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Saturday, 30 June 2012
Tuesday, 19 June 2012
Wednesday, 13 June 2012
Building Your Small Business: Tips & Tricks
Building you business can involve plenty of steps. Being sure you haven’t neglected anything important is the key. Here are some tips that will help you build your business thoughtfully and intelligently taking the steps necessary to make your venture an ultimate success.
Human Resources
5 ways to build a spectacular team without damaging your ego. People who become an entrepreneur usually have an ego that can be hard to accept. However, if this were not so, there would be very few entrepreneurial ventures. Sooner or later the entrepreneur realizes that he can’t do it all if his venture is to be successful. Building a good team requires the entrepreneur to assess the exact need and then hire for that need. After clearly communicating the function and expectation of each member of the team he must then allow the team to function with minimum interference. Forbes
Self-development
Nine ways employers screw up hiring. Hiring practices and procedures must be made current to match today’s business model and those qualified job-seekers. Businesses must examine their interviewing and hiring procedures and ascertain whether or not they match the requirements of the position they are seeking to fill. Unfortunately, many resumes and interviews do not. There are a number of “bad” hiring practices listed which can be used to begin evaluating your hiring procedures. Bloomberg BusinessWeek
Resource Management
5 creative ways for a business to save. As a small business owner, you can’t control the economy. What is under your control and is imperative for the success of your small business is your expenses. Check out the five creative ways this owner used in lowering his costs. In this economy for a small business owner to be successful, he must be able to be creative. CNNMoney
Operations
The importance of cash flow. For entrepreneurs, especially those with little or no business background, one of their biggest problems is cash management. The first step in learning this is to do a projection of the influx of cash received and one of cash out-go. Reuters
Strategy
Being remarkable. Of, course, ultimately it takes more than all this stuff to make your small business a success., It takes a group of supporters and customers so fanatical about what you do that they are willing to change the world. The Marketing Blog
Wednesday, 6 June 2012
When it’s my turn to ask my interviewer questions, what should I ask?
When it’s my turn to ask my interviewer questions, what should I ask?
Good question.This is a topic on which reasonable people can (and do) disagree.
Some insiders insist that you should always ask a question when offered
the opportunity, and that your question should prove to your interviewer how
much research you’ve done on the industry and the specific firm. We disagree
with both points, however well-intentioned the advice. If the sole purpose of
your question is to prove that you’ve checked out the firm’s website, read its
annual report, or read Investment Dealers’ Digest, chances are your interviewer can
tell a mile away. “I made that mistake,” says one insider, “I attended a dinner for
all of the candidates who had been invited to interview with a top-tier firm.
There was a moment of silence and I asked the recruiter across from me what
she thought of the recent article in The Economist about the banking industry. I
could actually tell by the expression on her face that she was breathing a deep
internal sigh of resignation. I wanted to crumple up in a ball under my chair. I’d
never do that again—even if I did read The Economist.”
As this insider learned the hard way, it’s probably best to err on the side of
caution with your questions. We advise that you stick to those questions that
you’d genuinely like answered, not to mention the questions that would be difficult
for you to answer without the benefit of insider insight. So if you really do
want to know why your interviewers chose to work at Firm XYZ, then ask
away. We didn’t speak to a single recruiter who dinged a candidate because their
questions weren’t insightful or penetrating enough. Of course, your questions
shouldn’t display blatant ignorance regarding the industry, the company, or the
specific position (i.e., don’t ask your M&A interviewer how long it will be
before you have your own accounts, or your Citigroup recruiter to explain the
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firm’s commitment to remain a pure-play investment bank). You won’t win
points for playing it safe and asking your interviewer to describe the last project
he worked on, but you probably won’t lose any, either. If you’ve had a reasonably
good interview so far (and perhaps even more so if you haven’t), you may
not want to rock the boat with questions designed to demonstrate how very
clever you are.
However, if you’re determined to ask a highly nuanced question that you’ve
crafted from the bowels of the company’s annual report, you’d better keep a
few things in mind. First of all, botching the details is not an option; we were
surprised by the number of insiders who recalled (with some glee, we might
add, and no small degree of derision) candidates who got the name of the
CEO wrong when they asked a question designed to showcase their inquisitive
mind. It’s also not unheard of for a candidate to ask an interviewer about a
high-profile deal on which the recruiter’s bank was not hired as an advisor.
(Even if you’re sure the bank in question was involved, however, we wouldn’t
advise asking questions regarding a specific transaction. The chances that your
interviewer was involved directly in the deal—or even has a particularly welldeveloped
opinion on its significance—are slim, and your question won’t be
particularly enlightening for either you or the recruiter.)
Not only must you keep your facts straight if you decide to show off your
industry knowledge, but you’d better be ready to offer a credible reason for
your particular query. Perhaps to a greater extent than their counterparts in
other industries, bankers are notorious bluff-callers; if you are indeed bluffing,
the person on the other side of the desk will make you rue the day you even
looked at the annual report. And if it’s a question that’s so obscure they can’t
answer it, you’d really better hang onto your hat; you’ll most likely incur their
well-restrained, buttoned-up wrath, and they’ll derive a particular sense of
satisfaction from putting you back in your place.
If all of this advice has your head spinning, don’t worry! There are ways to jazz
up your standard-issue “What Questions Do You Have For Us?” queries. One
recruiter suggests that candidates reframe relatively broad questions by personalizing
them. For example, rather than asking your interviewer to describe the
firm’s culture, you may choose to put it this way: “I’ve talked to several analysts
representing a range of product and function areas, and a number of them
have mentioned that they’ve been surprised by how accessible the senior people
are at Bank XYZ. I wondered if this was consistent with what you’ve experienced,
and whether you feel that’s indicative of the culture throughout the
bank.” Provided that you actually have spoken to analysts (and don’t even think
about referring to fictitious conversations), this question allows you to establish
your sincere interest in the firm while remaining relatively safe.
Another insider tip: Pay attention when your interviewer introduces himself,
and make a mental note of the group he represents. When the spotlight turns
to you, give your question a group-specific slant. “You mentioned earlier that
you worked in the energy group. I know that group assignments play a big part
in determining analysts’ experience, and I wondered if you could describe the
ways in which the energy group maintains its own unique culture. I’d be interested
to know whether you’ve worked in other areas of the bank, and how your
experiences in other groups compare.” Again, this question isn’t so generic that
your interviewer’s eyes glaze over, but it doesn’t suggest that your primary
objective is proving your business acumen.
As with any other interviewer question, there are a few types of questions to
avoid like the plague, including the following:
Presumptuous questions. “I really want to spend my third year in the London
office. How can I improve my chances of getting my first-choice location?”
