Thursday, February 18, 2010

CFN: What are People Doing Post-Crisis?

With the financial debacle of 2007-09 slowly, slowly receding, did those interested in or working in finance take detours elsewhere? Did they shift from one sector of finance to another? Did they take positions in government and not-for-profit enterprises? Did they start their own businesses, consulting firms, or investment funds? Did they withdraw from this world altogether?

The financial crisis forced many to take seismic shifts in their careers. Some went back to school. Others left finance altogether and took on second careers in an entirely different endeavor. Many were fortunate to stay in finance by remaining in the same position. Or they moved from one financial arena to another--by going to another institution or by assuming a different task (say, moving from banking to corporate treasury, or moving from fixed-income sales to cash management, or moving from equity trading to retail banking).

An unscientific overview of the Consortium Finance Network (CFN) shows members tended to remain in the field. They continued to have keen interests in finance. For the most part, CFN members, now 350 in number, prepared for long careers in finance in school and continue to work in or pursue financial positions.

CFN today includes large numbers of current MBA students at Consortium schools and Consortium alumni from around the country. Alumni work in a wide distribution of positions. CFN also includes sponsors, friends, and others interested in finance (and interested in the overall Consortium mission). It includes MBA graduates from Consortium schools, who may not have been Consortium students, or MBA graduates from non-Consortium schools.

CFN alumni members are involved in almost every aspect of finance. They work for large, known financial institutions (BoA, Morgan Stanley, Citi, UBS, RBS, Goldman Sachs, etc.). They work for corporations, community banks, insurance companies, accounting firms, and consulting firms. Many work for themselves. There is no significant concentration.

Among alumni, while real estate and equity-trading took big hits during the crisis, there are still many who are involved in those areas--although probably not as many doing so at major financial institutions. Many alumni, however, continue to have interests in real-estate development, real-estate investing, equity-trading, equity-underwriting, and equity research.

Prime brokerage (providing trading, clearing and financing services for hedge funds and small broker/dealers) continues to be a growing field at large institutions. Some alumni in finance have roles in this area.

Another growing area is risk management, where large banks manage risks of all kinds--credit, market, counterparty, and operations risks from doing business, financing, or trading with other large companies and institutions. While the sector grows, there aren't many CFN alumni in the field, likely because banks have not recruited formally or methodically for these roles. They haven't also explained these roles clearly to students in business school.

Alumni are involved across the country in corporate treasury and financial-management roles in large numbers. They tend to be financial analysts, financial managers, strategic planners, or business analysts for large Fortune 500 companies, where there are defined career paths and much opportunity to learn, travel and advance. (It's also probably not coincidental that many tend to work for long-time Consortium sponsors: Eli Lily, Pepsico, et. al.)

Retail banking has not necessarily been a popular career path for CFN alumni, but some big banks (BoA, most notably) have Consortium alumni in significant roles in this area.

Alumni, post-crisis, continue to be well-represented in conventional MBA roles--asset management, consulting, private banking, derivatives-trading, corporate finance, and M&A at both big firms and at boutiques.

As expected during the crisis, many alumni grew attracted to or took positions in a comparable role at the U.S. Treasury, Federal Reserve Bank, and other places. The experiences have been invaluable, as they get to immerse themselves in many activities and in many hot issues of these times and get to travel around the country.

While alumni are involved in many areas of finance, CFN members who are sponsors and friends are involved in just about everything finace-related--from recruiting to private investing.

This group, too, is currently working in conventional finance roles: investment mangement, corporate treasury, and corporate finance. (Corporate treasury, business management, and financial analysis are popular areas.) But more than CFN alumni, this group includes many who are working in financial brokerage (and financial planning), diversity recruiting, cash-management sales (at banks), and accounting.

There are many in this group who, after long careers elsewhere, decided to set up their own shops to take advantage of special expertise and be their own bosses. They have become private consultants, private investors, or advisors to individuals and corporations. One advises small corporations on strategic acquisitions. One advises others on managing risks via derivatives. One advises on foreign currencies. Another advises on personal investments.

Overall there are few notable trends. People interested in banking and finance continue to find ways to deploy their talents. In this environment, people must follow opportunities, but they are willing to try something different--smaller firms, less-rigid career paths, positions outside of financial centers (like New York and Chicago), or positions in government.

Current MBA students, meanwhile, are now watching for opportunities closely. They look for trends, they talk to professionals and professors and strategize among themselves.

Many still prefer investment banking (corporate finance and M&A), investment research and sales/trading. But over the past year, a number larger than usual have turned toward paths of private banking and wealth management. That is likely because big firms are doing a better job recruiting MBA talent in these areas, and students themselves like the long-term prospects here.

Tracy Williams

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