Wednesday, December 23, 2009

What's to come in 2010?

With 2009 expiring swiftly, what lies on the horizon for 2010--for MBA's, for Consortium students and alumni, and for finance professionals?

After the implosion of 2008, the year 2009 could only be marked by careful, straining efforts to pull ourselves up. Does 2010 mean full-speed ahead, or does it mean a continued careful, meandering recovery?

Let's try to project.

1. MBA finance internships. Last year was abysmal. This year there are promising signs. Consortium first-year students are earning their way onto select interview lists; some already have offers for the summer, 2010. They are, in fact, getting attention and offers in corporate-finance roles--virtually non-existent last year. January and February will tell a better story. Sales & trading opportunities are still fleeting, but that is a typical pattern.

2. Better moods, improved business opportunities. There are ongoing expectations of a continuing, slow rise in corporate finance and capital markets. Moods are better no doubt. But a nagging memory of the harshness of late-2008, early-2009 continues. Corporations are poised, ready and daring to do deals to grow and expand, but may adopt a go-slow, risk-adverse approach. Banks continue to clean up their balance sheets, sell toxic assets and implement risk-management procedures and systems. Both will try to incorporate lessons learned from the 2008.

3. Increased interest in banking and finance among prospects and current MBA students. Interest in finance and banking didn't evaporate, as some of us expected. The numbers among Consortium students and alumni didn't decline materially. With improved markets and optimism in the recruiting process, there may be an upturn in 2010--although slight--in students' interest in finance and banking. Students, too, may start to express their interests more vocally--not cautiously and with uncertainty as in the past year or so.

4. Renewed confidence in private-sector opportunities. Over the past year, students and alumni all of a sudden recognized the attraction of pursuing careers in the public sector: U.S. Treasury, Federal Reserve, Securities & Exchange Commission, etc. The public sector grabbed talent and deserved to do so. It sold MBA students and others in finance on the value and learning experience of working in financial regulaton.

In a recovery, finance professionals will have a different appreciation of the important roles of regulators and the opportunities they present. They will find the experience of working for regulators attractive and the skills can be transitioned to the private sector.

In a recovery, nonetheless, students will once again pay attention to the compensation packages of the private sector (banks, hedge funds, private-equity firms, etc.) and over time will be willing to take a little more risk in their careers.

5. Interest in more stable sectors. One out-growth from the market collapse is students' interest in promising, stable careers. They are now paying attention to sectors where business revenues are predictable and risks well-managed. Private-wealth management has become a popular pursuit among MBA's. Investment management and corporate-treasury also offer more stable opportunities. Companies and banks see this and have become to gear recruiting efforts to attract talent to these sectors, talent that might have single-mindedly pursued M&A or technology banking in previous years.

6. Lukewarm interest in sales & trading. Among students and younger professionals, sales & trading is an intriguing sector. But with uncertain, unstable markets, banks' recruiting efforts are one-off and unpredictable, and those interested in this sector will pursue only if they have unrelenting interest, especially in a specific sub-sector (e.g., derivatives trading, fixed-income sales, or equity markets).

Too much uncertainty about the usefulness of derivatives, about market liquidity, or about market performance will turn off those casually interested in this sector. Financial innovation, which sparked this sector for much of the 2000's, will be slow and deliberate. As a result, opportunities will be sporadic.

7. Rebounds in performance. Such big banks as Citi, Morgan Stanley and BoA should continue to rebound in performance and will continue to expand and try to compete with all other banks. These banks with new management, new structures, new capital, and new strategies will continue to attract talent in many sectors. They will no longer be fighting for survival.

8. New financial regulation. New regulation will be implemented more slowly than we expected in early 2009. And it may not be as strict or rigorous as expected or, in some cases, as hoped for. It may take all of 2010 and parts of 2011 to implement new derivatives-trading structures, tighter capital guidelines for banks, and new procedures for introducing new financial products. It will come, but gradually.

9. Hot topics. The topics on the tips of tongues in early 2010? Investment banks will continue to help smaller banks across the country find new capital. With expected tax increases among the wealthy, private bankers will step in to advise in tax strategies and help clients re-balance portfolios.

With new confidence, corporations may decide to grow via acquisitions again, spawning deals for M&A bankers. Corporate lending will grow, but mostly for large, high-rated borrowers. Banks are still wrestling with how to manage the risks of lending to low-rated or smaller borrowers.

10. A renewed interest in diversity. For some companies, firms and banks, in 2008-09, diversity got pushed to the back of the corporate agenda. They lacked time to focus on it and lacked the effort to sustain the momentum of the mid-2000's. We all witnessed the crumbling of progress, when large numbers from under-represented groups were victims in the massive layoffs in finance circles.

In 2010, the same institutions will put diversity back on the agenda (near the top, if not at the top), but will need to recover from the backward progress the past year. They may also need to convince minorities and women, who observed the shake-out the past two years, that it's worth their while to return to banking, finance, trading, and investing.

The year 2010 promises to bring further improvements, optimism and hope. Let's hope it exceeds expectations.

Tracy Williams

Tuesday, December 15, 2009

Consortium Finance Network, a Year Later

A year later makes a difference. Recall a year ago--just after the collapse of Lehman Brothers and AIG, the bailouts of banks, the implosion of equity markets and the scattering of acronyms and phrases for the ages--TARP, CDO's, CDS, toxic assets, etc.

The mood was dismal, the outlook uncertain--although there was a glimpse of optimism after Obama's election triumph. Consortium students in finance, normally juggling lucrative options and opportunities, wondered if there would ever be a market or economic upturn. Nobody could project an impending recovery. Students and alumni asked themselves, "What can we do in finance? Will financial institutions hire, expand, grow, or become profitable ever again?" Some even bothered to ask, "Why finance?"

In the midst of it all, the Consortium Finance Network (CFN) came to be. It started with clear, simple objectives and hopes of establishing a forum for Consortium students, alumni and friends to learn about opportunities, to share stories about survival in a financial crisis, to find out about what's new or what's next, and to open pathways for MBA students who follow behind. CFN opened its doors to all with an interest in finance or financial services.

During the year, CFN hosted events and sponsored programs. In the meantime, the crisis ebbed toward its end; over time, there appeared a glimmer of hope for a recovery or a return to times when those in finance could thrive--at banks, funds, insurance companies, brokerages, corporations, venture-capital firms, and investment companies.

In February, CFN held its kick-off program in New York--thanks to the Federal Reserve Bank. Over 160 students, alumni and friends watched a panel discussion on perspectives in finance (coming out of the crisis). Experts from the FRB, Credit Suisse and Citi led the spirited discussion on opportunities, an expected recovery, diversity topics, and financial regulation.

In May, CFN hosted a transitions event in New York--thanks to Citi. Charlotte Lee, an executive counselor/coach, presented ideas on how Consortium students and alumni can differentiate themselves in a tough job market or in any transition into a position in finance. Lee told stories about what has worked, what hasn't, what you should do, and what you shouldn't.

Earlier in the year, CFN organized itself on Linkedin. Membership now numbers above 330 and includes Consortium students, alumni, sponsors, recruiters, and friends. Discussion topics (finance topics, current events, career opportunties, diversity issues, etc.) are presented on its blog. Blog topics included summaries of the top diversity firms, new post-crisis finance courses in business schools, recruiting strategies at top banks, and attributes of top performers in banks.

In June, CFN introduced itself to new Consortium students at the Orientation Program in Charlotte. CFN also distributed online a guide to first-year Consortium students in finance. The guide included advice on how to set up information interviews at investment banks, how to master the elevator pitch, and how there are plusses/minuses working at boutique firms.

After the Orientation Program, to maintain enthusiasm among students in finance, CFN appointed CFN school champions, who have regularly shared updates on campus, described the moods and opportunities, and disclosed what banks and firms have increased their recruiting efforts.

In August, CFN rolled out its mentorship program, matching over 50 students in finance with over 20 mentors (alumni and other experienced professionals). Mentors in the program have actively introduced students to other contacts and mentors.

In September, CFN sponsored a career-planning webinar (presented by Jason Alba, a career-management expert) with a special focus on online networking and effective use of Linkedin. Over 100 registered for the session. (CFN discovered how the webinar permits greater participation from people around the country.

By yearend, based on feedback, CFN began to plan events (i.e., webinars) that will also emphasize non-traditional MBA finance careers (e.g., microfinance, community banking, etc.). And CFN hopes the Federal Reserve event of February will become an annual gathering to discuss industry perspectives and to meet and greet fellow students, alumni and friends.

Not a bad year--given the uncertainties and the anxieties of the times and given the near-upheaval in the industry. Not a bad year--thanks in part to the enthusiasm, optimistic spirit and energy of many Consortium students and in part to the passion and commitment of many alumni, sponsors, and friends.

