Why investment bankers should invest time in LinkedIn

Why investment bankers should invest time in LinkedIn

Investment bankers have traditionally been wary of LinkedIn and other social media networks, but now that’s a thing of the past. With big firms caring more and more about online presence, and networking increasingly taking place online, investment bankers can’t afford not to be on LinkedIn anymore.

Consider this example. Do you think it’s possible for an investment banker to:

  1. Break into an emerging international market with absolutely no regional business ties?
  2. Transition from a career in law to finance?
  3. Do all of this in a foreign country, where they don’t know the language?

No? Recently, one lawyer-turned-banker did just that, and when asked how he contacted firms in order to make the transition possible, he responded:

“I used LinkedIn extensively and even went through their paid options (InMail, etc.) so that I could contact people directly. I would search for terms like ‘China private equity’ and ‘China investment banking’ and also look up fellow expats who had indicated they were from my country but were now in China doing business. I got around a 30% response rate from the messages I sent there.”

All that through LinkedIn? Absolutely, and this is not even a rare example.

LinkedIn is full of opportunities, even in the traditionally social media-adverse fields of of investment banking and private equity. There are no limits to its creative possibilities, which go far beyond a digital resume. For the investment banker, LinkedIn enables speedy networking forward-thinking self marketing.

Here are three reasons why every investment banker, from first-year analyst to top-tier managing director, should invest their precious time on LinkedIn.

The Hunter Becomes the Hunted: Job Opportunities Abound

Last year, 73% of 18-34-year-olds found their last job over a social network. While that number may seem high, it makes sense knowing that 94% of recruiters are using LinkedIn to source candidates. It’s a good thing social media is turning into the most prolific recruitment tool because bulge bracket banks are inundated with resumes from traditional applications.

Take Goldman Sachs, for example. According to CEO Lloyd Blankfein, “Almost 300,000 individuals applied for full-time positions at Goldman Sachs for 2010 and 2011. We hired fewer than 4% of that population.” In that time, they’ve ramped up their LinkedIn page into one of the most active online communities in the business, and their careers section is the fastest and most direct place to learn about openings. You can’t afford not to be on there.

With competition increasing, a LinkedIn presence is paramount, especially for those trying to get their foot in the door of a big firm.

While creating a robust profile may seem time consuming for the 90-hour work week banker, once you’ve crafted your profile it takes very little effort to maintain. Simply showcasing your past employment, major accomplishments, awards and academic achievements allows recruiters and employers to find you. To optimize your profile even further, add industry keywords. These enhance your traceability within LinkedIn’s search engine. The banker mentioned above stressed that part of his success was due the keywords in his profile, like “M&A” and “cross-border transactions,” amongst others words chosen to attract the firms and positions he wanted.

You Have a New Connection: The New Networking

Networking has gone digital. A 2012 LinkedIn survey found that 66% of High Value Investors use LinkedIn to network for jobs and 34% use it to research and develop business ventures. There are over 1000 LinkedIn groups catering specifically towards investment bankers and myriad other niche groups that range from current events to job postings to alumni associations to regional communities.

In many cases, when you join a group, thought leaders and experts who are out of your professional network become accessible via InMail (LinkedIn’s private messaging function).

But it’s not just a matter of adding as many contacts as possible and liking their posts. On LinkedIn, you still have to network the right way.

One sage piece of advice comes from Moorad Choudhry, the former Head of Business Treasury, Global Banking and Markets at Royal Bank of Scotland. He says, “Networking is not calling someone when you need help. I never accept LinkedIn requests from people who don’t bother to write a personal message. If someone gets in touch because they knew me years ago or they’ve read my book and have a comment, then that’s fine, but make an effort to write a personal greeting!”

While networking may now include liking, sharing, and pressing the connect button, developing trust is still necessary to build and develop relationships. LinkedIn just makes it a lot easier.

Establishing Street Cred: Posting to Create Trust and Credibility

While you would be wise to save the pictures of your last martini party for your private Facebook account, establishing a professional commentary and posting relevant content on LinkedIn serves to increase your credibility.

Urs Haeusler, CEO at DealMarket, hits the nail on the head when he asks, “Who would you trust: The investor who is open on social media and discusses the industry, or the one with a five page website that won’t discuss what they do?”

Social media, especially LinkedIn, now materially impacts the finance community and its players. A study from the Brunswisk group surveyed 500 institutional investors and sell-side analysts. They found that ~30% had followed up on investments identified on social media and nearly 70% believed social media’s influence for investment decisions would increase in the future.

For any mistrust harbored against the finance community, sharing knowledge on LinkedIn increases trust in the individuals who are doing the sharing. LinkedIn’s study on High Value Investors found that “Ultra Affluent [high value investors] are 37% more likely to trust information from their LinkedIn network and 157% more likely to trust articles that are shared on LinkedIn.” While investment bankers may be reluctant to say too much publicly because of their firm’s code of conduct and confidentiality requirements, sharing articles or thoughts on industry news helps solidify one’s public professional reputation.

While you should be aware of the US Federal Trade Commission’s social media disclosure rules – which in a nut shell stipulate that you must not disclose any privileged information within a post – and abide by your firm’s code of conduct, the benefits of sharing your expertise publicly outweigh the cons and prove to be an integral strategy for forward looking organizations.

The Time to Press Connect is Now

LinkedIn’s average individual user isn’t an intern looking to earn some chops, but a seasoned executive who brings home a salary of $150 000+ and holds a graduate level education. It’s no surprise that at this point LinkedIn’s potential for opportunity is bordering on limitless. It’s high time investment bankers got in on the goods. Who knows? You could end up overseas, learn Mandarin, or right at home at your dream firm.