Who has the edge in the current finance recruiting marketplace? The newly graduated? MBA hires? Or banks, private-equity firms, hedge funds, asset managers? Or the Federal Reserve Bank and U.S. Treasury? Most will contend financial recruiters have the upper hand--whether for entry-level positions or mid-career posts, especially in an environment where hundreds chase a handful of open slots. But do they?
On paper, banks and investment firms no doubt have an advantage. Countless people are looking for fewer open spots--particularly at mid-level and senior positions. In some instances, firms have received over 1,000 resumes' for a single role. With these numbers, they can pick, choose and select whom they want--and when they want and how they want. They can rush the process, or they can (as many in the market will tell you) take their time, be deliberate and choose on the basis of odd, unusual criteria. (The demise of Lehman and Bear Stearns and the troubles of others enhanced that upper hand.)
But the dynamics might be slightly different for BA's and MBA's in the first stages of a career.
The number of first-year spots have declined at banks and funds, as these firms have restructured and pared down because of less activity, a slowdown in deal flow, or the outright shutdown of certain busineses (mortgage securitization? new derivatives products?). But the same firms worry that the number of people pursuing finance might have declined since last year and may continue to decline in the year or two ahead.
More important, they worry that the number of extraordinarily talented people will go elsewhere. They are comforted by large numbers from which they can choose, but will be concerned that exceptional people might not bother. It wasn't long ago when a fifth of students in Ivy League colleges were interested in Wall Street or when 20-25% of students at top business schools had an eye on a career at a Morgan Stanley, Blackstone, Goldman Sachs, Citadel, D.E. Shaw, Lehman, Merrill or KKR.
Big banks always prized themselves on hiring exceptional talent, because they contribute immediately and are productive right away. Top talent can:
(a) hit the ground running and get immersed in live deals or transactions in no time,
(b) learn new material and master it in days, no matter how little experience or exposure they may have had beforehand,
(c) do in-depth, useful research almost overnight on any relevant finance topic,
(d) produce astounding models, analyses, and presentations in a short period of time--material that will be stimulating, penetrating, profitable (of course) and immediately beneficial to clients,
(e) add creativity and special insight to new products, new transactions, new clients, new industry groups, etc.,
(f) execute and be productive with an uncanny ability to get things done swiftly and with unusual levels of energy, and
(g) be role models and astute tutors for those who follow behind them.
Firms have always "catered" to the exceptionals by giving them responsibility and compensation (and of course an unrelenting heavy workload). (Unfortunately sometimes how a fraction of new talent gets classified as "exceptional" or "extraordinary" might be subjective and political, especially when for years almost all entry-level talent was excellent.)
In essence, young MBA's can and did make a difference in getting the business, executing a deal in a creative way, making ground-breaking presentations to clients or executing a unique trade.
In years past, Goldman felt comfortable it could attract the top students in finance from, say, Darden, Ross or Tuck. Or Morgan Stanley felt it could convince a top student from Stern to accept its offer over one from the Federal Reserve. Lazard and Blackstone knew they would get the best and brightest from Wharton or Harvard. The same firms will want to continue the pipeline of top talent.
Today, that top student may have second thoughts, as he/she first tries to scope out the finance landscape in the years to come (Will the firm still be around in five years? Will new bureaucracy at banks stifle creativity?), tries to assess work-life balance, and wonders whether he/she will be able to contribute in a different financial environment.
Also, that top student may be wooed away by a more attractive and just-as-intellectual experience by the U.S. Treasury, Federal Reserve Bank, the SEC, or by a more interesting (and less stressful) entrepreneurial experience on the West Coast.
They worry this group might be lured to other professions with nothing to do with finance. A decade ago, dot-coms lured them away. Now even the arts, sciences, or government service could lure them away.
Thus in the coming year, banks and investment firms won't bask in the glory of being able to pick and choose as they please. They will revise, update and spice up how they present the "attractions" of financial services, corporate finance, sales and trading, and private equity. They will fill their quota in hiring easily, but want to be assured they still get their fair share of exceptional talent--talent that made a big difference in deals, transactions, analyses and client presentations in the years before.