Tracy Williams

Monday, November 30, 2009

Making Markets in Her Home Country

Did you know there exists a nascent, operating stock exchange in the Dominican Republic? And did you know the head of the exchange is a Consortium alumna from Michigan's Ross School? Darys Estrella Mordan for the past two years has been the CEO of the BVRD, the Stock Market of the Dominican Republic.

The exchange, formed in 1988-89, does not yet trade equities, but is taking steps to do so first by overseeing an active market for commercial paper and bonds among about a dozen issuers. Over time, the exchange will permit stock trades when it is assured of an active, liquid market for stock trading. That will occur when the investing public there gets comfortable with an electronic, liquid trading venue, when local, family-owned companies become confident enough to issue stock to the public and after the launch of other government-privatization programs.

For now, less than two dozen banks and brokerages are members and engage in daily fixed-income trading over a two-hour period of about 16 bond or CP issues (about $1 billion in daily activity).

Estrella Mordan is charged with leading the exchange into equities, but will do so when the timing is right. In its latest issue, she told Bloomberg Markets she wanted to build an equity platform emphasizing liquidity and transparency. "When you have a centralized platform, when you have a screen where you can go to see the prices, everybody wins," she said. The first IPO on the exchange is scheduled for 2011.

Estrella Mordan's road from Consortium graduate to head of the exchange was not a winding, distorted path. Every step or pause on the road paved a way to the next opportunity. There are links in the path--enabled by a Consortium MBA, preparation and hard work, but also by contacts, a Goldman pedigree, steadily increasing knowledge in the trading industry, and long-time interests in returning home at some point.

As she told Bloomberg Markets and Hispanic Professional magazines, she grew up in the Dominican Republic and decided to attend college in the U.S., graduating from Vassar College. A Hispanic Studies major, she took a job at the asset-management firm Deltic, a first immersion in business and investments.

After eight years at Deltec, she pursued and applied for the Consortium fellowship, entering Michigan in 2000. (The Orientation Program was in Chicago that spring.) She interned at Goldman Sachs after the first year and joined it full-time after graduation. While at Goldman, she specialized in fixed-income sales, eventually becoming a Vice President.

In the meantime, she had an urge to return home or do something related to building capital markets in her native country. While at Goldman, she helped found "Dominicans on Wall Street" and had opportunities to meet the top finance people of the Domincan Republic. After just five years at Goldman, when the exchange looked for a new CEO, her name was known among board members; it decided to offer her the job.

Within five years after her Michigan/Consortium degree, she was already leading a critical trading operation in a place she wanted to be, tasked with the challenge of expanding a business and pushing it into a daring direction of stock trades.

For more about Estrella Mordan, see For more about the exchange, see
Tracy Williams

Getting People Ready to Lead

In its latest issue (12/7/09), Fortune Magazine offers another one of its lists--to add to lists of the top 500 companies, top admired companies, powerful women and top 40 under 40. This time it recognizes the top companies that are best in grooming leaders, those who will eventually take over the company or who will occupy top roles in finance (CFO), technology (CIO), operations (COO), or legal, marketing or administration. (See

Some companies are widely known for identifying talent among mid-tier managers early. They groom them for years to become competent, effective and visionary leaders. In some cases, companies identify the pool of leadership potential, develop them, but let them compete to win top jobs.

GE has been a standard-bearer in how to identify, develop, and groom managers. The Jack Welch (former CEO) way of developing leaders is legendary: management-development classes and seminars, painfully detailed evaluations, and confidential talent books that keep close track of those who will run GE in the next generation. GE and other firms are obsessed with evaluating and assessing talent and meticulous about offering an array of experiences to get people prepared.

These companies do such an outstanding job that those who don't get the coveted top spots when the time comes tend to go elsewhere to become top officers in other companies.

Fortune's list includes names we would have expected. Many are companies and institutions that perform consistently, have a meaningful global presence, and maintain spotless reputation and brand. They are companies that tend to be stalwarts in their industries. They nurture young talent with the intention it will remain with the company for decades.

The Fortune list is intriguing in two other ways:

(a) At least 10 of the top 25 in North America are or have been important Consortium sponsors. Many on the list have been lead sponsors at Consortium orientation programs (Eli Lily, Proctor & Gamble, General Mills, and Pepsico, e.g.). Other Consortium sponsors (past and present) on the list include 3M, American Express, Target, HP, and Colgate-Palmolive.

That of course implies a long-term commitment to diversity, a recognition that these companies see potential, value and talent in all employees no matter where they are from. They are also companies with constituents around the world: employees, customers, suppliers, and shareholders. Hence, their top leaders need to be competent managers of complex, widely dispersed organizations, affecting diverse cultures.

(b) Only two of the top 25 were financial institutions: American Express and CapitalOne. The large, familiar investment firms, investment banks, insurance companies, commercial banks and fund companies didn't make the cut.

Why so few financial institutions? Why wouldn't they be recognized as places that get people ready to lead? There might be a few reasons.

(a) In banking, the top leaders tend to be those who grew up in the organization as top deal-doers, who focused on transactions, clients, client pitches, deal closings and deal revenues--not necessarily as cost and efficiency managers or experts in organizational management. That's not to say financial institutions don't have efficiency and organization experts. Traditionally, top "rainmakers," top client bankers (with substantial client lists), and top traders have been those who've found an easier path to the top.

Hence, the best managers and arguably the best leaders are not necessarily nurtured upward or rewarded with growth and responsibility. They may exist, but they may not get sufficiently recognized or promoted to top positions.

(b) Compensation has often been based--for mid-tier bankers and traders--almost solely on revenue generation. The appraisal system, therefore, doesn't always encourage people to become shrewd business-unit leaders or take risks to learn about other sectors in the institution. Some deal-doers and traders may, in fact, have exceptional leadership potential, yet they know the score: Deal, client, product and trading revenues will likely be what will permit them to advance swiftly (and earn large bonuses).

(c) Large financial institutions have excellent programs for developing entry-level talent. They include training programs, expectations guidelines, mentor programs, and opportunities to work in different units to learn as much as possible. That spirited emphasis of development dwindles after associates become middle managers and vice presidents, when they observe revenues will get them paid, if not pushed up to the next level.

Young professionals learn the scorecard and tend to avoid taking risks that might help them in the long term, but hurt them in the short term. Thus, they may avoid transferring to groups where they have little expertise, avoid overseas assignments that put them out of view, or avoid the possibility of failure of any kind--all essential steps in becoming smart leaders.

(d) The appraisal process is less about developing long-term leaders, more about rationalizing compensation (bonuses) to reward recent performance. Financial instititions devote enormous amounts of time to the appraisal process. Only modest amounts, nonetheless, are spent on legitimate, sincere assessments of talent potential for the long term.

(e) In many institutions, there is pressure to win the next deal, do the next trade, or sell the next financial product to maintain status as a top broker, trader or banker. Therefore, time spent on ferreting talent, developing it, teaching it broader skills, evaluating it, promoting it, and making sure it remains in the institution is time spent away from clients, deals, trades, commissions, research, investments, transactions, and closings. Many senior managers likely see the importance of talent development, but are often confronted with tough short-term objectives that can't be skirted over casually.

Some financial institutions (Goldman Sachs, e.g., although it didn't make the list) are well known for nurturing talent and grooming it for leadership. Many others are the product of a series of mergers. Others are merely fighting to remain financially healthy. While they must manage through merger integration, the financial crisis, or capital shortfalls, they haven't devoted sufficient time to leadership for the long term.

Yet somehow the IBM's, the GE's, the Pepsicos and P&G's have gotten it right. They project 7-10 years out. They identify a pool of potential senior managers every year and put them on a track to get them prepared to run the company. They take chances with them, permit them to run business units at an early age, encourage them to take assignments in Europe or Asia, and push them to assume positions outside their comfort zone. They promote them, pay them and reward them with more challenges (and more confidence).

There is no reason why prominent financial institutions can't do the same. To say the least, it could assure them top talent, including young professionals, would be willing to stick around for a long time.

Tracy Williams

Monday, November 23, 2009

Opportunities: Where Are They?

Recall a year ago at this time, when we braced for a colossal collapse of the financial system and settled into a notion that the Great Depression could repeat itself. A year later, with Lehman Brothers receding into Wall Street history, there are breaths of fresh air and hints that in banking and finance, opportunities for growth, expansion and employment exist.

Financial institutions have resumed practice and protocol in recruiting in b-schools and in hiring in mid-career positions. The big banks launched "redeployment" efforts, re-hiring into growth areas those it may have dismissed in declining units. Opportunities exist, but institutions are proceeding cautiously and carefully.

The ramping back up may not be as rapid as the ramp-down. After the dot-com collapse of the early 2000's, firms subtracted and eliminated quickly, but as soon as business and markets bounced back, they added and hired just as fast. This time, they may take baby steps first.