Well, let’s see: You could start by getting a job offer with this firm in the first place.
Interviewers typically dislike questions from candidates who prematurely
assume they’ll receive an offer, so be careful to avoid even the teensiest bit of
presumptuousness in your questions.
Questions with a tattle-tale tone. “I know that during the 1999–2000 recruiting
season, most banks on the Street significantly overestimated the number of
analysts and associates they’d need to hire, and then many of those same
people lost their jobs a year or two later. I’m curious whether your firm has
developed a better way of adjusting hiring activity to the market.” This is a
question that you may indeed want to ask, but use your better judgment. After
all, it’s a little early in the process to reveal your cynicism about the industry.
Questions that suggest you have underlying concerns about the job. “One of
the things I’ve heard over and over again is that the hours are really, really
brutal, and that it’s tough to take vacations or even long weekends. How many
weekends would you say you’ve had to work over the past year?” How many
times do we have to tell you that the job is demanding? Interviewers expect that
by the time you’ve gotten to this stage in the process, you know what you’re
getting into and that you’ve accepted it. If you’re still worried about evenings,
weekends, and vacations, you’re interviewing for the wrong job.
While you’re crafting questions to lob in your interviewer’s direction, keep one
last thing in mind: Most of your interviewers will be on a fairly tight timetable,
and they’ll be struggling to keep each interview to the 30- or 45-minute time
slot it’s been allotted. Learn to read your interviewer: If it’s clear that she is
trying desperately to wrap things up, don’t feel pressured to ask your questions
simply because you’ve prepared them. If you sense she’s trying to move things
along, a diplomatic response might be, “Thanks. I’m conscious of your time
restraints and know that the interview schedule is tight. Perhaps I could take
one of your cards and contact you later with any questions?” This way, you’ve
left it up to her—if she’s indeed at the end of her interview tether, she’ll take
you up on your offer. If she’s got plenty of time, she’ll invite you to ask away
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(and she’ll be impressed that you’ve respected her schedule—major
interpersonal aptitude points!).
If asked to name a group preference, should I provide a specific answer, or
should I say that I’m open to any industry or product group?
That depends. If a particular industry or product interests you, then by all means
mention this interest to your interviewer. As with any other interview question,
be prepared to provide solid reasons for your specific answer. If your unique
background is consistent with your choice (e.g., you completed a summer internship
at Procter & Gamble and cultivated a genuine interest in consumer products),
so much the better. However, you should refrain from expressing too narrow an
industry or product focus too early in the process or implying that your decision
to join a particular firm depends solely on whether it can accommodate your
stated interests. In early rounds, for example, it’s not appropriate to imply to
your interviewer that it’s either an offer in the firm’s health-care industry group
or no offer as far as you’re concerned. While firms often try to achieve a match
between candidates’ interest and their own staffing needs, several factors (almost
always beyond your interviewer’s control) determine where you’ll be placed.
If you’ve decided to indicate a group preference, make sure that the firm’s
organization allows for such a specialization; many firms have reshuffled their
industry and product groups significantly in the past few years, and it’s possible
that the group you have in mind has actually been lumped in with another one.
Not all firms have a consumer products or industrials group, for example, and
stating a keen interest in joining a group that does not exist may not advance
your candidacy. And even if you’re certain that your world would end if you
don’t land a spot in the mergers group, it’s probably best to say you’re openminded.
One possible answer to this question might be, “Well, as I mentioned earlier, I’m
a finance and accounting major, and so my academic interests and training have
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typically centered around the highly quantitative and strategic analysis driving
corporate finance. So far, I’ve gotten the sense that I might be a good fit in
either Mergers & Acquisitions or Leveraged Finance, but I’m flexible. Through
my conversations with current analysts, I’ve learned that a personality fit with a
given group makes a big difference in the analyst experience, so I’d be interested
to know your thoughts on which groups are likely to be a good match for me.”
As part of your preinterview research process, be sure to ask current bankers
whether analysts and associates are hired into particular groups, or whether
placement decisions are made once the training program begins. If you join a
firm that hires directly into groups, you may have little or no involvement in the
placement decision. On the other hand, firms that make placement decisions
once training begins allow you to meet with various groups before stating your
group preferences. Still others offer a rotation program in which incoming hires
work in multiple functions or products before a permanent placement occurs.
Each method offers its own advantages. If you’re hired directly into a product or
industry group, you may find yourself specializing earlier than you’d like.
Conversely, analysts who participate in a “matching” process once training
begins sometimes report a sense of competitiveness with classmates to snag
coveted spots in the most high-profile groups.
If you don’t have a decided placement preference, don’t feel pressured to name
a few groups or products for the sake of doing so. (In particular, don’t say
“M&A” unless you can offer a solid reason for it. It’s the default answer for
many candidates who just don’t know the names of any other functions or
products, or those captivated by the apparent glamour of Wall Street). While it’s
probably best to demonstrate that you’ve given the various functions and
products a thought (or—at the very least—that you know what they are), you
won’t lose points for being flexible in your response.
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Everyone says I’m expected to “do my homework.” What exactly does this
mean? How much will I be expected to know about each company with
which I interview?
First and foremost, “doing your homework” means that you genuinely understand
the role of an investment bank and can clearly articulate the distinct roles
of its various functions and that you have devoted some time to distinguishing
among the major players. It means you’ve considered all of this information
and shaped an idea of which firm you’d like to work for, and in which general
area. It means that you’ve developed reasonable job expectations, done some
good old-fashioned soul searching to decide whether or not the inherent
sacrifices are worth it to you, and determined the specific benefits you’d hope
to gain from the analyst or associate experience.
As we discussed earlier in this guide, the homework bar is higher at the MBA
level than it is at the undergraduate level. In general, interviewers are more
forgiving of analyst candidates for two primary reasons: First, no one expects a
22-year old interviewing for his first job to know for certain that his destiny lies
in investment banking. Second, investment banks typically hire analysts for a
2- to 3-year time horizon, after which they expect many will go on to business
school or other jobs. Nonetheless, firms will expect that both undergraduates
and MBA candidates alike can articulate solid reasons for pursuing a job in the
field, and they will expect to see evidence that you’ve invested some serious time
determining whether this career—and this firm in particular—is right for you.
Regardless of the specific position for which you are applying, “doing your
homework” has two primary components: understanding what distinguishes the
firm in its industry, and understanding what distinguishes the firm as a place to
work. The first of these relates to the firm’s position in the financial marketplace,
while the second has to do with its “employment brand”—the unique
way the firm positions itself to prospective employees.
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Our Seven-Step Homework Guide should help you to learn about both
distinctions:
1. Particularly if you’re an undergraduate with little prior exposure to investment
banking, make sure you understand what an investment bank
does and how the various functions of a securities firm fit together.
