Graduates turn away from Wall Street

Story highlights

  • More graduates are opting for careers outside investment banking
  • Statistics show a decline in the number of graduates taking Wall Street jobs
  • Goldman Sachs' decision to end its graduate training programme caused ripple
  • Wharton sent less than 17% of grads to Wall Street, rather than one in four in 2008

More graduates are opting for careers outside investment banking as the pull of big bonuses is replaced by job insecurity in an industry struggling to adapt to regulatory change.

MBA statistics show a steady decline in the number of graduates taking jobs at investment banks. The Wharton school at the University of Pennsylvania, which bankers consider the "conveyor belt of Wall Street", sent 16.6 per cent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools.

"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. "We've seen more opportunity for students in private equity and hedge fund roles."

Goldman Sachs' decision to end its two-year graduate training programme caused ripples on university campuses. The bank has decided to hire graduates on an open-ended basis partly due to worries that some were defecting to private equity firms after the two years were up.

"They're out there on a limb by themselves now," said one campus recruiter at a rival bank, whose company is considering following the practice. "It's going to be interesting to see whether it's positive or negative from a campus recruiting standpoint."

A senior executive at Morgan Stanley said his bank was committed to its training programme and added that the industry had a duty to train people and not be "feeders like the hedge funds".

In the UK, the financial services sector cut 9,000 jobs during the past three months as business volumes and profitability fell for the first time in more than three years, the CBI employers' group and PwC reported. A further 3,000 job cuts are expected.

Banking suffered the deepest job cuts after a slowdown in investment banking revenues and a scandal over the Libor benchmark interest rate.

City of London recruiter Morgan McKinley, which reinforced the uncertain employment outlook, said new vacancies in the UK's financial market fell 19 per cent last month compared with August and 43 per cent compared with a year ago.

For those who decide to stick with Wall Street, pay packages are down but not to penurious levels. Graduates who land a job at JPMorgan Chase, Goldman or Morgan Stanley can earn $60,000-$70,000 in their first year, with a potential bonus of one to two times that salary, according to recruiters. MBA graduates typically earn about $90,000-$100,000 in salary with a similar proportion of bonus on top.

There is also debate about the effect of broader anti-bank sentiment on students desire to choose a Wall Street career. John Studzinski, head of Blackrock Advisory Partners, who talks regularly to MBA students, said there had been a noticeable turn against a career in finance with more wanting to become entrepreneurs.

The campus recruiter at the rival bank said there was a noticeable spillover from the Occupy Wall Street events last year. "There was a lot of backlash and there were some protesters at some of the campus events," he said, adding that at his bank there seemed to be as many students as ever willing to work long hours for the privilege and pay of being an investment banker. "We didn't see a decrease in applicants."

At Harvard Business School, the proportion of MBA graduates this year moving into investment banking fell from 10 to 7 per cent. But it was not clear that they are all doing something more entrepreneurial. The proportion going into consulting, at 29 per cent, was a nine-year high.

        CNN Business

      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Why are Iraq oil markets stable?

        Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
      • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

        Ebola's economic 'scare factor'

        The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
      • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

        Casinos beat the banker

        Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
      • spc marketplace middle east ata atmar a_00010015.jpg

        Bateel's new bakery venture

        Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
      • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

        Is this the real new black?

        A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
      • Move over Siri, here comes Jibo

        Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
      • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

        Jordan: Seeking calm in chaos

        Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
      • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

        Forget 3D, it's 4K now

        At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Where is Iraq's oil?

        Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
      • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

        Why Europe needs Russian gas

        The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.