Many Consortium students and alumni are asking, "If things have picked up and there are hopeful signs, where then are the opportunities?"

They may exist at specific institutions. As the media note prominently, firms such as JP Morgan and Goldman Sachs are setting near records for quarterly performance (buoyed by investment-banking and trading revenues). Scattered opportunities exist in many spots at these firms. They are focused on building the "stable, sustainable" businesses (private banking, investment management, and retail banking) and supporting the businesses (investment banking and trading) that generated the incomes that put them in the headlines.

These firms are hiring at all levels, but are being careful not to overdo it. Hence, they are not about to double the number of bankers they bring on board in the next year or two.

Firms such as BofA-Merrill, UBS, and Citi are aggressively working to rebuild their brands and balance sheets. They have made progress, although they may need take the occasional, substantial asset write-down. They are presenting a confident, we-expect-to-be-around face to the marketplace, including their faces to prospective bankers. They are visible in recruiting, hiring and convincing top talent to come their way.

Others such as Morgan Stanley, Deutsche, and Credit Suisse know that in a period of recovery, they can't afford to take a back seat to peer firms. It's in the abyss of a business cycle when firms ably strategize to pounce on opportunities to take them to the top of a finance sector (mergers, equities, fixed-income, retail banking, syndicated loans, etc.). Hedge fund Citadel (even after its crisis-related trading losses) is daring to start an investment bank from scratch.

Firms like Barclays Capital and Jefferies are poised and eager to pick up trading and banking business left on the table when Lehman collapsed. BNY Mellon survived the crisis untainted, partly because it emphasizes stable, unsung businesses as securities processing, clearance, and custody. It aspires to be the industry leader in those segments.

Nonetheless, careful, methodical steps in expansion is the common theme.

What about opportunities in specific sectors, Consortium alumni and students ask?

In investment banking, many banks tend to wait out the cycle, wait for M&A to return, wait for an inevitable rebound in equity and debt underwriting. They follow historical paths. The business collapses, but it bounces back.

Others take advantage of new business in select specialties. For example, some firms are doing a brisk business in advising corporations in restructuring their debt or their organizations. Some are advising parties (creditors, debtors) in bankruptcy. Banks with financial-institution clients (FIG) are thriving by helping clients (banks) raise capital or sell assets. M&A bankers see opportunity when an industry wants to expand, but a different opportunity if that industry needs to reorganize, consolidate or reconfigure itself. Healthcare bankers are waiting in the wings, as the nation confronts healthcare reform.

In sales & trading, opportunities are fleeting, sometimes momentary. Right now, many traders and hedge funds are focusing on distressed assets (mortgages, bonds, loans, e.g.), trying to take advantage of mis-pricing of assets or assets (bankrupt companies, e.g.) that are unfairly under-valued. Fixed-income traders have been taking advantage of low interest rates all year, although some think those opportunities will dim in time.

Financial institutions took a beating last year because they took on too much risk (credit and market risks) or they didn't know how to manage it or compute it (or all of the above). Many are now hustling to beef up their risk-management units. Smaller firms are hustling to launch risk units where they hardly existed before.

Large banks are evaluating their approaches to risk-taking, their tolerance for large balance sheets, large trading exposures, or gigantic loans to large corporations. As a result, some are looking to expand businesses that are less volatile and promise stable, predictable revenues. They are prepared to trade occasional home runs for frequent singles. Private banking, asset management, cash management, securities processing and custody offer such stability, and many banks want to grow those areas. Hence, opportunity.

Other firms simply want to stick to the niche they know best. Growth and opportunity will be slow, steady, assured. This includes the banking boutiques (Lazard, Greenhill, Evercore, e.g.), the trading, dealing, market-making boutiques (Knight, ITG, MF Global, Liquidnet, e.g.), or the retail-brokerage boutiques (Raymond James, Charles Schwab, Edward Jones, TD Ameritrade, e.g.).

A year makes a difference. Most of us were too scarred or scared to even mention "opportunity." Today we dare to highlight them, but that's opportunity with baby steps.

Tracy Williams

Monday, November 16, 2009

CFN On Campus: Recruiting, A Sixth Course

Keeping up with recruiting demands, networking, attending corporate events, setting up information interviews, slipping out of class to fly to Chicago or New York and strategizing to get on closed interview lists. It's like a sixth course in business school, Consortium finance students say.

But they are a necessary demon, if you aspire to get an offer from a top bank, fund, or financial institution. Some would contend in these times, where there continue to be segments of uncertainty, recruiting chores are necessary if you aspire to get any offer of significance.

A few Michigan Consortium students accompanied the Ross finance club to New York two weeks ago as part of its annual Week on Wall Street. Just two weeks later, some are returning or have returned to follow up with contacts, meet with other banks and firms, and merely to let it be known they are serious in their bids to gain offers from top firms.

Yale and Dartmouth students, too, have come back to New York for follow-up meetings and informational interviews after formal sessions with big banks a few weeks ago.

UBS, Barclays, Credit Suisse, JPMorgan, Morgan Stanley, BoA-Merrill and Goldman Sachs continue to be notable for courting Consortium finance students methodically and seriously this fall--especially first-year students interested in investment- or private banking. These banks are executing on well-defined recruiting strategies. They also tend to be the ones that accommodate Consortium students who want to meet bankers for informal meetings or for off-the-record coffee.

Sales & trading positions, as usual and as expected, are elusive--not because top firms are not hiring, but because they tend to hire on a one-off, as-needed basis. While corporate finance and private banking recruit MBA's into formal training or development programs. Sales & trading desks tend to recruit MBA's, only when desks plan to explain, when trading in certain markets is "hot," and when they want "apprentices," those willing to come aboard, watch and learn before they are allowed to take risk or manage portfolios.

Barclays, in private and investment banking, has made a substantial name for itself in recruiting circles this fall. The British bank, already with a large U.S. presence, hopes to attract the talent that once gravitated to Lehman Brothers. Barclays has an advantage, since it purchased most of Lehman's U.S. net assets and hired many of its experienced people. It recently approached CFN to announce that it still has open positions for second-year students.

Citigroup's head of investment banking in the U.S., Ray McGuire, visited NYU-Stern recently. Consortium students had a chance to meet with him and get honest advice on how to succeed in banking. He advised them to make sure they master technical skills, the basics of finance, capital markets and accounting.

McGuire is one of highest-ranking of African American investment bankers. He has been at Citi four years. His career path is not unusual for many top bankers in the industry. He worked at four other firms before landing at Citi. That doesn't include a stint at a New York law firm. McGuire has MBA and JD degrees from Harvard.

While some bankers stay put at one firm for much of their career (characteristic of managing directors at Goldman Sachs), others will follow mentors, clients, deal flow, and, yes, compensation packages from firm to firm, big and small. McGuire was at Merrill Lynch and Morgan Stanley before Citi. McGuire tended to follow mentors and promises of more responsibility. The industry doesn't frown on such movement, because many of the best bankers have done it and most know people and talent will go where opportunities abound.

Tracy Williams

Tuesday, November 10, 2009

A "Must Skim": eFinancialCareers Manual

eFinancialCareers, the financial recruiting firm with an expansive online presence, just published a new manual ("Careers in Financial Markets") that helps guide students and young professionals pursuing long-term careers in banking and finance. The manual is long (about 100 pages), but it's a "must skim," if not must-read, for those starting out in financial services.

Nowadays there are countless manuals, guides, brochures and books on how to pursue a career in banking--or more specifically, investment banking or sales & trading. This one stands out for two reasons:

1. It presents a detailed description of various segments--each a specialty in financial services and each usually offering opportunities for MBA's. Hence, not everybody should or is interested in pursuing a life of investment banking. It tries to convince that there are enriching careers in areas like risk management, and it accurately explains the difference between corporate and investment banking.

2. There is a section on diversity, and themes, issues and topics of diversity are prevalent throughout the manual. (There is a casual reference to the Consortium, as a diversity pipeline for candidates in finance.)

Few will have time to digest and absorb this manual cover to cover, but skim what's relevant to you. And like all pieces of advice, assess what is recommended and decide your own next steps.

The manual is candid, straightforward. Its intended audience includes anybody--not just MBA's--interested in finance. It covers many aspects of looking for a job, planning a career, and learning how to network. A few highlights are worth noting:

1. It's direct, honest and even injects humor on the best ways to get a job at a top investment bank, daring to say (with a wink) takes some combination of 4.0 GPA's, direct contacts to top managing directors, relatives in key positions, and a diploma from a name school to get an offer. That's is way of showing how hard it can be at elite firms (e.g. Goldman Sachs, Morgan Stanley, or Blackstone).

2. It includes a section that advises when it's best to leave a firm or transfer out of a position. Few guides ever tell you to leave. This one knows the fit between you and the firm may be awkward sometimes, and you should do something about it.

