Hiring Investment Banking Graduates: Pre-employment tests to use

An Investment Banking career is a popular choice for graduates due to its lucrative rewards for those willing to invest time and effort in mastering the field. Recruiters are thus increasingly searching for the top Investment Banking Graduates who have the necessary blend of skills and knowledge to become the future leaders of tomorrow.

In this recruiter’s guide, we present in detail our recommended pre-employment assessments and selection tools to integrate into your Investment Banking Graduate recruitment process. Our goal is to ensure you confidently select and hire the best-fit candidates, first time, who will thrive within your organization. 

Contents: 

1. What is an Investment Banking Graduate and what do they do?
2. What is the best assessment process to hire the right Graduate Investment Banker?
3. Concluding remarks

1. What is an Investment Banking Graduate and what do they do?

What is an Investment Banking Graduate?

An Investment Banking Graduate is an entry-level analyst role, most often recruited through a structured graduate program from top international banking institutions, such as Morgan Stanley, Goldman Sachs, JP Morgan, and Deutsche Bank, as well as smaller banks. Most schemes involve intensive hands-on training, live projects, and broad exposure to different divisions, clients, and transactions so that graduates can develop into highly-skilled banking professionals.

What are the different divisions an Investment Banking Graduate could work in?

From the outset and as they progress through their careers, Graduate Investment Bankers may choose to work in various departments, such as: 

• Corporate Finance 
• Asset Management 
• Mergers & Acquisitions
• Restructuring
• Corporate Broking
• Financial Advisory Services
• Sales & Trading
• Risk Management
• Equity Capital Markets
• Debt Capital Markets
• Equity Research

What would be the roles and responsibilities of an Investment Banking Graduate in my organization?

The primary responsibility of Investment Banking Graduate Analysts is to assist more experienced investment bankers with investing, raising, and managing capital and executing financial transactions for clients. These clients could be corporations, agencies, governments, and high net-worth individuals. Often Investment Banking Graduates will be required to pass professional exams in order to perform certain tasks.

Common responsibilities for an Investment Banking Graduate include: 

• Financial analysis and forecasting to evaluate potential investment opportunities for clients
• Conducting market research and writing reports with analysis into markets, products, opportunities, and trading strategies for clients
• Building and maintaining relationships with clients to understand their needs and offer high-quality strategic solutions and structured financial advice
• Collaboration with senior professionals and colleagues across different departments, such as sales, legal, PR, etc.
• Assessing and mitigating financial risks for clients, such as credit risk, interest rate risk, market risk, and operational risk
• Developing financial modeling for client investments, raising necessary funds, and assessing their financial performance
• Assisting in structuring and executing high-profile deals and financial transactions, such as mergers & acquisitions, initial public offerings, and debt offerings
• Effectively presenting and communicating complex financial concepts to clients, colleagues, and other stakeholders

What skills and competencies are important for an Investment Banking Graduate role?

There are a range of skills and competencies which are essential for success within investment banking. To effectively hire top Investment Banking Graduates, we therefore recommend assessing a combination of technical skills and soft skills in your recruitment assessment process, such as:

• Numeracy skills
• Analytical skills
• Critical thinking skills
• Presentation skills
• Written and verbal communication skills
• Organizational and multitasking skills
• Attention to detail
• Financial and commercial awareness
• Customer-centric
• Adaptability 
• Time management 
• Computer and IT skills

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2. What is the ideal assessment process to hire the right Investment Banking Graduate?

When hiring for a Graduate Investment Banking position, we advise using a tailored assessment process that tests candidates not only based on their numerical and analytical skills but also on the other key qualities, attributes, and competencies essential for investment banking. 

Below, we have outlined step-by-step the most robust assessments to include in your Investment Banking Graduate recruitment plan. Following this approach will ensure you gain accurate and reliable insights into candidates’ technical skills, strengths, and job performance so that you can confidently hire the right candidates first time.

1. Pre-employment Aptitude Tests

At the initial assessment stage of your Investment Banking Graduate recruitment process, it is best practice to begin with asking candidates to take a combination of online pre-employment aptitude tests. These assessments will allow you to quickly and accurately assess candidates and sift out those who do not have the required level of technical skills for your investment banking role.

What aptitude tests should I include at the initial sifting stage of my Investment Banking Graduate assessment process?

For your Graduate Investment Banking role, you should consider including a combination of all or a couple of these skill-based pre-employment ability tests:

• A pre-employment numerical reasoning test: Investment Banking Graduate Analysts in the workplace spend a lot of time with numbers, graphs, and financial data when managing financial transactions, investments, and capital for clients and conducting financial analysis and modeling. Therefore, assessing candidates’ numerical capabilities, analytical skills, and accuracy through a numerical reasoning test is essential to ascertain candidates’ capability to interpret and reason with numerical information effectively day-to-day.