We’d recommend that you start with WetFeet’s Insider Guide to Careers in
Investment Banking. Mariam Naficy’s book The Fast Track: The Insider’s Guide to
Winning Jobs in Management Consulting, Investment Banking, and Securities Trading
also provides an excellent overview. As the name implies, this book is a
particularly good resource for those candidates comparing potential
opportunities in multiple areas.
2. Once you’ve determined which firms you’ll be interviewing with,
check out any firm-specific literature you can find. This includes the
WetFeet Insider Guides to investment banking firms (see the list at the end
of this book), which provide insights into the firms’ areas of relative
strength and insiders’ perceptions of the companies’ culture. In addition,
be sure to review any recruiting literature on file at your campus career
center. This information is likely to be fairly general, but it will provide a
useful overview of each firm’s organizational structure and respective
recruiting processes. Also, these materials will give you a general sense of
the “employment brand” that the firm is trying to convey—in other words,
you’ll get a sense of how the firm distinguishes itself from other firms in
the marketplace that compete for talent.
3. Check out the website of each firm with which you’ll be interviewing.
This does not mean that you’ll be expected to memorize and regurgitate
either the company’s financials or its business principles in the course of
the interview. However, if you’re interviewing with a public company, you
should probably at least take a gander at the firm’s annual report (generally
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162
available through the Investor Relations section of the firm’s website). In
addition to providing detailed information on the company’s financials,
the annual report highlights the key transactions in which the bank was
involved over the course of the previous year and summarizes the relative
performance of each of its major revenue-generating areas. Also, check out
the most recent press releases for any noteworthy developments that have
taken place since the last annual report went to press.
4. Refine your industry-specific knowledge and review the major
transactions in which each firm is involved. Trade journals such as
Institutional Investor, Investment Dealers’ Digest, and The Daily Deal provide a
wealth of timely industry-specific information. For example, Investment
Dealers’ Digest (www.interactiddmagazine.com) offers an excellent online
database for subscribers, which includes league table information, recent
deal flow activity, and information on the biggest transactions in various
areas (M&A advisory, high-technology, energy, etc.). Unfortunately, an
annual subscription to this little gem costs a hefty $995, but full-text
articles from the print publication are available through Factiva, a comprehensive
online news database; if your business school library offers Factiva
access (and it’s worth checking into), you may want to take a look. If not,
Investment Dealers’ Digest occasionally offers trial subscriptions at little to no
cost. In all likelihood, you won’t ever be asked about a particular bank’s
league table standings, but it doesn’t hurt to develop a sense of who does
what on the Street.
5. Keep abreast of current events—those relating to the financial
markets and otherwise. Even if you’re not ordinarily a faithful Wall Street
Journal reader or subscriber, it may behoove you to become one, at least
during the recruiting season. The publication’s online edition is particularly
user-friendly and is available to students at a significant discount (as is the
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print version). The Financial Times (WSJ’s European equivalent) is another
excellent source of financial news and not surprisingly provides a more
pronounced international focus than the Wall Street Journal. At a minimum,
you should know the major developments and trends characterizing the
investment banking industry. In particular, the increasingly widespread
practice of “bundling” investment and commercial banking services and
the intense scrutiny over firms’ investment research franchises are two
trends you should feel comfortable discussing in an interview. Also, be sure
to have at least a general sense of movements in the major indices (investment
banking interviewers have been known to ask what the Dow closed
at the previous day) and the events that most directly affect the financial
markets.
6. Attend the on-campus information session. Trust us: The hour that
you spend at each firm’s on-campus meet-and-greet will be time well spent.
At the information session, the company will undoubtedly address the
topic of what sets it apart from its chief competitors—its competitors for
business and its competitors for talented people. Pay attention to what the
firm’s representatives stress as its key selling points: whether it’s the firm’s
untrammeled dominance of M&A activity, its unique rotation program for
incoming analysts or associates, or its unparalleled reputation as an employer
of choice. In addition, these information sessions provide an
opportunity for you to meet current analysts and associates and to hear
them answer the questions that you’ve been formulating throughout the
course of your research.
7. Take the time to speak with insiders! There’s really no substitute for
good old-fashioned informational networking (a process which should be
relatively easy for current MBA students, who have a considerable network
of b-school students, former analysts, summer associates, and alumni to
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consult). If you’re an undergrad with fewer industry contacts, check out
your career center’s alumni database for the names and contact details of
current firm employees (preferably within the division to which you’re
applying). At the very least, contact the individuals who represented their
firms at the on-campus information sessions (analysts and associates,
please—firms may send VPs and the occasional MD to information session,
but bankers at this level aren’t likely to return your call—remember
our discussion of the hierarchical structure earlier in the guide?). Not only
can these individuals generally answer your most pressing queries, they can
typically put you in touch with other people at the bank who can provide
you with a broader perspective on what it’s like to work there. Not only will
this help you learn about the specifics of each firm’s culture, but it will give
you some real-life insight into the life of an analyst or associate.
Make no mistake about it: Preparing for interviews is a time-intensive process.
If your schedule is already filled to capacity with academic and extracurricular
obligations, it’s particularly tempting to gloss over interview preparation in favor
of the more immediate demands on your time and attention. This is a dangerous
trap, and one that you should avoid at all costs. In this case, it’s better to
take a long-term view. As one recently hired insider advises, “Take a light
course load that semester if you can. The time you spend researching
companies and talking to insiders is time well spent, and definitely worth the
investment in the end.”
Good question.This is a topic on which reasonable people can (and do) disagree.
Some insiders insist that you should always ask a question when offered
the opportunity, and that your question should prove to your interviewer how
much research you’ve done on the industry and the specific firm. We disagree
with both points, however well-intentioned the advice. If the sole purpose of
your question is to prove that you’ve checked out the firm’s website, read its
annual report, or read Investment Dealers’ Digest, chances are your interviewer can
tell a mile away. “I made that mistake,” says one insider, “I attended a dinner for
all of the candidates who had been invited to interview with a top-tier firm.
There was a moment of silence and I asked the recruiter across from me what
she thought of the recent article in The Economist about the banking industry. I
could actually tell by the expression on her face that she was breathing a deep
internal sigh of resignation. I wanted to crumple up in a ball under my chair. I’d
never do that again—even if I did read The Economist.”