You should take steps to transfer or look elsewhere, for example, when your group is engulfed in office politics, when your firm is suffering in performance, when managers above you operate within an impenetrable social circle, or when you receive an unfair, unwarranted performance review.

3. The manual provides 20 excellent descriptions of sectors of finance, explaining where there might be opportunities for entry-level positions or opportunities for mid-career people. They include unsung sectors, often not on the mind of the typical MBA, such as global custody, risk management, compliance, "information providers" (Bloomberg and Reuters come to mind), and even human resources.

The diversity section is good, because it devotes proper attention to the subject and focuses on the importance of fit at a bank or company. Diversity is not treated as a footnote. But the manual treads carefully.

The manual doesn't provide what many students (especially first-year Consortium students) crave this time of year: A candid assessment on places to work, including those that are outstanding or those that should be avoided. Nor does it rank or rate banks and firms as ideal places to start a career in finance or to get promoted.

Consortium students want stark impressions of a firm's culture, want to know where they will fit, and want to know whether a firm values technical skills more than client skills. Given many financial institutions are clients of eFinancialCareers and given many contributed sidebar articles to the manual, you can see why it avoided rating firms or offering candid summaries of culture at specific places.

The manual also doesn't focus on banking boutiques or smaller specialty firms (trading firms, dealers, clearinghouses, technology firms with a financial clients, etc.). And because its audience includes the senior literature major in college, as well as the bank VP in private banking who wants to transfer into corporate banking, it doesn't focus on how MBA graduates can take advantage of finance, accounting and banking courses they took in b-school.

Nonetheless, that's nitpicking. There is much useful information and informed advice if you take a moment to peruse it.

Tracy Williams US.pdf

Monday, November 2, 2009

CFN On Campus: Never Enough Time

With a blink of an eye, the school year at most Consortium b-schools is already one-third old. And what a difference a year makes. For Consortium students in finance, moods are less dismal than they were a year ago. Few have second thoughts about pursuing finance.

News stories about the collapse of both big-name institutions or market segments have receded. Students are approaching next summer (for internships and full-time positions) with more hope; some even with optimism.

General observations?

1. Students in similar numbers are interested in corporate finance and investment banking. We surmised many would be discouraged by the events of last year and would explore other careers (marketing, consulting, etc.). Finance continues to attract those who had years of experience in finance before b-school, those interested in global capital markets and transactions with clients, and those with extensive quantitative backgrounds (engineering, math, e.g.).

Finance attracts those still eager to tackle the demands of financial modelling, trading interesting financial instruments, investing in new ventures or doing headline-grabbing deals.

2. Predictably, students from larger, known finance-oriented b-schools (NYU, Dartmouth, Michigan, e.g.) are the ones with large numbers of student interested in finance and banking. These same schools, however, benefit from strong recruiting relationships with top banks and extensive alumni networks at the same banks.

3. Some schools without the same large Wall Street networks still have significant numbers of students (including Consortium students) interested in finance--primarily because of the schools' special efforts to encourage careers in financial services or prepare students for the process of pursuing something in finance (Indiana, Carnegie Mellon, e.g.).

4. Many Consortium students interested in finance are transitioning from other careers (government, marketing, publishing, engineering, consulting, etc.) and know they must catch up in understanding what top firms, funds and banks are looking for in MBA students. They, however, are learning they bring something unique from their prior experiences (teamwork in consulting roles, quantitative expertise in engineering roles, client management in sales positions, etc.).

5. All students acknowledge the challenges of adjusting to a rigorous schedule and admit coursework is far more demanding than they thought. But most are motivated by knowing they are doing the right thing, learning massive amounts of finance material in a short time, and seeing the marketplace more attractive than it was nine months ago.

Michigan's finance club came to New York for its annual Wall Street visit last week. Students, including a few Consortium members, visited JPMorgan, UBS, RBC and Morgan Stanley. Michigan has organized this trip for years. Typically 30-40 attend annually, and the numbers didn't appear to have dwindled this year.

Dartmouth's finance club likewise visited New York in mid-October. A few Consortium students, too, accompanied the club, as it visited large banks and met with alumni at many of these institutions.

Indiana's "academies" in investments and banking made short trips to New York, too, with a similar agenda of visiting firms and establishing contacts.

NYU has the advantage of being in New York, so students meet with Wall Street firms often. New York-area companies and banks, on the other hand, frequent the campus. As with many schools, Stern's Office of Career Development meets with each student to help him/her map out a plan for recruiting.

Yale students, also in New York, got a chance to visit representatives from Credit Suisse, Goldman Sachs, JPMorgan and Morgan Stanley. Yale CFN students planned to meet as a group to discuss recruiting, companies and course challenges. Students are adjusting to Yale's novel approach to b-school education, where team-taught courses in the "Consumer," "Investor," "Employee," et. al. replace traditional courses in finance, marketing and accounting.

New York is not the be-all and end-all for finance. Chicago, London and San Francisco would contend, too. But students and their finance clubs go to New York to meet contacts, see a concentrated group of alumni and figure out their next steps in the recruiting game.

At many schools, the CFN mentorship program is thriving. Students have commented favorably about how mentors have helped them with recruiting strategies and in meeting contacts at particular firms. Moreover, mentors have provided good, old-fashioned moral support.

Tracy Williams

Tuesday, October 27, 2009

The Race to Keep Up

How is it possible for MBA students to keep up with what's going on in the world of finance, to keep up with headlines and industry news stories--when they have case groups, final exams, recruiting events, and meetings with professors? How is it possible for corporate-finance associates or even well-established VP's in finance to keep up--when they have strategy meetings, budget deadlines, client presentations, pitchbooks, hundreds of e-mails, and a burdensome in-box?

Yet everybody expects everybody to be on top of financial events, trends, updates, innovation, new products, and even financial gossip. Keeping up with what's going on and having a view or special insight about financial events can make a difference--in a promotion, bonus, or (for students) in getting an offer. Those who are in the know tend to stand out and are often relied upon to teach or show others.

The world of finance evolves and changes as quickly as markets are updated, as quickly as money is transferred from one end of the globe to the other, and as quickly as one time zone closes business only to open up minutes later in another time zone.

MBA students and professionals in finance today should probably be aware of Obama's plans for financial regulation, should understand what might be driving recent upticks in equity markets or general behavior in bond markets, should be aware of general trends in the decline in the dollar (or the China's insistence on keeping its currency de-valued), should understand why it's important for banks to maintain large cushions of capital, and should be aware of the recent death of Lazard CEO Bruce Wasserstein, one of the most prominent M&A bankers over the past 25 years, and its impact.

MBA students and professionals should probably be familiar with recent industry talk about the growing influence of high-frequency equity traders or the necessity for a clearinghouse or settlement system for those infamous credit-default-swaps.

It's a constant, maddening struggle to keep up. Consortium students say it's a challenge to keep up when a group paper is due tomorrow or exams follow thereafter. Even MBA professionals say they must find precious time to keep up with headlines and trends. Are there tools and short-cuts to perform well in the day job and be an expert on current events?

Reading financial publications cover to cover daily would help. But who has time to do that? Is there a short cut to determine what's important, what should be skimmed, and what should be read?

It's helpful to scan all headlines of the Wall Street Journal and the Financial Times everyday and then assess what's important or not. Both the Journal and the Times have news summaries and digests that summarize news items. Both also provide clues of who's reading what by reporting the most popular stories in their online editions.

Skimming headlines is a quick, easy, five-minute way to keep up, although this won't provide depth in relevant topics. So it's necessary to scan to determine what's necessary for follow-up. If you have an interest in private equity, then if you see a headline about Blackstone, KKR or the Carlyle Group, you should note to follow up later. If you have an interest in high-yield markets and you see headlines about trends in pricing or new issues or changes in ratings at certain companies, then you should note to follow up later.

Some financial magazines are excellent sources for keeping up and providing perspective--especially for finance professionals who need information, who need it in appropriate depth and who need it presented in a sensible, summary manner. They include Institutional Investor and Investment Dealers' Digest magazines. (See and The problem is these magazines are often inaccessible and expensive. But banks, trading firms, and business schools make them available or provide a means to gain online access to them.

The articles in both are detailed, but the topics cover all aspects of corporate finance, banking, trading, and investing. They are especially good at covering hedge funds and private-equity firms, where general information about them is hard to come by.

Just as much, they cover the people and firms. Sometimes bankers have said they have learned more about their institutions by reading about them in Institutional Investor. Few professionals have time to read all the articles. Yet it's an advantage to know what's being written about or discussed and to know if you need to become an expert in the topic, you know where to go to get a quick tutorial.

Other publications cover finance adequately, although not in the same depth as those above: BusinessWeek, The Economist, and Bloomberg. For some busy students or busy VP's, scanning and assessing the headlines in those publications will suffice. For sure, those periodicals are more accessible and less expensive. Bloomberg covers people, firms, and funds very well. The Economist provides a concise summaries of finance theory, events and product and incisive insight.

