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Despite my claims that “we never read cover letters,” some readers have pointed out that almost all banks require them. And some places might even pay attention to them.I’ve seen lots of cover letters lately – and nearly all of them suffer from the same problems.
Here’s how to avoid these common mistakes and how to structure your cover letters properly, so you can avoid looking like The Joker.
Let’s Set the Record Straight: Who Actually Reads Them?
In 99% of cases, only small boutiques (or small private equity firms) actually care about cover letters.
Big banks don’t have the time to go through stacks of cover letters. Remember the 30-second rule: if only 30 seconds are spent reviewing your resume and making a yes/no decision, you can imagine how much time is spent on the cover letter.
Small places care more because:
- “Fit” is extremely important when there are only 4 people in the office; and
- They actually have time to read cover letters (occasionally).
The True Purpose of Cover Letters
Cover letters are similar to GPA / test scores: a great one doesn’t help you much, but a poor one can kill your chances if someone happens to notice it.
And there are a few mistakes that come up repeatedly – no matter who you are or what you’re applying to.
Mistake #1: Writing a Life Story, Not a Cover Letter
I’ve seen some really long cover letters before. Keep it to 1 page – 500 words or less – and ideally 300 words or less.
Yes, I’m sure you have a very interesting life story about how you were abandoned by your parents and raised by wolves on the outskirts of a tribal village, but please don’t tell me any of this.
Get to the point – who you are, what you’ve done, and why we should pay attention to you.
Mistake #2: Telling Me Your favourite Book is Monkey Business
Microsoft Certified in Excel? Extra in American Psycho? Know the bank’s market share in Mongolian M&A deals?
Great, but don’t waste my time with this trivia. All I care about is whether you can do the work.
If you have a relevant skill, such as fluency in another language, that’s ok to bring up. But almost every other Skill/Activity/Interest is pointless.
Mistake #3: Writing The Sound and the Fury, Not a Cover Letter
Logic is key when you’re selling someone on yourself – and that’s what a cover letter does.
So don’t write a letter using stream of consciousness.
An amazing number of cover letters skip around and don’t present the applicant’s background coherently.
Just like any other type of writing, you need an introduction, a body, and a conclusion.
The Ideal Cover Letter
So how do you actually write a solid cover letter?
Follow the tips below, and then copy the investment banking cover letter template once you’ve figured out what you’re going to say.
The Information at the Top
Nothing too fancy here. Your name and contact information could go on the right side, and the recruiter’s / firm’s name and contact information could go on the left.
If you don’t have a name, don’t panic – just use the company name and address instead. Yes, it’s better to have a real name and send it to a real person, but it’s not a deal-breaker.
Similarly, “Dear so-and-so” works better if the “so-and-so” is someone’s name but if you don’t have it, “Dear Sir or Madam” is acceptable.
Paragraph 1: Introduction
Here’s where you say who you are and how you learned of the opportunity – from networking, from an event, from a friend or however else you found out. Then you say what attracts you to the company and the specific position.
Keep this short – 2 to 3 sentences is best.
Paragraph 2: Your Background
This is usually your longest paragraph. Start out by writing what you’re currently doing, and then give the relevant internships/jobs you’ve had. Focus on useful skills (e.g. financial analysis) and whatever you did that’s applicable to banking, trading, or whatever you’re applying for.
A reverse chronological structure works well because most of the time, your most relevant experience will also be the most recent.
I would use no more than 5 sentences for this one. Paragraph 3: Why You’re a Good Fit
This is a shorter paragraph. You should explain why your skills / experiences match whatever you’re applying for and re-iterate what makes you interested
If you have anything unique (for example, you’re applying to a middle-market private equity firm after having run your own middle-market company), you may also want to mention it here as another selling point.
Paragraph 4: Conclusion
Remind them that your resume is enclosed, give your contact information and say that you look forward to hearing from them soon. Keep this to a few short sentences.
Sometimes this exact structure doesn’t work – if you’ve had more extensive experience (i.e. you’re not just out of undergraduate or business school) or have unusual circumstances, you may want to write something slightly different.
Let’s say you’re applying to investment management firms in China and you grew up there, having moved abroad when you were 10 – in that case you probably want to use 1 paragraph for your “finance experience” and another paragraph for your “China experience” rather than just writing 1 “background” paragraph.
No matter what your background, though, keep your cover letter brief, logical and relevant.
Otherwise you look like a fool.
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