As this insider learned the hard way, it’s probably best to err on the side of
caution with your questions. We advise that you stick to those questions that
you’d genuinely like answered, not to mention the questions that would be difficult
for you to answer without the benefit of insider insight. So if you really do
want to know why your interviewers chose to work at Firm XYZ, then ask
away. We didn’t speak to a single recruiter who dinged a candidate because their
questions weren’t insightful or penetrating enough. Of course, your questions
shouldn’t display blatant ignorance regarding the industry, the company, or the
specific position (i.e., don’t ask your M&A interviewer how long it will be
before you have your own accounts, or your Citigroup recruiter to explain the
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firm’s commitment to remain a pure-play investment bank). You won’t win
points for playing it safe and asking your interviewer to describe the last project
he worked on, but you probably won’t lose any, either. If you’ve had a reasonably
good interview so far (and perhaps even more so if you haven’t), you may
not want to rock the boat with questions designed to demonstrate how very
clever you are.
However, if you’re determined to ask a highly nuanced question that you’ve
crafted from the bowels of the company’s annual report, you’d better keep a
few things in mind. First of all, botching the details is not an option; we were
surprised by the number of insiders who recalled (with some glee, we might
add, and no small degree of derision) candidates who got the name of the
CEO wrong when they asked a question designed to showcase their inquisitive
mind. It’s also not unheard of for a candidate to ask an interviewer about a
high-profile deal on which the recruiter’s bank was not hired as an advisor.
(Even if you’re sure the bank in question was involved, however, we wouldn’t
advise asking questions regarding a specific transaction. The chances that your
interviewer was involved directly in the deal—or even has a particularly welldeveloped
opinion on its significance—are slim, and your question won’t be
particularly enlightening for either you or the recruiter.)
Not only must you keep your facts straight if you decide to show off your
industry knowledge, but you’d better be ready to offer a credible reason for
your particular query. Perhaps to a greater extent than their counterparts in
other industries, bankers are notorious bluff-callers; if you are indeed bluffing,
the person on the other side of the desk will make you rue the day you even
looked at the annual report. And if it’s a question that’s so obscure they can’t
answer it, you’d really better hang onto your hat; you’ll most likely incur their
well-restrained, buttoned-up wrath, and they’ll derive a particular sense of
satisfaction from putting you back in your place.
If all of this advice has your head spinning, don’t worry! There are ways to jazz
up your standard-issue “What Questions Do You Have For Us?” queries. One
recruiter suggests that candidates reframe relatively broad questions by personalizing
them. For example, rather than asking your interviewer to describe the
firm’s culture, you may choose to put it this way: “I’ve talked to several analysts
representing a range of product and function areas, and a number of them
have mentioned that they’ve been surprised by how accessible the senior people
are at Bank XYZ. I wondered if this was consistent with what you’ve experienced,
and whether you feel that’s indicative of the culture throughout the
bank.” Provided that you actually have spoken to analysts (and don’t even think
about referring to fictitious conversations), this question allows you to establish
your sincere interest in the firm while remaining relatively safe.
Another insider tip: Pay attention when your interviewer introduces himself,
and make a mental note of the group he represents. When the spotlight turns
to you, give your question a group-specific slant. “You mentioned earlier that
you worked in the energy group. I know that group assignments play a big part
in determining analysts’ experience, and I wondered if you could describe the
ways in which the energy group maintains its own unique culture. I’d be interested
to know whether you’ve worked in other areas of the bank, and how your
experiences in other groups compare.” Again, this question isn’t so generic that
your interviewer’s eyes glaze over, but it doesn’t suggest that your primary
objective is proving your business acumen.
As with any other interviewer question, there are a few types of questions to
avoid like the plague, including the following:
Presumptuous questions. “I really want to spend my third year in the London
office. How can I improve my chances of getting my first-choice location?”
Well, let’s see: You could start by getting a job offer with this firm in the first place.
Interviewers typically dislike questions from candidates who prematurely
assume they’ll receive an offer, so be careful to avoid even the teensiest bit of
presumptuousness in your questions.
Questions with a tattle-tale tone. “I know that during the 1999–2000 recruiting
season, most banks on the Street significantly overestimated the number of
analysts and associates they’d need to hire, and then many of those same
people lost their jobs a year or two later. I’m curious whether your firm has
developed a better way of adjusting hiring activity to the market.” This is a
question that you may indeed want to ask, but use your better judgment. After
all, it’s a little early in the process to reveal your cynicism about the industry.
Questions that suggest you have underlying concerns about the job. “One of
the things I’ve heard over and over again is that the hours are really, really
brutal, and that it’s tough to take vacations or even long weekends. How many
weekends would you say you’ve had to work over the past year?” How many
times do we have to tell you that the job is demanding? Interviewers expect that
by the time you’ve gotten to this stage in the process, you know what you’re
getting into and that you’ve accepted it. If you’re still worried about evenings,
weekends, and vacations, you’re interviewing for the wrong job.
While you’re crafting questions to lob in your interviewer’s direction, keep one
last thing in mind: Most of your interviewers will be on a fairly tight timetable,
and they’ll be struggling to keep each interview to the 30- or 45-minute time
slot it’s been allotted. Learn to read your interviewer: If it’s clear that she is
trying desperately to wrap things up, don’t feel pressured to ask your questions
simply because you’ve prepared them. If you sense she’s trying to move things
along, a diplomatic response might be, “Thanks. I’m conscious of your time
restraints and know that the interview schedule is tight. Perhaps I could take
one of your cards and contact you later with any questions?” This way, you’ve
left it up to her—if she’s indeed at the end of her interview tether, she’ll take
you up on your offer. If she’s got plenty of time, she’ll invite you to ask away
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(and she’ll be impressed that you’ve respected her schedule—major
interpersonal aptitude points!).
If asked to name a group preference, should I provide a specific answer, or
should I say that I’m open to any industry or product group?
That depends. If a particular industry or product interests you, then by all means
mention this interest to your interviewer. As with any other interview question,
be prepared to provide solid reasons for your specific answer. If your unique
background is consistent with your choice (e.g., you completed a summer internship
at Procter & Gamble and cultivated a genuine interest in consumer products),
so much the better. However, you should refrain from expressing too narrow an
industry or product focus too early in the process or implying that your decision
to join a particular firm depends solely on whether it can accommodate your
stated interests. In early rounds, for example, it’s not appropriate to imply to
your interviewer that it’s either an offer in the firm’s health-care industry group
or no offer as far as you’re concerned. While firms often try to achieve a match
between candidates’ interest and their own staffing needs, several factors (almost
always beyond your interviewer’s control) determine where you’ll be placed.
If you’ve decided to indicate a group preference, make sure that the firm’s
organization allows for such a specialization; many firms have reshuffled their
industry and product groups significantly in the past few years, and it’s possible
that the group you have in mind has actually been lumped in with another one.