For corporate and investment bankers, Dow Jones has just unveiled a new site that will help students and professionals to keep up with deal flow, IPO's in waiting, new ventures, private-equity transactions, and who's who this week or month. The site,, is being launched and will require subscription, but serious bankers or students of banking should explore it.
Don't minimize the value of networking. That helps people keep up, too. Being out and about, talking to peers, colleagues, classmates, and clients can help you be informed and up to date. Cornering an expert at a corporate event and asking him/her about a certain market, firm, or product (and his/her views) can be an optimal tutoring session on the latest. Attending industry-related seminars, symposia, and events also help in keeping up. These events often provide fat handouts on an esoteric subject. You may not have time to read them thoroughly, but grab them and know you have a ready summary when you need them.

Keep in mind, nevertheless, trends, perspectives, events and topics change steadily. Almost weekly. What was in the Journal's headlines last week are long gone by next month. So it's better to have a consistent approach and a steady habit to stay on top, keep up, and assess the whirlwind of financial activity around us--without becoming overwhelmed by all the information or being slowed down by all that might be unimportant.
Tracy Williams

Wednesday, October 21, 2009

October: How Mentors Can Help

Consortium MBA students across the country are submerged in case studies, core courses, finance, accounting, team meetings, and sessions with professors and the career-development office. Most will admit that b-school (especially at top schools within Consortium) is a challenge. A beast. But it can be tamed.

This might also be the peak time when students seek guidance, encouragement, input, feedback and help. In the midst of overwhelming, exhaustive coursework, students must plan careers and find jobs for the summer or full-time positions--and still get good grades. CFN's mentor program, launched in August and now under way, can help Consortium finance students.

But not just those mentors assigned by CFN. Any Consortum alumnus or any finance professional--with varying levels of experience, interests, and expertise--can stand ready to share wisdom, help students make connections, or act as a sounding board for students who are trying to make tough decisions with almost time to spare.

Mentors in the CFN program should be seeking out students for a second-round of discussions with assigned students. However, that doesn't prevent others from reaching out to students, too, or making themselves available.

With October almost gone, mentors can help in many ways. There are numerous possible topics to review with students. First-year students know the ropes now. They've figured out a way to handle the grind, but so much still lies ahead. Up to the plate step mentors.

1. Recruiting strategies. Finance students by now should have developed a recruiting strategy--a Plan A, B and maybe C. They like to bounce these strategies off experienced alumni or other professionals. At this point, many are deliberating over broad industry segments and want to narrow their options. Investment banking vs. private banking? Hedge funds vs. investment management? Corporate treasury vs. commercial banking? Big firm vs. boutique? New York vs. Chicago? London vs. New York? Equity research vs. credit research? Fixed-income vs. equities? Financial consulting or financial management?

Many students have already designed plans, but crave help in polishing the strategy. Sure, they can speak with career-development offices and meet with professors, and those meetings will be invaluable. But the icing on the cake is a special one-on-one brainstorm with another Consortium finance alumnus or another person with similar background and passions, who can tell the real stories about how a deal is done or trade is made, who can make a proper introduction, who can describe how to manage the delicate work/life balance, or who can describe what it's like to be a woman or person of color in an intense banking environment.

At this point, students would like to narrow industry segments and broad opportunities before they head into the holiday season.

2. Targeting specific companies. Many have targeted companies they may want to work for. Yet they want more information about what goes on inside. What is the culture? What is the career path? Is the company telling us the truth? How does the company manage MBA newcomers in a downturn? Should they be worried about the company's reported financial woes? Students know they must be well-informed about the firms they like, but they want information beyond what they read on the websites or in annual reports.

The information, too, helps them narrow their choices. Mentors can help guide students and provide the right kind of information (or connect students to somebody else who may know).

3. Making connections. Students are told all the time they must network, reach out to others, and make contacts at the firms they want to work for. This is crucial in banking, in private equity and in venture capital--especially if students want to get on the "closed list" for interviews. Many students, however, are not sure how to go about making contacts. Or with mounting work to be done for accounting, macroeconomics or operations-research class, they don't know how to reach out to get results.

Mentors can step up to help in many ways. A mentor who works at a firm a student aspires to can introduce the student to the right people at the firm, can offer background on who's who at the firm, and can suggest who can provide more information about a department or business-unit leader. The mentor can also suggest how to approach others.

As the relationship blossoms, mentors will tell students what they need to know, what they won't hear from recruiters, and what questions they ought to be asking. For Consortium students, mentors will help them understand a firm's approach to diversity. Is diversity a check-the-box process there, or is it a passion from top management to first-year associate? Consortium students want to know.

4. Time management. How often have b-school students described how they didn't realize the workload would be enormous and recruiting demands would hit them hard the first week? MBA students eventually learn how to juggle the daunting demands, but mentors can offer more tidbits, hints and short cuts--how to handle mid-term exams while trying to schedule information interviews, how to do homework about a bank while trying not to miss the meeting with the case group.

5. Finance and accounting. In banking and finance, it's important to do well in finance and accounting. It's critical to show competence in these areas. Mentors might be able to help students understand difficult finance concepts or help show how the same will be applied in real-world deals. Mentors might also help students demonstrate in interviews or informal meetings how they have mastered important concepts.

6. Keeping up. In the recruiting process, prospective banks, firms, and funds want to see students who not only know the theory and have aced tough courses, but they want to know if students are keeping up with industry topics. Are students aware of the Obama administration financial proposals? Are they aware of the big, headline deals that took place last quarter? Do they have an opinion about widespread concern about derivatives? Do they agree with financial bailouts of banks and auto companies? Do they think they are working? Do they have a view on the current high-yield bond market?

How can students manage courses, recruiting demands, extracurricular pursuits and still keep up with the front and middle pages (in depth) of the Wall Street Journal? Mentors can guide students, remind them what the important industry issues are, and help them shape well-informed opinions about the issues of the day.

This is that time of the year when students crave direction and guidance as they refine their strategies and juggle everything in sight. Mentors, when they make themselves available, will have a lot to talk about with students.

Tracy Williams

Tuesday, October 13, 2009

Banking or Bust--A Year Later

Ken Alozie's Bankingorbust website is now over a year old and continues to be useful to anybody in the early years of a career in investment banking and corporate finance--whether you are a first-year MBA student or a banking associate hustling to become a vice president.
Alozie is a Consortium alumnus from Michigan's Ross School, who worked at Lehman Brothers in corporate finance, among other firms. He has experience in mergers and acquisitions and leveraged buy-outs.
The site offers a textbook worth of information, guidance, tidbits, reminders, and warnings. It focuses on all aspects of technical skills and requirements. Banks and funds hire associates, assuming a minimal level of technical competence. Business schools teach this level of expertise. Alozie's site tries to package and summarize some of that expert knowledge.
Don't think of it as your first-course business-school finance text. It avoids details of theory and offers concrete summaries of what you need to know to do deals, to value firms, to assess debt capacity, to recapitalize balance sheets, to merge firms, or to issue stock publicly. In some ways, it is a focused refresher; in other ways, it's the real-world approach to corporate finance.
Accounting is the foundation of finance; hence, the site helps you improve your understanding of accounting concepts--especially those that help you improve modeling skills in preparing cash-flow projections, valuing firms, or analyzing of financial statements.
Beyond technical summaries, the site provides lots of tidbits and reminders. In a business driven (besides elaborate technical models) by people, contacts and networks, the site offers a long list of people you should know and why you should know them. For example, bankers ought to know who the leaders in the industry are--today or historically, heroes or villains (Carl Icahn, William Donaldson, or Dick Fuld). Or the few leaders who happen to be women or people of color (Ray McGuire at Citi, Kenneth Chenault at American Express, or John Rodgers at Ariel).
For students, the site helps in preparing for interviews--not just informational interviews, but tough, mind-boggling technical interviews where banks put students on the spot with technical questions that might stump even experienced managing diretors.
There are also tips and hints on how to be more competent with Excel spreadsheets and using them to create or devise the most esoteric of financial scenarios.
A glossary is included and helps students and professionals in transition with the industry's jargon--whether they are buzz words flaunted at cocktail gatherings or arcane accounting terminology used to merge two firms. Each term is described clearly and succinctly.
As a Consortium alumnus, Alozie designed the site with other Consortium students and alumni in finance in mind. Investment banking, private equity, or investment management can be contrued as one big, hard-to-penetrate club. The stakes are high, the risks enormous, and the payouts (in certain years) handsome. That makes the club hard, near-impossible to join. Alozie tries to help knock down doors to find an entrance to it.
A year later, Alozie continues to update the site. Today, he himself is polishing his own skills, expertise and experiences by studying for a Masters in finance at London Business School before he re-enters the club.
Tracy Williams

Wednesday, October 7, 2009

Diversity: Work to Be Done in the Trenches

We expected it--the flood of post-crisis commentary, critiques and books on what happened, who was at fault, and how it may happen again. One book chronicled the implosion of Lehman Brothers. At first, it appears to be just another account of the financial bubble and ensuing collapse, as told by a Lehman vice president, Lawrence McDonald. (The book, "A Colossal Failure of Common Sense," eventually made New York Times best-selling lists.)

