Career Journal: M.B.A.s Veer Off Path to Big Finance Jobs
By Dana Mattioli
1312 words
18 November 2008
The Wall Street JournalD4
English
(Copyright (c) 2008, Dow Jones & Company, Inc.)
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As recruiting season begins on business-school campuses, the collapse of major banks on Wall Street has many soon-to-graduate M.B.A.s rethinking their post-graduate paths. That's especially true for students who had set their sights on a career in investment banking.
A large percentage of business-school grads head to financial careers. At schools like New York University's Stern School of Business and University of Pennsylvania's Wharton School, nearly 50% of graduates head for finance careers, with a good number of them expecting to end up at large investment banks or financial-services firms. Now, students who may have otherwise settled for nothing less than big-name investment banks are seeking smaller, boutique and middle-market investment firms that may offer more job stability. And some students, unwilling to ride out the storm, are giving up or delaying their investment-banking dreams to pursue different careers entirely.
Immediately following the
Lehman Brothers collapse and news that
Merrill Lynch would be acquired, students at Northwestern University's Kellogg School of Management began re-evaluating their plans, says Roxanne Hori, assistant dean and director of the career management center at Northwestern University's Kellogg School of Management. She says several major investment banks that have recruited on campus during the normal October and November recruiting season in previous years have dropped out completely this year, including
Morgan Stanley and
Credit Suisse Group. Others, like
Citigroup, which recently revealed plans to cut its work force by more than 20,000, have scaled back.
For those whose career paths have been turned upside down, directors of career services at M.B.A. programs say that consulting, private equity and corporate finance positions within traditional manufacturing or technology companies are popular alternative avenues for students who previously planned on pursuing investment banking. "Consulting has been popular on campus this year from the company side and student side," says Pamela Mittman, assistant dean of career services and student activities at NYU's Stern School.
Maryellen Lamb, senior associate director of the University of Pennsylvania's Wharton School, says more finance-oriented M.B.A. students are focusing on function rather than industry. "I've seen a number of students saying to me 'I really want to work in finance but I don't know if I have the stomach for banking, what else can I do?'"
Linkun Li, a second-year M.B.A. student at the University of Connecticut School of Business, recently changed his focus to corporate finance and risk management from investment banking. The 30-year-old said recent market events made him change his career path. "The traditional investment-banking industry was basically wiped out with bankruptcies and mergers, and that posed concerns for me," he says. He plans to pursue these alternate paths for a few years and then try to return to investment banking once the market stabilizes.
Students who are willing to switch focus are a boon to recruiters like Brian Thomson, senior manager of university recruiting for Philips Electronics North America, who have had to compete with investment banks for candidates in previous years. He has seen a dramatic increase in interest from M.B.A. students for jobs in their finance department this year, and in some cases Philips has been the most popular company at M.B.A. information sessions.
In years past Mr. Thomson says it was sometimes a struggle to fill the eight to 10 interview slots he had set for campus visits. But on a recent trip to Kellogg he says his biggest challenge was determining which of the 60 applicants to interview. "There's a big increase in the caliber of the finance students we're seeing this year," he says, adding that the company plans on hiring more M.B.A. students than in previous years. "One door closed . . . [and] now we have all of these students who are essentially free agents."
Consumer-products company Unilever U.S. has also experienced a higher number of applicants at the M.B.A.-level who say they're interested in working in the company's finance department. "We're interviewing people and hearing that they've interned with investment banks and either didn't get an offer, or received an offer and are reluctant to go that path," says Christine Eggensperger, university relations manager for
Unilever. She says the increase means a wider range of talent to choose from.
The surge in interest has the attention of Julie Coffman, head of recruiting in North America for
Bain & Co., a consulting firm, for different reasons. She says applications at the M.B.A. level have increased 10% to 15%. But, she says, that increase is pushing the company to do a better job vetting in order to determine the motives of applicants.
When talking to the newly interested, she makes sure they're "interested in Bain because of what we offer, not just because other avenues have closed," she says. "We don't want folks to wait out the storm for 12 to 18 months on our watch."
For those still bent on banking, turning to middle-market and small firms will give them "the option to engage in the same sort of activity for a few years, even if these firms don't carry the cachet of some of the Wall Street firms," says Richard Coughlan, senior associate dean and director of the University of Richmond's Robins School of Business. The deals they work on will be smaller or more regional, "but the actual experience [they] gain has similarities to what [they] gain at a bigger bank," he says.
Grant Garcia, a student at the school, says last December he went through recruiting for a summer position on Wall Street, at firms that no longer exist or have merged. Alumni at big New York banks have advised him to ride out the bear market by getting as much regional experience as possible, and to look back to New York in a few years. He's taking their advice and concentrating on smaller banks to find work.
Mr. Garcia and others pursuing this path will find that boutique firms and smaller banks hire only a handful of M.B.A.s each year, compared with the hundreds a big investment bank typically hires. And the influx of interested M.B.A.s is allowing the smaller concerns to be choosier.
Still, smaller investment banks say they are benefiting from a larger talent pool to choose from for positions to open next summer and fall. Peter Kies, head of the investment bank recruiting committee at
Robert W. Baird & Co., a middle-market investment bank in Milwaukee, says there has been a 50% increase in interest at the M.B.A. level over last year. Mr. Kies also says that the bank is appealing to students on a national level rather than just at business schools from the Midwest and East Coast.
"We're sort of like kids in a candy store right now in terms of tracking high-quality folks," he says.
Harris Williams & Co., a middle-market M&A investment bank in Richmond, Va., and with locations in Boston, Philadelphia and San Francisco, has seen a 30% to 35% increase in applications from M.B.A. students since last year.
Stevie McFadden, recruiting director or Harris Williams & Co., says this year's class is a much more discerning group with a long-term view. "We're receiving a lot of questions about stability and what we predict our performance will be this year and next year," she says. But "we're in a position to be more selective."
