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| Almost a third of Tuck's grads went into finance |
Take a peek at the latest
statistics. At many business schools,
they're out and available. MBA graduates from the Class of 2013 have launched
their post-business-school careers, and they haven’t avoided financial services
as much as the popular impression suggests.
True, countless thousands who've
entered and finished graduate business school since the worst days of the
crisis opted not to pursue banking, trading and investment management or other
financial-services paths. The industry has endured transformation of all
kinds (regulation, business restrictions, non-stop restructuring, and souring
popular sentiment). And it’s true, too,
the industry had become a turn-off to some smart students who in years past
would have pursued investment banking without a thought.
In current times, the rewards,
comforts and predictable career paths in finance are still uncertain. Don't forget, too, the knocks
on jobs and roles that had once been perceived as prestigious and awe-inspiring on the cocktail circuit. Many MBA students at top schools, so goes popular
sentiment, will likely prefer more humane, more constructive routes in a long
business career.
But the statistics are out for
recent business-school classes, and they suggest MBA students continue to flock
to certain areas in financial services. Finance
will still attract those who are inherently interested in finance, those who
have finance in their bones, so to speak.
Perhaps the numbers are not
surging as much as they were pre-2007, but they aren't insignificant. Or perhaps
banks, investment managers, and trading firms are doubling down to make special efforts to present
themselves more fashionably to students, describing career opportunities better, and promising easier lives on the work-life-balance front.
However, perhaps the industry is
more defined, better understood after all the years of restructuring and
gearing up for an environment ensconced in new regulation. Of course, some hard-core students,
fascinated by markets, deals, transactions, and cash flows, will head toward
finance despite what they hear, see or are told.
Compensation helps, too. It continues to be one attraction. Data and anecdotal evidence suggest financial
institutions still pay well, even if the industry pulled back and rationalized
(and reduced) compensation after the mid-2000’s splurge.
Let’s take a look at Dartmouth-Tuck,
a Consortium school. Its career-advisory unit recently shared data for the most
recent graduating class after it received a sufficient number of responses from
departing students. Tuck is a good example, because it has an outstanding
history preparing graduates for Wall Street, has attracted large numbers
interested in finance since its early days, and has a reputable finance division.
The Tuck data indicate consulting is
the hot spot these days. MBA graduates
are flocking to what is referred in campus jargon as "MBB"--McKinsey,
Bain and Booz. In Tuck's Class of 2013, consulting firms hired 27% of the class
(and offered the highest amounts in compensation). In all, 33% are working in consulting roles,
including those working at non-consulting firms or working in the consulting arms of the big accounting firms (Ernst and Deloitte, e.g.)
For some MBA students, consulting
offers an experience, similar to what they might have received at an investment
bank. They get to do extensive research and analysis. They get to study corporate strategy and make recommendations regarding growth, expansion, and acquisition. They participate in “live
transactions” and prepare exhaustive presentations for clients. They travel around the country.
They also get
to have meaningful contact with clients and sit in meetings with clients' senior managers.
Some become experts in the industries of their clients. Hence, while
consulting has always been a favorite first job for MBA students, consulting might be
swiping a handful of those who a decade ago would have marched right into
Goldman Sachs or Morgan Stanley (or Lehman Brothers, back then) at the first whiff of interest on the banks' part.
Yet the numbers going into
finance haven’t dwindled that much. MBA graduates at top finance business
schools like Tuck (and arguably NYU-Stern, Michigan-Ross, Virginia-Darden, all Consortium
schools) are finding their ways back to Wall Street, but perhaps in a variety of roles. About 30% of the Tuck Class of ’13 headed to
financial institutions, and about 35% are working in finance functions. In
investment banking, 14% of the class went to work there; 11% are working in
classic investment-banking functions (equity or debt underwriting, M&A,
client advisory, etc.)—numbers that don’t suggest a lack of interest in this generation of students.
Tuck’s statistics, nonetheless,
show a dearth of classmates headed into private equity and venture
capital (only 2%). The small percentage
stands out because many go to business school with expressed interests (and great enthusiasm) about private
equity and venture capital. The numbers might reflect the scarcity of
opportunity in such a fiercely competitive segment and the unorthodox
ways some of these firms recruit.
(Blackstone and Carlyle may recruit at top business schools across the
country, but Silicon Valley venture-capital firms may recruit informally or
prefer to recruit only from across the street at Stanford).
The latest statistics may also
reflect the lack of opportunities on trading desks at big banks, which have had
to scale back because of new regulation. MBA graduates interested sales and trading
nowadays don’t have the chance to work in structured career pathways at a
Credit Suisse or JPMorgan and will likely look for opportunities, if they
exist, at hedge funds, many of which struggled last year and may not be swarming business schools this year. Some students interested in sales and trading can seek
similar opportunities at investment managers (Blackrock, e.g.).
Tuck’s statistics show first-year
compensation in finance hasn’t fallen into a sinkhole. But the range is
as wide as ever, partly because the impressive, mind-shaking salaries and
bonuses have been paid out primarily at the bulge-bracket and boutique
banks in financial centers (New York, Chicago, San Francisco), and not always
at the smaller, regional institutions.
Still, in a post-crisis era,
compensation doesn’t seem to always drive MBA graduates’ career decisions. Indeed these are different times. MBA graduates know the time they spend at Bank of America, Aetna, or UBS right out of school won't last decades. Furthermore, they seek flexibility and a life on weekends or seek some comfort
that when the next crisis occurs, they won’t appear on a bank’s
long reduction-in-force list.
Tracy Williams
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