Not all firms have a consumer products or industrials group, for example, and
stating a keen interest in joining a group that does not exist may not advance
your candidacy. And even if you’re certain that your world would end if you
don’t land a spot in the mergers group, it’s probably best to say you’re openminded.
One possible answer to this question might be, “Well, as I mentioned earlier, I’m
a finance and accounting major, and so my academic interests and training have
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typically centered around the highly quantitative and strategic analysis driving
corporate finance. So far, I’ve gotten the sense that I might be a good fit in
either Mergers & Acquisitions or Leveraged Finance, but I’m flexible. Through
my conversations with current analysts, I’ve learned that a personality fit with a
given group makes a big difference in the analyst experience, so I’d be interested
to know your thoughts on which groups are likely to be a good match for me.”
As part of your preinterview research process, be sure to ask current bankers
whether analysts and associates are hired into particular groups, or whether
placement decisions are made once the training program begins. If you join a
firm that hires directly into groups, you may have little or no involvement in the
placement decision. On the other hand, firms that make placement decisions
once training begins allow you to meet with various groups before stating your
group preferences. Still others offer a rotation program in which incoming hires
work in multiple functions or products before a permanent placement occurs.
Each method offers its own advantages. If you’re hired directly into a product or
industry group, you may find yourself specializing earlier than you’d like.
Conversely, analysts who participate in a “matching” process once training
begins sometimes report a sense of competitiveness with classmates to snag
coveted spots in the most high-profile groups.
If you don’t have a decided placement preference, don’t feel pressured to name
a few groups or products for the sake of doing so. (In particular, don’t say
“M&A” unless you can offer a solid reason for it. It’s the default answer for
many candidates who just don’t know the names of any other functions or
products, or those captivated by the apparent glamour of Wall Street). While it’s
probably best to demonstrate that you’ve given the various functions and
products a thought (or—at the very least—that you know what they are), you
won’t lose points for being flexible in your response.
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Everyone says I’m expected to “do my homework.” What exactly does this
mean? How much will I be expected to know about each company with
which I interview?
First and foremost, “doing your homework” means that you genuinely understand
the role of an investment bank and can clearly articulate the distinct roles
of its various functions and that you have devoted some time to distinguishing
among the major players. It means you’ve considered all of this information
and shaped an idea of which firm you’d like to work for, and in which general
area. It means that you’ve developed reasonable job expectations, done some
good old-fashioned soul searching to decide whether or not the inherent
sacrifices are worth it to you, and determined the specific benefits you’d hope
to gain from the analyst or associate experience.
As we discussed earlier in this guide, the homework bar is higher at the MBA
level than it is at the undergraduate level. In general, interviewers are more
forgiving of analyst candidates for two primary reasons: First, no one expects a
22-year old interviewing for his first job to know for certain that his destiny lies
in investment banking. Second, investment banks typically hire analysts for a
2- to 3-year time horizon, after which they expect many will go on to business
school or other jobs. Nonetheless, firms will expect that both undergraduates
and MBA candidates alike can articulate solid reasons for pursuing a job in the
field, and they will expect to see evidence that you’ve invested some serious time
determining whether this career—and this firm in particular—is right for you.
Regardless of the specific position for which you are applying, “doing your
homework” has two primary components: understanding what distinguishes the
firm in its industry, and understanding what distinguishes the firm as a place to
work. The first of these relates to the firm’s position in the financial marketplace,
while the second has to do with its “employment brand”—the unique
way the firm positions itself to prospective employees.
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Our Seven-Step Homework Guide should help you to learn about both
distinctions:
1. Particularly if you’re an undergraduate with little prior exposure to investment
banking, make sure you understand what an investment bank
does and how the various functions of a securities firm fit together.
We’d recommend that you start with WetFeet’s Insider Guide to Careers in
Investment Banking. Mariam Naficy’s book The Fast Track: The Insider’s Guide to
Winning Jobs in Management Consulting, Investment Banking, and Securities Trading
also provides an excellent overview. As the name implies, this book is a
particularly good resource for those candidates comparing potential
opportunities in multiple areas.
2. Once you’ve determined which firms you’ll be interviewing with,
check out any firm-specific literature you can find. This includes the
WetFeet Insider Guides to investment banking firms (see the list at the end
of this book), which provide insights into the firms’ areas of relative
strength and insiders’ perceptions of the companies’ culture. In addition,
be sure to review any recruiting literature on file at your campus career
center. This information is likely to be fairly general, but it will provide a
useful overview of each firm’s organizational structure and respective
recruiting processes. Also, these materials will give you a general sense of
the “employment brand” that the firm is trying to convey—in other words,
you’ll get a sense of how the firm distinguishes itself from other firms in
the marketplace that compete for talent.
3. Check out the website of each firm with which you’ll be interviewing.
This does not mean that you’ll be expected to memorize and regurgitate
either the company’s financials or its business principles in the course of
the interview. However, if you’re interviewing with a public company, you
should probably at least take a gander at the firm’s annual report (generally
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162
available through the Investor Relations section of the firm’s website). In
addition to providing detailed information on the company’s financials,
the annual report highlights the key transactions in which the bank was
involved over the course of the previous year and summarizes the relative
performance of each of its major revenue-generating areas. Also, check out
the most recent press releases for any noteworthy developments that have
taken place since the last annual report went to press.
4. Refine your industry-specific knowledge and review the major
transactions in which each firm is involved. Trade journals such as
Institutional Investor, Investment Dealers’ Digest, and The Daily Deal provide a
wealth of timely industry-specific information. For example, Investment
Dealers’ Digest (www.interactiddmagazine.com) offers an excellent online
database for subscribers, which includes league table information, recent
deal flow activity, and information on the biggest transactions in various
areas (M&A advisory, high-technology, energy, etc.). Unfortunately, an
annual subscription to this little gem costs a hefty $995, but full-text
articles from the print publication are available through Factiva, a comprehensive
online news database; if your business school library offers Factiva
access (and it’s worth checking into), you may want to take a look. If not,
Investment Dealers’ Digest occasionally offers trial subscriptions at little to no
cost. In all likelihood, you won’t ever be asked about a particular bank’s
league table standings, but it doesn’t hurt to develop a sense of who does
what on the Street.
5. Keep abreast of current events—those relating to the financial
markets and otherwise. Even if you’re not ordinarily a faithful Wall Street
Journal reader or subscriber, it may behoove you to become one, at least
during the recruiting season. The publication’s online edition is particularly
user-friendly and is available to students at a significant discount (as is the
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print version). The Financial Times (WSJ’s European equivalent) is another
excellent source of financial news and not surprisingly provides a more
pronounced international focus than the Wall Street Journal. At a minimum,
you should know the major developments and trends characterizing the
investment banking industry. In particular, the increasingly widespread
practice of “bundling” investment and commercial banking services and
the intense scrutiny over firms’ investment research franchises are two
trends you should feel comfortable discussing in an interview. Also, be sure
to have at least a general sense of movements in the major indices (investment
banking interviewers have been known to ask what the Dow closed
at the previous day) and the events that most directly affect the financial
markets.