And one wonders what unique story, inside information or special insight a mid-level VP might have about the demise of one of Wall Street's most storied names. McDonald was a distressed-debt trader at Lehman for only four years.

But with the help of a ghost writer, the book offers an abundance of drama about Lehman going under--from the vantage point of the trading room. The trading room of a major investment bank is its heartbeat, its eye of the storm or its center of all market activity. The trading room is noisy, bustling, frantic--almost the size of a football field. McDonald had a ring-side seat and tells a story of disappointment, defeat, and despair. There is suspense, even when we know the ending.

There is, nonetheless, a disturbing aspect to his story. The subject of diversity and the indifference those on the trading floor had to inclusion and to reforming a culture that was once centered around white males.

McDonald tells how Lehman's president Joe Gregory was fixated on diversity. "He was consumed by it," he writes. Gregory would have diversity assemblies, and he would preach diversity "as if we were running a friggin' prayer meeting."

McDonald suggests Gregory might have been too focused on topics related to culture, recruiting, and inclusion and not sufficiently focused on the firm's exposure to risks or its overblown balance sheet.

Lehman in its last years made admirable progress in at least trying to create a culture of inclusion, recruit people from under-represented groups, and make a public statement about its commitment to diversity. (Lehman regularly hired many Consortium graduates each year and had begun talks to become a bigger supporter.)

Lehman may have failed because of hubris, a disregard for risk management or an overly leveraged balance sheet. But it didn't fail, because it decided it needed to get with the times on the diversity front.

McDonald says those on the trading floor at Lehman ("down in the trenches") dismissed all the fanfare about diversity: "The whole scenario really bothered a lot of people, especially hard-nosed traders who, after hours of real stressful work out there fighting the world, were then being marched off to these meetings and rallies to support (Gregory's) trumpet call for equality."

He goes on: "(Gregory's) mission for diversity drove (a senior research analyst) mad. She had no time for any of it....Most of (the traders) didn't care about the cause...."

Elsewhere in the book, when Lehman appointed Erin Callan CFO in 2008, he describes how colleagues deduced she was selected in part because of (Gregory's) "devotion to underdogs and minority groups."

McDonald provides a convincing account and argument for why Gregory and CEO Dick Fuld should be blamed for Lehman's collapse or for not selling the firm sooner when they had a chance. He shows how they insulated themselves from the rest of the firm and were not competent enough to understand the risks of a market bubbling over or a balance sheet shackled with debt.

Those are likely reasons for Lehman's failure. But a firmwide campaign to embrace inclusiveness wasn't. Diversity is about respect for the talents of all and a spirit that all are competent and can contribute. It's not, as McDonald's traders were suggesting, a wasteful time commitment at the expense of other important corporate objectives.

McDonald's portrayal proves a couple of things, known to many people all along:

(a) With such common attitudes in the trading room, it's easy to understand why it has been difficult for people of color and women to penetrate the tight circles on trading desks, a circle closed in part because of the enormous amounts of money that can be made and shared by few.

(b) Senior management at many top firms has done an admirable job in committing resources and personnel to manage diversity and inclusion, but there is still a lot of work to be done in the trenches (trading floors, deal rooms, research offices, etc.). Lehman had gone so far as to threaten traders' bonuses if they didn't wise up to the firm's diversity mission, but traders were still reluctant to embrace it or go along.

While McDonald apparently sided with the traders and, like them, grew tired of Lehman's growing emphasis on diversity, it probably worked out well for him to have spelled out these scenarios to remind all that there is still work to be done in those trenches.

Tracy Williams

Monday, October 5, 2009

On Campus: Ready to Seize Opportunity

Mid-October approaches for Consortium finance students. For many, that means mid-term exams (final exams for some at Dartmouth, e.g.). It means, too, getting immersed and possibly getting exhausted by the demanding recruiting process.

For some campuses, it means a trip to New York for annual Wall Street visits, where students get a chance to network, meet new contacts, plan information interviews, secure full-time offers for next spring, connect with Consortium alumni, and learn something directly from bankers, traders, and investors of all kinds.
The week enhances what they study in class. On the one hand, students want to make contacts, ask questions about opportunities for next summer for full-time slots, and schedule information interviews.
On the other, they may want to test theories they learn in class: For example, "How relevant are computations of weighted-average-cost-of-capital?" "What are the real-life lessons of having endured the financial crisis?"
In the weeks to come, CFN will select and share students' impressions and experiences--especially a post-crisis view of Wall Street. To date, students say companies are cautious, but the doors are not as closed as they were a year ago.

NYU-Stern doesn't have classes on Fridays, permitting students to spend a whole day on recruiting activities, if they wish. This year, first-year students are paired with second-year students with similar interests, where second-years get to pass on wisdom of how to get the right internship, how to make a resume' look good or how to handle both mid-terms and recruiting at the same time.

Stern's Consortium students in finance agreed to get together to practice interviewing, fine-tune the "30-second pitch," and trade stories about networking and reaching contacts.

At Michigan-Ross, CFN students acknowledged how well prepared they are, as banks have begun to make presentations and network among students. They see the advantages of having had the Consortium experience at the Orientation Program or having taken advantage of contacts, guidance and information from CFN.

Yale's finance club has scheduled a "Day on Wall Street" in mid-November. Consortium CFN students will be involved. Yale students will get to network at JPMorgan and Morgan Stanley.
At Dartmouth, Tuck finance students spend their "Week on Wall Street" this week. Tuck has done this for years and sees the benefit of students slipping away to Manhattan once first-quarter exams are done. Students comb through financial circles in New York to connect with other Tuck alumni and learn as much as they can about finance opportunities and specific financial businesses. This is the week that really helps students decide what they want to--trading, banking, asset managing, investing, etc.

CFN students at Tuck recently met to discuss recruiting strategies. They expressed interest in investment banking and venture capital. Many of those interested in banking, but without banking experience, will attend the week on Wall Street.
Tuck CFN students are creating a database to permit them to share finance contacts with each other and other general, useful information.
Later this month, an investment-banking class from Indiana will be in New York with a non-stop schedule of meetings, sessions, and interviews with alumni, bankers and other finance professionals.
For all, students appear to be hopeful and confident, ready to pounce on opportunities they find--fortunate that the dismal aftermath of last year's market collapse is receding.
Tracy Williams

Wednesday, September 30, 2009

Hiring Talent: Networks Beyond Networks

Finance professionals don't need to be reminded of the importance of networking, nurturing contacts and keeping up with what's going on in the marketplace.

Lawrence Kellner, Continental Airlines CEO, explains when he hires someone into a senior role, he relies less on conventional processes--recruiting, interviewing and putting candidates on the spot in two-hour one-on-one sessions. He says he succeeds in hiring the best candidate by tapping his own network of people he knows, people he's worked with, and people he know are good.

Kellner plans to leave Continental in December to run a private-equity firm, Emerald Creek, in Houston. He explained his methods for sourcing talent to the New York Times last week: "Have I worked with somebody who could fill this job who's really good?"

He explained he then "widen(s) the net to people I trust...people I've worked with." Or he says he tries to "find somebody we know and trust who knows the person we're thinking of hiring." He minimizes the importance of interviewing, claiming it is superceded by the value of "somebody who's got even a couple of months work experience with a (possible candidate)."

In other words, who knows whom? Who can trust whom? And who knows the person beyond the staged session of a formal interview or a well-credentialed resume'?

He's right. The correlation isn't always perfect--that he/she who performs well in interviews will not necessarily become top performers in the role. Hence, good managers look for other clues for exceptional talent or top performance when hiring. Often that means tapping into the hiring manager's own network to find talent or to seek guidance and recommendations from people who have worked side by side for a long time with a candidate. The power of the network.

He's right, but what if the best talent lies outside his own network, outside his club of senior managers and contacts--especially if that talent comes from under-represented minority groups, who haven't had years of a chance to benefit from the power of networks?

The best leaders and managers know how to tap talent beyond a closed network. They know how to broaden their connections, extend their closed networks, and reach out to networks beyond their networks to find people who have worked with other talented people. And they don't have to be persuaded to look for talent beyond a circle of close friends, classmates and fraternity brothers.

If only we could have asked Kellner how does he ensure his network for tapping talent encompasses all.

His new firm, Emerald Creek, will specialize in commercial real-estate investments.

Tracy Williams

Sunday, September 27, 2009

Business as usual for B-Schools?