• A pre-employment verbal reasoning test: Whilst investment banking does primarily involve crunching numbers, Investment Banking Graduates will also be required to produce written reports and present complex financial concepts and arguments to clients and colleagues through clear written or verbal communication. A verbal reasoning test serves as a valuable tool to assess candidates’ verbal comprehension and communication skills for this Investment Banking Graduate role.

• A pre-employment logical reasoning test: Investment Banking Graduates in their day-to-day work will frequently encounter diverse problems and challenges, which they will need to identify and solve with new and innovative solutions. A logical reasoning test assesses candidates’ problem-solving and critical thinking skills. Therefore, this assessment will help you to determine which candidates are skilled problem solvers and logical thinkers and should proceed to the next assessment stage.

2. A Pre-employment Situational Judgement Test

At this initial stage of your Investment Banking Graduate assessment, or the stage after, we also recommend administering a pre-employment situational judgement test, in which candidates have to select the most and least appropriate actions when responding to work-based scenarios and challenges. This style of assessment is designed to accurately measure candidates’ fundamental behavioral competencies and to predict how candidates are likely to perform in the role. This complements the insight you already have from the aptitude tests about candidates’ technical skills, helping to build a well-rounded candidate profile. 

Furthermore, you have the opportunity to customize your Investment Banking Graduate situational judgement test by incorporating real work-based scenarios and challenges that graduates may encounter in your role and organization. You can also create bespoke questions which focus on assessing only the specific competencies relevant for investment banking. 

What specific competencies should I assess in my Investment Banking Graduate situational judgement test?

The competencies which are vital for investment banking roles and should be assessed in your situational judgement test are:

• Analyzing
• Innovating
• Solving problems
• Communicating
• Delivering results
• Working with colleagues
• Client-centric
• Influencing
• Resilience

3. A Work-style Personality Questionnaire 

At the same assessment stage in your Investment Banking Graduate recruitment process, you might consider pairing your situational judgement test with a work-style personality questionnaire to learn more about your candidates. Utilizing the The Big 5 personality model, this questionnaire will provide you with detailed insights into candidates’ personalities and work-style preferences, further enhancing the existing information you have about each candidate.

How should I use the results from my Investment Banking Graduate work-style personality test?

Rather than sifting candidates, like the previous aptitude tests, the work-style personality test aims to dive deeper into candidates’ authentic personality traits and preferred ways of working so you can determine whether they naturally align to your role, team, and organization. Candidates who work in the correct role and environment for them will be happier, perform better, and stay longer.

4. A Pre-hire Video Interview

Before the last stage in your Investment Banking Graduate assessment process, it is best practice to shortlist your candidates further by getting them to complete a one-way video interview. Here, candidates will be required to record their answers to a set of predetermined questions under timed conditions. This aims to help you learn more about the skills and relevant knowledge each candidate would bring to the role and their suitability for your role, division, and company. 

As a recruiter, what questions should I include in my Investment Banking Graduate video interview?

Your Investment Banking Graduate video interview should typically include 3-10 questions, structured around a combination of competency-based, strength-based, and technical questions as well as finding out candidates’ motivations, preferences, and why they want to work in the financial services sector as opposed to other industries. 

As assessors, you can use your own selection criteria to shortlist candidates for the final assessment stage. This allows you to confidently determine which candidates align best with your organization and have the core strengths and skills to advance and succeed within investment banking.

5. An Assessment Center

The final assessment in your Investment Banking Graduate recruitment process is to set up an assessment center and invite your top shortlisted candidates to attend in-person or virtually. This assessment center aims to give you the opportunity to further understand candidates and their relevant strengths, behaviors, technical skills, and how they might fit into your company culture. This well-rounded insight will empower you to select the top candidates and make informed hiring decisions.

How should I set up an assessment center for my Graduate Investment Banking role?

Your Investment Banking Graduate assessment center should include a variety of exercises customized for your role and company. These exercises are strategically designed to assess shortlisted candidates’ technical expertise, behaviors, strengths, and personality traits. We recommend:

• A group exercise to assess how well candidates communicate and work in a team when under pressure and faced with challenges
• An individual or group presentation
• A case study exercise or role-specific task to look at how candidates solve problems
• A final interview, one-on-one with a member of the senior leadership team or in front of a staff panel – this should focus on exploring candidates’ motivation and testing their technical skills and fit within the company

As assessors, by incorporating these exercises into your assessment center, you can make informed hiring decisions regarding which candidates are best aligned to your Investment Banking role, your team dynamics, and company culture. This will empower you to confidently select and recruit the top candidates with the skills and strengths necessary to excel in your organization. 

3. Concluding remarks 

Centering your Investment Banking Graduate recruitment strategy on these assessments will ensure you gain an accurate and well-rounded understanding of each candidate, encompassing their technical skills, behavioral competencies, and personality traits. This objective insight will equip you, as recruiters and hiring managers, with the confidence you need to make informed hiring decisions and recruit the top best-fit candidates first time for your investment banking role and organization.