6. Attend the on-campus information session. Trust us: The hour that
you spend at each firm’s on-campus meet-and-greet will be time well spent.
At the information session, the company will undoubtedly address the
topic of what sets it apart from its chief competitors—its competitors for
business and its competitors for talented people. Pay attention to what the
firm’s representatives stress as its key selling points: whether it’s the firm’s
untrammeled dominance of M&A activity, its unique rotation program for
incoming analysts or associates, or its unparalleled reputation as an employer
of choice. In addition, these information sessions provide an
opportunity for you to meet current analysts and associates and to hear
them answer the questions that you’ve been formulating throughout the
course of your research.
7. Take the time to speak with insiders! There’s really no substitute for
good old-fashioned informational networking (a process which should be
relatively easy for current MBA students, who have a considerable network
of b-school students, former analysts, summer associates, and alumni to
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consult). If you’re an undergrad with fewer industry contacts, check out
your career center’s alumni database for the names and contact details of
current firm employees (preferably within the division to which you’re
applying). At the very least, contact the individuals who represented their
firms at the on-campus information sessions (analysts and associates,
please—firms may send VPs and the occasional MD to information session,
but bankers at this level aren’t likely to return your call—remember
our discussion of the hierarchical structure earlier in the guide?). Not only
can these individuals generally answer your most pressing queries, they can
typically put you in touch with other people at the bank who can provide
you with a broader perspective on what it’s like to work there. Not only will
this help you learn about the specifics of each firm’s culture, but it will give
you some real-life insight into the life of an analyst or associate.
Make no mistake about it: Preparing for interviews is a time-intensive process.
If your schedule is already filled to capacity with academic and extracurricular
obligations, it’s particularly tempting to gloss over interview preparation in favor
of the more immediate demands on your time and attention. This is a dangerous
trap, and one that you should avoid at all costs. In this case, it’s better to
take a long-term view. As one recently hired insider advises, “Take a light
course load that semester if you can. The time you spend researching
companies and talking to insiders is time well spent, and definitely worth the
investment in the end.”
Five Things You Need to Know: Here's a TIP: Investors Are Banking on Inflation
Kevin Depew's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Here's a TIP: Investors Are Banking on Inflation
Caught the following headline on Bloomberg when we walked in this morning: "TIPS' Yields Show Fed Has Lost Control of Inflation."
The gist of the story is that the yield on the five-year Treasury Inflation-Protected Security TIPs) is negative for the first time ever, and has been trading that way since Feb. 29. The real yield is currently -.20%. Five-year TIPS are now yielding about 2% less than five-year Treasuries.
What does this mean? Does a negative yield mean a Treasury Inflation-Protected Securities holder has to pay to own the security? In a way, yes. It means if you buy TIPs here you are essentially paying the government to do so because the yield is less than the Treasury equivalent.
Now why would anyone do that? Because TIPs are designed to provide protection against inflation. Investors can still earn money from TIPS with sub-zero rates because the principal rises with the CPI. TIPs pay interest twice a year at a fixed rate and that rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
When TIPS mature an investor is paid the adjusted principal or original principal, whichever is greater. What the current negative yield situation means is that investors believe headline inflation is going to remain elevated and are willing to give up the real yield for the inflation-adjusted return of principal.
TIPS have returned 6.2% this year, compared with 3.7% from Treasuries, according to tracking indexes compiled by Merrill Lynch (MER).
On the one hand, buying TIPs here might seem a bit like fighting the Federal Reserve, though not in the way one might typically think of "fighting the Fed." The bet on TIPs would be that the U.S. central bank is sacrificing price stability for higher growth, allowing inflationary pressures to continue to build.
That's the conventional wisdom to be sure, and we disagree with it. It's true, the Fed is not fighting inflation; they're fighting deflation. TIPs holders better hope the Fed doesn't lose.
2. Barron's Joins the "Tinfoil Hat Club"
Last week when sitting around wearing my tinfoil hat and pondering the potential nationalization of Fannie Mae (FNM), little did I know I would soon be joined in the "tinfoil hat club" by Barron's. The weekly newspaper was out this weekend with a pretty wonky story on Fannie Mae ("Is Fannie Mae Toast?") and the possibility the mortgage giant may be "the next government bailout."
"Just maybe a bailout of Fannie, in effect a nationalization, would be a good thing," the article said. "A retooled Fannie could pursue its important social mission without the distraction of trying to please Wall Street. Of course, it's doubtful if this happens that the shareholders would be along for the ride."
It certainly appears at least some shareholders have reached that conclusion as well, which is really what prompted the Five Things piece on the nationalization of the GSE's in the first place. Fannie Mae and Freddie Mac (FRE) are down more than 40% since the beginning of the year.
As for nationalization being "a good thing"? Well, Barron's will have to remain in that particular club without us.
3. The Next Real Estate Bubble?
First residential real estate. Now, increasing signs of stress in commercial real estate. Next? Perhaps the farm. According to an interesting piece in the New York Times over the weekend ("A Global Need for Grain That Farms Can’t Fill"), the flood of money into American agriculture is leading to rising land values and a renewed sense of optimism in rural America.
A separate Associated Press story noted that farmland values rose 16% in parts of the upper Midwest, the largest increase in nearly 30 years. USDA officials found that the average value of an acre of Wisconsin farmland, about $2,250 in 2002, had jumped to $3,366 in 2006.
4. Apparently, We Aren't Going to Just Sit Home Twiddling Our Thumbs Every Day
Amusement park operator Six Flags (SIX) may not be the most important stock in the universe at around a buck 65 a share, but we took a listen to their conference call this morning mainly because we were interested in their take on a consumer recession and what that means for discretionary entertainment dollars.
Mark Shapiro, Chief Executive Officer noted the headwinds right off the bat: "From October 15th to the end of 2007 the stock market was down 15%, driven by the credit crunch, driven by the housing bubble, driven by oil prices, driven by a retail sector that was down really across the board from a Christmas shopping standpoint, just overall it's the same climate
that we're experiencing right now," he said.
True enough. But what caught our ear was the inventiveness in Shapiro's pitch that Six Flags is somewhat recessionary proof. Despite the economic headwinds, what ends up happening historically is the long-distance vacation, the big-ticket items are what get sacrificed, Shapiro said. The short, close to home and affordable vacations usually historically ramp up.