Now that we are at the tail end of the financial crisis, pundits, analysts, and economists get to point fingers toward those they think are responsible. In its latest issue, the Economist magazine points a finger at prominent graduate business schools--some of which provided a pipeline of graduates to Wall Street to engage in behavior that might have had an direct impact on the collapse of markets last year.

"Business schools have done too little to reform themselves in the light of the credit crunch," says its sub-headline in its Sept. 26 issue. The article (in its new "Schumpeter" business column) claims b-schools have done "precious little" to respond to the crisis beyond introducing a few new courses. "Business schooling, as usual," it claims. (See
Strong claims. Perhaps b-school deans will get to rebut or at least show how they didn't stand still. They are hurriedly evolving, changing or tweaking their programs in the aftermath. That's not unusual, since top b-schools have always raced out front to make sure they remain relevant to its constituents--companies, prospective students, graduates, and the global business community. (CFN previously outlined how Consortium schools Virginia, New York Univ., and Yale introduced new courses, written new cases, and prepared book-length analyses of what happened and how and why.)

Some professors and deans might argue that it is too soon to teach the crisis or give it proper perspective. Its end might be near, but there is still widespread uncertainty about its recovery and the impact on new financial regulation. Professors are still polishing up work that might recommend novel changes in market structure, financial instruments, and accounting methods.

Some might argue, too, that more than all other professional schools, top b-schools in the past two decades have an admirable history of change. They transform themselves continually--when necessary and when they feel they need to update themselves to be more relevant. Frequently b-schools revamp curricula, introduce new courses, aggressively promote globalization and technology programs, and implement ethics course requirements. Often these transformations occurred after a crisis, market collapse, or business scandal.

At some schools, the core courses a student takes today are hardly similar to those a student would have taken in the early 1980's or even 1990's.

The Economist fortunately advises how it would change b-schools today, although the advice would be "tweaks," not major transformational changes. It suggests graduates will be able to manage or confront future crises, if they were taught history courses of past crises. It didn't offer details. However, that might include studying such topics as the dot-com crash, the collapse of Long Term Capital in 1998, the allure and then scandal of Enron, the insider-trading scandals of the late 1980's, and the late 1990's crises of Asia and Russia.

Not a bad idea. Understanding past crises reminds professionals they can occur again, prepares them for business cycles, asset bubbles and possible market collapse and affords them an appreciation for risk management and strong balance-sheet management.

To its credit, the magazine continues to proclaim the relevance of rigorous graduate instruction in finance and management.

Business as usual? Not likely, since schools know change makes them relevant and change is as much a part of the b-school experience as basic core courses in economics, finance and accounting.

Tracy Williams

Tuesday, September 22, 2009

Which way--investment or private banking?

Students and finance professionals often grapple with tough decisions about what's next in their careers. One common decision: In which direction do I go, private banking or corporate/investment banking? Many Consortium alumni and students in finance confront this question every year.

Private banking (PB) encompasses an array of services for high net-worth individuals. That might mean personal banking, but might also entail sophisticated services: currency hedging, asset disposition, tax advice, portfolio management, and mergers and acquisitions on a smaller scall.

Investment banking/corporate banking (IB) provides services, advice and products to large corporations around the world. That, too, might mean basic corporate banking, but might entail complex debt or equity financings, takeover defense, project finance, convertible-bond offerings, or equity share repurchases.

But sometimes the two intersect. The owner of a thriving, growing private company decides to go public. Private bankers and investment bankers will be involved--to advise the company on its IPO and to advise the owner and other shareholders how to manage its ownership of new public shares or newfound wealth.

Students and other finance professionals in transition will knock their heads evaluating which direction to lean. Some have asked whether it's possible to transition from one to the other--whether investment bankers can become private bankers, and vice versa. Recently some CFN members reviewed factors that can help people decide what's best for them. Some are summarized below.

Private Banking (or "private wealth management")

Important factors to consider:

1. You'll establish close relationships with clients who are senior industry leaders or established entrepreneurs (who might seek you to join them in the long term one day). You'll be valued for the important contacts you've made and the long-term relationship you maintain.

2. Wealth management is a targeted growth area in many big firms, especially those which seek to avoid the erratic revenue streams from trading and investment banking.

3. Wealth management, among other objectives, focuses on accumulating assets and generating stable fees from those assets. By design, banks manage the business to be less cyclical and less susceptible to economic downturns.

4. You will learn and become exposured to a large number of banking products and services (from estate planning to private-equity investing, from portfolio management to funds transfer and securities custody.

5. There is often flexibility in moving from private banking to other banking units or other companies, because of that product/service exposure.

6. If you are good and stand out among others, will there be opportunities and encouragement to advance rapidly? Or would you be stifled by a "wait your turn" approach to advancement?

Investment banking/corporate banking

1. There is continued emphasis on innovation, new products, and novel financial techniques (many of which evolve and mature over time, many of which are eventually "shared" with private banking clients).

2. When deal flow peaks, the environment is intellectually challenging, adrenaline-building, and stimulating. When deal flow dwindles, the same day-to-day challenges can appear as "busy work" or "going through motions."

3. The learning curve accelerates, even for experienced, senior bankers. Banks differentiate themselves by offering something new, something that can boost shareholder value substantially, or something that can radically change the corporate face or product set of a client.
4. Those who are designated as "stars" are allowed to advance rapidly and get paid well.

5. The business is cyclical, no matter how much firms have tried to stabilize it by offering counter-cyclical services (restructuring advice, e.g.). In downturns, dismissals are rapid and sometimes rash.

6. Heretofore, the compensation pie has been large. (Time will tell whether that will continue, or continue at levels in recent years.) That pie must be divided among all those who contributed to and participated in deals. And often, that division process is undermined by anxiety and internal politics.

7. Teams are responsible for doing deals or managing corporate relationships. Subjectivity sometimes decides who plays the most important role, although in recent years banks have tried to implement objective, quantifiable methods to assess the importance of your contribution.
Yet in the end, subjectivity will influence how you are evaluated and appraised (and paid).

Investment and private bankers at large firms often work together. An older entrepreneur wants to retire and sell his/her firm. A wealthy investor wants to purchase a large stake in a blue chip company. The senior management of a large corporate client wants to understand the impact of a merger on its top leaders' wealth. These situations bring investment and private bankers together to advise the client.

It's not unusual for investment bankers to transition into private banking. It's rare, but private bankers sometimes transfer into investment banking, especially if they bring deep, rich relationships with important people within an industry.

For younger finance professionals, which way to go? Both will require special financial skills and a thorough knowledge of finance. Both will involve extensive client contact. Weigh the factors carefully, while being mindful of your own objectives. And keep an open eye.

Tracy Williams

Tuesday, September 15, 2009

CFN On Campus: Gearing up for Recruiting

It's back to the books for almost all Consortium students. Classes have started, and the crunch of case studies, problem sets, and group meetings is under way. At b-schools, students have to manage a back-breaking work load and then gear up for a long, sometimes tortuous recruiting season.

CFN School Champions have sent updates from campus. Not all schools are the same, so experiences and impressions differ. The curriculum and core requirements at Yale differ from those at Indiana or Tuck. There are more "finance types" at NYU than there might be at USC. But some themes are common:

1. Few worry, as they did last year, about the collapse of the financial system. However, b-schools are warning students to be cautious and prepare for a tough recruiting season. There will be opportunities, but we haven't returned to the happy days of pre-2008. Some students have observed erratic scheduling of presentations by a handful of firms. They had planned to come, but changed their minds suddenly. Or many companies are hesitant to specify hiring numbers right now; there is still some uncertainty about summer, 2010.

2. Despite the financial crisis, students continue to be interested in corporate finance and investment banking--perhaps not in the same overwhelming numbers. Yet there is still a solid core of students who want to pursue such careers.

3. Sales & trading opportunities are fleeting. Many top banks and firms are not hiring MBA's into formal trading programs, although they are interested in MBA's on a case-by-case basis (based on the specific needs of a particular "trading desk.") Private-equity and hedge funds, if they recruit formally and strategically, like MBA talent and will consider hiring them because of their experiences and specific academic training in capital markets (foreign currencies, options trading, equity markets, derivatives trading, etc.). Nonetheless, hiring tends to be ad hoc.

4. Banks (JPMorgan, Citi, Barclays, Deutsche, BoA, Goldman Sachs, etc.) are making presentations on campuses coast to coast, but are promoting other sectors with similar vigor as investment banking--private banking, asset management, risk management, and commercial banking. Many banks, students notice, have reduced their core MBA schools substantially--by half, in some cases.

5. Corporations, knowing that some students may be reluctant to go the banking route, are taking advantage of such ambivalence and continue to recruit eagerly on campus (although they, too, plan to be cautious to avoid over-hiring).

