Career Advice Mar 28 2012

For Hungry Students, Wall Street Still a Draw

By julie steinberg

On a recent Saturday night in Cancun, Mexico, Kyle Carnes partied with his friends on spring break, listened to a live band and watched fire twirlers spin flaming sticks.

He couldn't quite relax, though. Every few minutes he checked his iPhone. Mr. Carnes was waiting to find out whether he had gotten a final interview for a summer internship program at a major European bank.

Winning the three-month internship would have put him a step closer to his dream: working on Wall Street.

The financial industry may be in retreat, with tighter regulation, smaller bonuses, layoffs and persistent questions over its ethics and culture. But for hundreds of students like Mr. Carnes, a 20-year-old junior at Tufts University in Medford, Mass., Wall Street is still seen as the ultimate launch pad to a successful career.

"Don't get me wrong, we know it's not the Gordon Gekko age anymore," Mr. Carnes says. "It's a tougher business and there's a lot more scrutiny, but we also know that once you get accepted into the ranks of the banking elite, you can do any job you want afterward."

Universum, an employing branding firm that every year asks 6,300 M.B.A. students which companies they have applied to or where they will apply, found that big banks have taken two or three spots in the top 10 since 2007. Goldman Sachs Group Inc. has either been third or fourth on the list during that period. Morgan Stanley and J.P. Morgan Chase & Co. have hovered in or just above the top 10 list.

Build a Network

Connie Jao, a 20-year-old junior at the University of Southern California, starts her internship in early June at a large bank in New York—a position she snared in part by reaching out to a USC alumna for help.

Ms. Jao says she isn't deterred by the brutal hours that young analysts are expected to work.

"You're putting in so many hours so the ratio [of pay] isn't as glamorous as people as think it is, but it's not really a monetary issue for me," Ms. Jao says. "What attracts me to this is the learning experience and getting to build a network."

For all of Wall Street's image problems over the past few years, the lure of "bulge bracket" firms like Goldman, Morgan Stanley and J.P.Morgan remains strong.

"Students still want to begin their career at a brand-name employer, and banks have done a good job getting their message out to them," says Patricia Rose, director of career services at the University of Pennsylvania.

At the Philadelphia college, 33% of those who graduated in May 2011 and found a job went into financial services. In 2010, the figure was 34%, the same as in 2009, which was a slight decrease from 38% in 2008.

More Money

"Wall Street is always going to be a coveted place to work, regardless of what the market sentiment is," says Chirag Saraiya, an instructor at Training the Street, a New York-based company that prepares incoming Wall Street analysts. "There will always be more students than spots available because of the type of experience and skills you can develop."

High pay, long one of the strongest lures of Wall Street, still entices. Students say that even though bonuses are lower than in the past, base salaries remain higher than in most other industries—many first-year employees can earn total compensation in the low six figures. A top associate with previous finance experience and an MBA from a top school can earn a salary of up to $150,000, plus bonus, according to Options Group.

In addition, students believe a financial job gets them in the door for prestigious positions, greater success and monetary gains later in their careers.

"Investment banking gives you the foundation," said one New York University senior who will join Credit Suisse as an investment banking analyst this summer. "The payout is later on because of the exit opportunities [to go to] hedge funds and private-equity firms."

Others claim to like the cut-and-thrust of the markets. Stephen Reisert, a 20-year-old sophomore in the undergraduate business program at Cornell who plays Division I soccer, has been trying to get an internship this summer in sales and trading.

"Things are so fast-paced and unpredictable, like on the soccer field, and that's appealing to me," he says.

Fewer Jobs

Banks are hiring fewer people in positions that require capital and leverage, and are trying instead to build fee businesses like private wealth management, says Deirdre O'Donnell, a former senior vice president in fixed income sales at Lehman Brothers who now works in the career development office at Tuck. In sales and trading in particular, banks are hiring students who have interned for them rather than new business school graduates, O'Donnell said.

To be sure, Wall Street's own vicissitudes, and the rise of other "hot" sectors such as technology, are deepening the competition in the war for young talent. At Harvard, the number of seniors who took jobs in finance dropped to 17% last year from 28% in 2008.

Many of the most sought-after students are heading to Silicon Valley.

Liz Wessel, a 21-year-old senior at the University of Pennsylvania, interviewed with a half dozen top banks her junior year. She ultimately accepted an internship with Google Inc., which led to a job offer. "Many of my finance friends tell me their job is making rich people richer," she said. "My job is going to help develop products that will change the world."

Google and Apple were the top two most popular companies among American undergraduates studying business last year, according to a survey of more than 22,000 students by Universum.

Wall Street's dramatic shrinkage since the crisis is also playing a part.

Stiffer Competition

At Dartmouth College's Tuck School of Business, 12% of the graduating M.B.A. class will accept investment banking and sales and trading positions in 2012, a decrease from 23% in 2008. School officials say that's because there are fewer jobs available. Employment in securities, commodity contracts and investments, which includes investment banking and sales and trading, fell to 803,700 people in 2011 from a ten-year peak of 855,700 in 2007, according to data from the Bureau of Labor Statistics.

The number of analysts starting this summer may shrink by as much as 20% from last year, says Mr. Saraiya of Training the Street.

A smaller Wall Street, however, means stiffer competition for those who want to get in. James Gorman, Morgan Stanley's chief executive officer, recently called the idea that people don't want to work on Wall Street "ridiculous."

Between 78% to 84% of the business-school students whom Morgan Stanley recently offered jobs to accepted and those who didn't went to rival banks, he said recently. That rate is in line with past years, according to a Morgan Stanley spokesperson.

Mr. Carnes, the Tufts junior, heard from the European bank after he returned from his vacation. He landed the final interview.

"I still see Wall Street as the premiere job option after college," he says. "At a top school, there's a lot of talk about being the best. It seems like it's a natural choice for many of my peers."

--Aaron Lucchetti contributed to this story.

Write to Julie Steinberg at Julie.Steinberg@dowjones.com




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