"We just believe that people are not going to stay in their house every single day just twiddling their thumbs," he said. "Recent results from BJ's (BJS) and Costco (COST) indicate the consumers are essentially trading down for specialty stores, they're trading down from department stores, they're looking for lower price alternatives and we believe Six Flags is such that it is exactly a low-priced alternative."
Fair enough. So does that mean the company gets hammered when the economy improves and people can afford to vacation again?
5. Anti-Consumption Sentiment Turns Against the "Good Consumers"
Ran across a fascinating piece in the Washington Post that merges neatly with our thesis that as social mood darkens, consumption will increasingly be targeted as a societal evil. What was unexpected, however, was that the target in this anti-consumption piece wasn't the Neiman Marcus set, but "good consumers."
"Let us buy Anna Sova Luxury Organics Turkish towels, 900 grams per square meter, $58 apiece. Let us buy the eco-friendly 600-thread-count bed sheets, milled in Switzerland with U.S. cotton, $570 for queen-size.
Let us purge our closets of those sinful synthetics, purify ourselves in the flame of the soy candle at the altar of the immaculate Earth Weave rug, and let us buy, buy, buy until we are whipped into a beatific froth of free-range fulfillment.
And let us never consider the other organic option -- not buying -- because the new green consumer wants to consume, to be more celadon than emerald, in the right color family but muted, without all the hand-me-down baby clothes and out-of-date carpet."
The aggressive cynicism in the first three paragraphs is also a bit surprising. There's no attempt to gently persuade going on here. The commentary is forthright and harsh:
"Consuming until you're squeaky green. It feels so good. It looks so good. It feels so good to look so good, which is why conspicuousness is key."
It speaks to the magnitude of the shift in social mood that we may be seeing.
http://www.minyanville.com/
1. Here's a TIP: Investors Are Banking on Inflation
The gist of the story is that the yield on the five-year Treasury Inflation-Protected Security TIPs) is negative for the first time ever, and has been trading that way since Feb. 29. The real yield is currently -.20%. Five-year TIPS are now yielding about 2% less than five-year Treasuries.
What does this mean? Does a negative yield mean a Treasury Inflation-Protected Securities holder has to pay to own the security? In a way, yes. It means if you buy TIPs here you are essentially paying the government to do so because the yield is less than the Treasury equivalent.
Now why would anyone do that? Because TIPs are designed to provide protection against inflation. Investors can still earn money from TIPS with sub-zero rates because the principal rises with the CPI. TIPs pay interest twice a year at a fixed rate and that rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
When TIPS mature an investor is paid the adjusted principal or original principal, whichever is greater. What the current negative yield situation means is that investors believe headline inflation is going to remain elevated and are willing to give up the real yield for the inflation-adjusted return of principal.
TIPS have returned 6.2% this year, compared with 3.7% from Treasuries, according to tracking indexes compiled by Merrill Lynch (MER).
On the one hand, buying TIPs here might seem a bit like fighting the Federal Reserve, though not in the way one might typically think of "fighting the Fed." The bet on TIPs would be that the U.S. central bank is sacrificing price stability for higher growth, allowing inflationary pressures to continue to build.
That's the conventional wisdom to be sure, and we disagree with it. It's true, the Fed is not fighting inflation; they're fighting deflation. TIPs holders better hope the Fed doesn't lose.
2. Barron's Joins the "Tinfoil Hat Club"
"Just maybe a bailout of Fannie, in effect a nationalization, would be a good thing," the article said. "A retooled Fannie could pursue its important social mission without the distraction of trying to please Wall Street. Of course, it's doubtful if this happens that the shareholders would be along for the ride."
It certainly appears at least some shareholders have reached that conclusion as well, which is really what prompted the Five Things piece on the nationalization of the GSE's in the first place. Fannie Mae and Freddie Mac (FRE) are down more than 40% since the beginning of the year.
As for nationalization being "a good thing"? Well, Barron's will have to remain in that particular club without us.
3. The Next Real Estate Bubble?
A separate Associated Press story noted that farmland values rose 16% in parts of the upper Midwest, the largest increase in nearly 30 years. USDA officials found that the average value of an acre of Wisconsin farmland, about $2,250 in 2002, had jumped to $3,366 in 2006.
4. Apparently, We Aren't Going to Just Sit Home Twiddling Our Thumbs Every Day
Amusement park operator Six Flags (SIX) may not be the most important stock in the universe at around a buck 65 a share, but we took a listen to their conference call this morning mainly because we were interested in their take on a consumer recession and what that means for discretionary entertainment dollars.
Mark Shapiro, Chief Executive Officer noted the headwinds right off the bat: "From October 15th to the end of 2007 the stock market was down 15%, driven by the credit crunch, driven by the housing bubble, driven by oil prices, driven by a retail sector that was down really across the board from a Christmas shopping standpoint, just overall it's the same climate
that we're experiencing right now," he said.
True enough. But what caught our ear was the inventiveness in Shapiro's pitch that Six Flags is somewhat recessionary proof. Despite the economic headwinds, what ends up happening historically is the long-distance vacation, the big-ticket items are what get sacrificed, Shapiro said. The short, close to home and affordable vacations usually historically ramp up.
"We just believe that people are not going to stay in their house every single day just twiddling their thumbs," he said. "Recent results from BJ's (BJS) and Costco (COST) indicate the consumers are essentially trading down for specialty stores, they're trading down from department stores, they're looking for lower price alternatives and we believe Six Flags is such that it is exactly a low-priced alternative."
Fair enough. So does that mean the company gets hammered when the economy improves and people can afford to vacation again?
5. Anti-Consumption Sentiment Turns Against the "Good Consumers"
"Let us buy Anna Sova Luxury Organics Turkish towels, 900 grams per square meter, $58 apiece. Let us buy the eco-friendly 600-thread-count bed sheets, milled in Switzerland with U.S. cotton, $570 for queen-size.
Let us purge our closets of those sinful synthetics, purify ourselves in the flame of the soy candle at the altar of the immaculate Earth Weave rug, and let us buy, buy, buy until we are whipped into a beatific froth of free-range fulfillment.
And let us never consider the other organic option -- not buying -- because the new green consumer wants to consume, to be more celadon than emerald, in the right color family but muted, without all the hand-me-down baby clothes and out-of-date carpet."
The aggressive cynicism in the first three paragraphs is also a bit surprising. There's no attempt to gently persuade going on here. The commentary is forthright and harsh:
"Consuming until you're squeaky green. It feels so good. It looks so good. It feels so good to look so good, which is why conspicuousness is key."