6. In past years, many schools (Dartmouth and Michigan, e.g.) planned a "Wall Street Week" in New York for finance students. That tradition will likely continue this fall, and the numbers who flood New York for a week of presentations and networking with firms and actual traders and deal-doers will not have declined much.

At Carnegie Mellon, it's not surprising Heinz--headquartered nearby--has a major presence on campus, where it will recruit for corporate-finance slots. Union Pacific and BNP Paribas have also made presentations on campus. Finance students there try to stay ahead by joining the Graduate Finance Association.

At Michigan, finance students join the Finance Club, which helps guide students in the recruiting process. About 80-plus students are involved. The number is reportedly down from years ago, but is still significant. Students in the club are those pursuing careers in investment banking, sales & trading, private banking, and corporate finance.

Yale students spent part of orientation in New York. That permitted many of them to meet directly with major banks and firms and establish important contacts, even before classes started.

Indiana's directors of its investment-management academy advised students to get ready for a tough recruiting season, but encouraged them to gear up to get ahead by traveling to key cities (Chicago, New York, e.g.) to network, meet contacts and plan information interviews. BoA/Merrill has already made enthusiastic presentations on campus.

At UNC, CFN students convened early on to discuss strategies, opportunities, and upcoming course obligations.

All is not hopeless. Just a measure of caution from deans, recruiting directors and professors. Firms, companies, banks, and funds don't want to be caught off guard by over-hiring.

CFN will track progress among Consortium schools throughout the recruiting season with hopes that good planning, wise strategizing and discrete sharing of information will yield offer letters for all.

Tracy Williams

Wednesday, September 9, 2009

Career Management for the Long Haul

It's no longer just about job search and resume' submission. Nowadays, to get ahead and stay ahead, it's about non-stop planning, long-term career management, networking and "relationship management."

That was Jason Alba's prominent theme Wednesday night in the CFN's first webinar for Consortium students, alumni and friends. Over 115 registered to participate in the webinar.

Alba, CEO of, hosted the session and provided tools and clues on how best to use online professional and social networks to your advantage--especially Alba is the author of "I'm on Facebook, Now What?" and produced the DVD "Linkedin for Job Seekers."

Alba was once a victim of corporate downsizing; years later, he's used the expertise and experience from exhaustive job searches to develop useful strategies for career management. In a 90-minute presentation, special for the Consortium, he touched on many topics and offered dozens of helpful hints. Some are summarized below.

1. Job search should no longer be about just that. Transform "job search" into "career management." And do that by always growing your networks--in your geography, in your profession and in your industry, he said.

2. In networking, assess "who you know": family, professors, friends, colleagues, friends of friends. There are important people and power people, but there are, he pointed out, "power connectors," people who can connect you to other power people, sometimes just from the roles they play or the positions they hold. ("Accountants," for example, he said, "know everybody," because of their contacts with many key people in corporations.)

Nurture relationships; go beyond the superficial. E-mail, follow up, send thank-you notes, and personal greetings. Make people remember you.

3. Alba suggested sending out a monthly newsletter or communique to selected people in your network, but "keep it short." In it, tell people what you want, what companies you have seen, what companies you want to see, what job titles you are interested in. When people know what you are up to and what you want, they can help you, connect you or tell you exactly what you need to know.

4. The Linkedin Profile. Abla stressed the importance of the profile: "This is how people find you." Fix it up, make sure it's updated, include a professional picture, and be precise in the summary. Attach links (detailed resume', other information, etc.), as well.

Use the new features of Linkedin: "Answers," "Companies." He showed how they can be used in searches, in helping networks sprout, and in figuring out who's who at the places you want to be. The features, he demonstrated, can prove you already have a far more extended reach into certain firms than you thought.

5. Powerpoint Presentations of yourself. Alba thought it wise to prepare a presentation of yourself, particularly helpful in establishing your personal brand and pinpointing who you are and what you want.

6. Elevator pitches. Alba urged people to prepare not just one, but many: a 30-second pitch, a 5-second pitch, and pitches for different audiences and different purposes.

7. JibberJobber. Because Linkedin doesn't have a useful, intricate relationship-management tool, his site can fill that role. Alba showed how to manage networks and people contacts for the long term. The tool helps you classify, rate, and assess your contacts and keep tabs of those you haven't been in touch with for years. Yes, he suggested you rank or rate your contacts.

8. Alba, a constant blogger himself, is a big believer of blogging--making it easy for others to find you, allowing you to deliver your message, and polishing your personal brand. He gave an example of a law student, whose network is now so extensive he has over 70,000 following him on Twitter. Alba hinted that it would be impossible for him not to find the perfect position when he decides he wants to practice law.

For those who also participated in the webinar, share your feedback and insight. For those interested in more, visit and reach out to Alba directly.

Tracy Williams

Tuesday, September 8, 2009

Off the Beaten Path

MBA's from top b-schools spend two frenetic, intense years shaping and carving out an ideal career path. Those in finance will likely have their eyes on prominent, well-paying positions. Positions, where the deals will be big; the stakes will be high, the risks mind-boggling and the clients large and familiar to those who read the Wall Street Journal.

The prize they covet is often a role in equity research, corporate finance, commercial and investment banking, mergers & acquitions, derivatives, fixed-income trading hedge funds, public finance, insurance, private equity, financial analyis, corporate treassury, or investment management. That's a typical, respectable route. Top firms, corporation and banks seek talent and parade to top schools to fill the prized roles.

But what about non-traditional routes for the MBA in finance or for the finance professional early in his/her career? Not everybody wants to be or should become an investment banker or hedge-fund trader. Not everybody is interested in the "big deal," "big IPO," or "big trade." What are the opportunities off the beaten path?

First, the traditional route is not an undesirable path. Students and professionals shouldn't be discouraged from heading into the direction of their interests and passions. MBA's are mature professionals who have thought long and hard about what they want to do.

The traditional route has advantages. Handsome compensation packages is one. Top firms, funds, or banks (such as Goldman, Blackstone, BoA, or Citigroup) value the MBA and look for people who have extensive knowledge, can handle significant responsibility and can contribute right away.

B-schools prepare graduates well for those roles--with tailored courses, varied concentrations and in-depth academic preparation. Opporutnies are broad; career progresion is explicitly defined. Often training programs are at the doorstep. Networking and connecting with alumni are possible just by tapping a shoulder.

But what if the early-career professional wants something different? What are alternatives, and what can they do to design a different career path?

Non-traditional roles can encompass almost anything. MBA's and finance professionals occasionally reject what's familiar and venture elsewhere, still using their skills, coursework, experiences and contacts.

They bypass investment banking for community banking or microfinance-preferring to do business with individuals, small businesses, or mom-and-pop enterprises. They have become financial managers at museums, art galleries, opera companies or West Coast start-ups.

They have assumed senior finance roles in not-for-profit organizations--at charities, foundations, social-responsibility and civil-rights groups. They have assumed roles in government as financial managers at municipalities or treasury officials of states. In microfinance, they focus on helping fund one-person shops in emerging markets.

Also, off the beaten path may mean exploring less flamboyant or less known roles in traditional banks or firms. That might mean responsibilities in risk management (credit risk or market risk), cash management (funds transfer, short-term investments), custody (securities holding), securities processing, credit cards, and community reinvestment (CRA). Opportunities abound in these areas, but they aren't always well publicized or well recruited. MBA's thrive in these areas, even when some schools may not teach related courses or professors don't specialize in the same.

The financial crisis didn't discourage MBA's from banking and corporate--at least not as much as expected. But it spurred them to be fair to themselves and ponder the non-traditional realm.

Amid such opportunities, there are challenges. Non-traditional employers may not have histories of recruiting MBA's or deep-rooted relationships with schools. Thus, they may not already have large numbers of MBA's in management and may prefer to groom from within. Or they aren't familiar with the value of MBA hiring or aren't familiar with the process.

Do b-schools prepare MBAs for these roles? Many seek to do so. They offer courses in non-profit management, introduce students to public finance, public policy and social responsibility, and require finance students to be adept in operations and general management. Some professors specialize in these topics. And schools gladly help students and alumni connect with alumni in these roles.

Are the opportunities real? Yes, if they are pursed or hunted carefully. They may require the seeker to convince the non-traditional employer to take a chance with finance types, their skills and special experience.

At CFN, some members say they want to explore non-traditional activity more. CFN is considering a special event or webinar on the topic. Students, alumni in transition and even experienced professionals want to learn more about MBA's who understand what it takes to garner a specific, ideal role at an organization that doesn't recruit MBA's in finance traditionally.

They want finance, but perhaps want to fund a neighborhood barbershop or finance accessible housing. They want finance, but may want to fund a community park or a waste-management facility in a developing country. Or they may want to manage investments of a local college or manage the expenses and cash flow of a jazz club.

And the "deal" or "trade" need not be highlighted or headlined in the Wall Street Journal.

Tracy Williams