as the only people who really care about the relative prestige of Columbia finance clubs are the members and applicants within the University itself. Although these clubs see themselves as a form of bootcamp for working in the “real finance world,” they seem to overestimate the extent to which real finance workers share this view and often mislead potential applicants to believe recruiters care more about club experience than they actually do.
A final theoretical benefit of finance clubs is the opportunity for networking. If a student joins a club with lots of alumni at prestigious financial firms, the thinking goes, they have an edge in being able to meet those alumni and potentially score a referral. For this alumni network to provide members with a meaningful advantage in recruiting, however, former club members would have to give some degree of preferential access or treatment to students from their old organizations, which they don’t seem to do to a meaningful extent. This was confirmed by the recruiter I spoke with, who reflected that “I don’t think an alumnus would refuse to speak with you simply because you weren’t in the same finance club. If someone doesn’t respond, it’s probably for some other reason.”
The ultimate end goal of networking in the recruiting process is to obtain a “referral” (essentially a recommendation) from an employee of the bank a candidate is applying to. The bank employee loses credibility if they refer a candidate who isn’t a good fit, meaning a personal connection alone cannot secure a referral: the employee still has to perceive the candidate as competent. Thus, if employees accept networking chats from fellow finance-club alumni and non-alumni alike, club membership provides little competitive advantage in obtaining a referral: Both candidates ultimately have to demonstrate their competence through networking conversations. The institutional devotion students are searching for might instead be found in Greek Life, as these alumni do seem to retain a certain level of allegiance to their former fraternity or sorority long after graduation. In deeply unfortunate news for the esteemed nerds of America, however, building spreadsheets and decks together just doesn’t foster community bonding the way the ‘Elephant Walk’ does.
This is not to say that finance clubs are useless. Nevertheless, given that acceptance to even the most prestigious finance club on campus is neither necessary nor sufficient to get a job on Wall Street, students should see these clubs less as crucial professional development and more as personal development opportunities. Finance clubs give students a unique, risk-free opportunity to find out if they’re actually interested in pursuing a finance job post-grad: Students should take advantage of that, but they should also remember that the seriousness, competition, and elitism that these clubs generate are ultimately artificial.
Emilio Stuart-Alban is a sophomore at Columbia College studying economics and political science. He is a staff writer for Sundial.
The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of the Sundial editorial board as a whole or any other members of the staff.
It was always my dream since I was a little kid to work 100 hours a week at JPM ‼️‼️