It speaks to the magnitude of the shift in social mood that we may be seeing.
http://www.minyanville.com/
Tuesday, 5 June 2012
Online Banking
List of Internet Banking Articles, Tips, and Advice for Freelancers
The eventual movement towards online banking was done in the last 10 years due to the need of customers to perform transactions in a safe and quick manner. Online banking or also Internet banking as it’s often referred to allow customers to conduct financial transactions on a secure website operated by the primary branch of a bank. Easy and quick transactions are very important traits to those professionals in the freelancing world.
The following list of links focuses on all of the aspects of online banking from a basic description to security issues:
PC World Online Banking Article
This PC World article explores the risks of online banking and necessary precautions to protect accounts and personal information.
Digital Trends Online Banking Article
This article offers reasons to use online banking as an alternative to the traditional way of banking from the author.
Wikipedia Online Banking Article
This Wikipedia article offers a good general description of online banking with a variety of related links at the bottom of the webpage.
Microsoft Online Banking Article
This 8 page article from Microsoft examines online banking for the small business owner.
Online Banking Report Subscription
This site offers a subscription of online banking updates with a basic subscription rate of $1195 for a single user (1 year) and higher from there.
Online Banking Lesson
This link offers an online lesson to follow that explains what online banking is and reviews the pros and cons of online banking versus traditional banking.
Two-Part Online Banking Article
This link examines the demographics in two parts on online banking in the United States
Bank of America
This link offers a wide variety of online banking articles developed by Bank of America.
Safe Online Banking Article
This article discusses the safe way to do online banking around the net.
Informedbanking.com Articles
Informed Banking includes online banking and finance topics, banking software and bank technology reviews, as well as accounting software reviews.
MSN Money - Online Banking Article
This MSN – Money article discusses the features to look for in online banking, and the top 10 online banking sites.
Online Banking Reviews
The Star Reviews site does the work, and enables the freelancer to easily compare the best online banks.
About.com on Online Banking
This About.com guide focuses on online banking, with a variety of other article links throughout the webpage.
Allbusiness.com - Online Banking Articles
This link offers a wide variety of related online banking articles throughout its main web page.
The Advantages and Disadvantages of Online Banking:
The advantages and disadvantages of online banking are both persuasive, and many people nowadays use a hybrid of both internet banking and a physical banking account with a local bank. While online banking doesn't seem as tangible as withdrawing and depositing your cold hard cash, you can do almost anything with online banking that you did at your bank branch.Save Time and Money
Arguably one of the biggest advantages of online banking is saving time and money. When you use online banking, you can check your account, schedule bill payments and manage deposits with a few clicks of the mouse. Even better, you have control of your money 24/7; not on a 9-to-5 physical banking schedule at some place across town.
No more phone calls or trips to the ATM to check your balance; no more fussing around with paper bills, losing one and having to go search for it, and missing a payment; and no more wondering whether cousin Sally has cashed her birthday check, or waiting until your paper statement arrives in the mail to find out.
Online Bill Pay
Most internet banking institutions give you the option of setting up online bill pay. By using online bill pay, you can either choose to make a one-time payment on your bills, or you can set up recurring bill payments for monthly bills, such as an auto loan, car insurance or your mortgage. This advantage of online banking is invaluable since you can set up payments anytime and know exactly when the payment is credited.
No more putting a bill in the mail and receiving a notice the next month that the check arrived late, or that the recipient didn't get around to processing it until after your deadline. Online bill pay also saves you the worry of losing a bill; manage your bills electronically, and you never have to worry about a missing piece of paper.
Interest-Earning Accounts
It's common knowledge that online savings accounts typically earn a better interest rate than the savings accounts at a bricks-and-mortar bank, but you might not realize that some internet banking institutions also offer interest-earning checking accounts. Internet banking interest rates for checking accounts range from 0.5% to 3.40% annually. These rates rival the interest rate you'd get for a savings account at any traditional banking institution, and you're unlikely to find an interest-bearing checking account at a regular bank, either.
Funny Money
While internet banking makes it easier for you to manage your money, it might make it easier to forget to check how much you have so you can budget. Online banking is a lot like using a credit card-the easy access makes it easier to spend without thinking about why you are spending. You can set up e-mail alerts to let you know how when your account dips below a certain number, but nothing beats looking at it yourself and keeping your checkbook balanced.
Also, when you get a credit-card statement in the mail and open it on a monthly basis, you are instantly reminded to check if any strange charges appear on your account. It's easier to forget to keep track of such information online, and you'll need to have good money management habits.
Security
Hackers can break into nearly any computer system, so how can you be sure they won't break into your bank's system? You can't, but any online bank site you consider should have statements on the type of security they use. You should also e-mail the bank or head to the bank branch to find out exactly what would happen if there were a security breach and press the point or go to another bank if the answer is vague. In general, you should think of your money as being as safe online as it would be in a vault, but it is your responsibility to find out just how secure the bank is, if it is FDIC-insured and if they keep their security systems up-to-date. Finally, you should also make sure that you use security software on your personal computer to reduce the chance that anyone can get your personal data.
You Might Miss That Physical Location
While online banking has many advantages, one of the biggest disadvantages is the absence of a physical location. Being able to make deposits to a physical bank account assures peace of mind; you don't have to wonder if your check is lost in the mail or when it's going to be credited to your account.
You might also want that physical location for other reasons. Finances are complicated enough, and it's not a stretch to think that you might have a question about a transaction or fee someday. One of the disadvantages of online banking is that you can't speak to a customer service representative in person; you must either send an e-mail or call a number and wait for your call to be answered. If it's a sensitive question or if you are dealing with a mistake on your statement, you might get an answer faster if you go to a bank branch.
Internet Banking That Makes Sense: The Hybrid Approach
While an increasing number of companies have gone electronic, giving you the option of checking statements and paying online, some occasions even today simply require doing business on paper. Some companies aren't set up for online banking, so you'll need paper checks for those businesses. If you rent an apartment, your landlord probably isn't equipped to receive payments electronically, so you'll need a check to pay rent. While it's convenient to be able to use electronic bill pay, you're going to need to use a paper check at some point.
Deposits constitute another disadvantage of online banking. If you use a bank that doesn't have a physical location, you'll have to mail your deposits to your online bank. In these cases, you may be waiting a week or two for your deposit to be received and processed, and that's time in which you can't access that money. Sometimes things are lost in the mail, so the security of making a deposit by mail is questionable. Many people who use banks that exist solely online keep a second banking account at a nearby physical bank to make deposits and then transfer them electronically to their internet banking institution.
Even if you're inclined to rely solely on internet banking, the disadvantages of online banking are strong enough to make it prudent to keep a second banking account at a physical bank. Finding a physical bank that offers online banking provides the best of both worlds, giving you a location for fast and easy deposits, but the freedom to access your money anytime.
