According to new data, business school grads are not heading straight for Wall Street as they once did. Hmm, I wonder if it has anything to do with what has happened to Wall Street over the last four years?
Huge job cuts, the financial crisis and that pesky little protest have definitely contributed to the steady decline in the number of MBA graduates taking jobs at investment banks. “The number of students going into financial services has remained steady but what’s changed has been the types of roles,” said Maryellen Lamb, director of MBA career management at Wharton. Wharton, dubbed the “conveyor belt of Wall Street,” has seen a major plunge in grads heading to Wall Street since 2008. Harvard has too with the proportion of MBA graduates this year moving into investment banking falling from 10% to 7%. There have been Occupy Wall Street protests at bank recruiting events on bschool campuses. That is a tough way to get people to want to come to Wall Street.
Compensation is also another major factor. Pay packages are still good, but they are not what they once were. According to CNBC, MBA graduates typically earn about $90,000-$100,000 in salary with a similar proportion of bonus on top and now they are being offered more like $60,000 to $70,000 in their first year. Goldman Sachs just retired its two year analyst program, which guaranteed a bonus and job security. According to a recent survey from Capstone, 67% of the 2,000 associates and vice presidents on Wall Street interviewed, said did not feel they are being compensated the correct amount for the sacrifices they are making, such as 100-hour work weeks, canceled vacations, etc. One investment banker who participated in the survey described a breach of the “tacit understanding” that he or she would be well compensated. “This business has to be more rewarding,” the person said, according to Capstone. “It’s been a rough couple of years for them,” Rik Kopelan, managing partner at Capstone. “Fewer and fewer plan on making it a career, because they’re working these long hours and not getting paid as well as they were.”
So where are all these business school grads going? Well some are going to hedge funds and to work in private equity but many are becoming entrepreneurs. Though you don’t need an MBA to start a company, it can’t hurt you. Business schools provide a literal sandbox of potential collaborators.