Tuesday, July 28, 2009

Diversity: Staying in the Front Seat

Are diversity initiatives taking a back seat in the face of the past year's financial turmoil--especially at financial institutions?

Banks, insurance companies, investment managers and other financial institutions made important, noticeable advances on the diversity front in the past decade. You could see that in many circles. More and more women and people of color began to populate trading desks and entry-level corporate-finance programs. More became fluent in exotic derivatives, valuation models, and optimal asset allocation. And more began to take lead roles in deals in corporate or municipal finance.

They became interested in venture capital and private equity. Those who started out years ago progressed to vice president, branch manager, and senior research analyst. Some had started their own brokerages or funds.

In business schools across the country, blacks and Latinos plotted careers as bankers, as traders, as financial consultants, as financial engineers, and M&A advisers. Many could envision the day they would become heads of trading desks, managing directors, sector heads, or top-ranking researchers or salespersons.

Watching mentors and prominent examples, they grew confident in a finance career path. They wanted to be the next generation of CFO's, deal-doers, star analysts, creators of new financial products, or prominent fund mangers. They watched as African-Americans led Merrill Lynch and American Express. African-Americans had become top bankers at Morgan Stanley and Bank of America. Women had become CFO's at Lehman Brothers and Citigroup and "All-American" equity-research analysts.

But have all the progress and sense of urgency slowed down?

Financial institutions last year found themselves with backs against walls, fighting for their lives--scrambling to avert loan and trading losses, reduce and rationalize staff, cut expenses, boost capital, and respond to regulators and the general public. Many understandably worried about panic among depositors and runs on their banks.

Did diversity and the special passion to ensure all aspects of financial services were inclusive and reflected all faces of the general population get pushed to the bottom of corporate agenda?

Most institutions will contend that throughout it all diversity remained high in importance. But keeping it there was a daunting challenge. Last summer, Lehman Brothers, a Wall Street firm that had made admirable progress on the diversity front the last decade, was hustling to maintain its existence. Reducing its balance sheet, shifting top management, confronting a frightened public, avoiding comparisons to Bear Stearns and injecting more capital were an all-consuming preoccupation. Diversity initiatives were likely shoved aside.

Lehman wasn't alone. In a severe crisis, firms' diversity council meetings with senior management are postponed. Diversity follow-up programs, initiatives and scorecards draw less attention. Firmwide enthusiasm and celebration of inclusiveness dwindle. A culture that had been one where minorities finally felt happy and felt belonged turns fierce, mean and Darwinian. Funding for diversity-pipeline programs (SEO, Inroads, Toigo, and Consortium) gets cut or rationalized away. Recruiting budgets are sliced, and recruiting itself becomes erratic or inconsistent.

As the crisis last year ballooned, financial institutions swiftly reduced staff. Those in under-represented groups suffered from "LIFO" staff reduction: last hired, first eliminated--especially at entry-level positions. Just like that, a half-generation of progress was at risk of being dismantled. The next generation of top minority deal-doers, senior analysts, senior vice presidents and managing directors got tripped up right at the starting gate.

Worse, there was the risk that those who followed might get discouraged. They could get disenchanted if they saw few women and minorities ahead of them and could ask themselves, "Why?" or "Why bother?"

The best firms kept the passion in good times and bad. As the world of finance pondered bailouts, new capital, and trading losses, the best firms--faced with the same--reaffirmed their commitment. It wasn't easy, but they did.

They are the ones, who while fighting for existence, still managed to keep diversity high on the agenda, convened diversity-council meetings, and ensured there was a significant pipeline of diverse talent headed their way. And they did so eagerly--while distracted, anxious, and burdened. They had a long-term perspective on inclusiveness.

Top business schools had an important role, too, in helping to keep diversity on the agenda. They reminded corporate recruiters they don't need to go far to find diverse talent. Talent is in their backyards. They made sure the next generation of talent was well-prepared, ready to contribute. And they helped convinced under-represented groups a career in finance is still worth the effort.

Fortunately markets have stabilized and anxieties eased, but the challenge remains. It took decades to get the spirit of inclusion near the top of the agenda. It took just a few months for it to slip and take a back seat. It will take everybody to get it back to where it needs to be and make sure it stays there.

Tracy Williams

Sunday, July 26, 2009

Darden's Response to the Crisis

It was inevitable that top business schools wouldn't stand still after witnessing a succession of threats to the financial system the past two years. Several schools announced earlier this year how they intended to respond to the financial crisis, change curriculum, provide analyses, or produce case studies of specific events.

A team of NYU-Stern professors just published a detailed, comprehensive analysis of the events before, during and after crisis. Restoring Financial Stability: How to Repair a Failed System (Wiley Finance) is the result of contributions from the team and offers a chronicle of what happened, detailed analyses of what happened, and solutions for how a bursting of the financial bubble can be avoided in the future. The book takes an academic approach and could be an anchor text for future b-school students who want to understand 2008 more thoroughly.

Meanwhile, Virginia-Darden has shown how a top school can respond not just with useful texts and new case studies, but how it can "exploit" the crisis by teaching it to students and strategically injecting all aspects of the b-school experience with analysis, solutions, lessons, and even reflection.

For example, it has hosted panels featuring top professors, alumni and other business leaders--all discussing the crisis and proposing next-step solution. Some of them are available on YouTube.

It has introduced courses that address the crisis in specific ways. A course "Hot Topics in Finance" invited alumni from banks to describe their experiences the past two years. A course in securitization showed how a flood of mortgage securitization contributed to the crisis and explained how liquid markets can become illiquid overnight.

Even such courses as "First-Year Ethics" and "Responsible Decision-Making" are covering crisis-related topics and highlighting where management at certain institutions might have misunderstood risks they took or have been misguided by compensation programs that rewarded excessive risk-taking.

The demise of Bear Stearns and Lehman, the collapse of AIG, and the Government's takeover of Fannie Mae and Freddie Mac provide ample opportunities for professors to prepare case studies and let students dissect events and second-guess decision-makers at those firms. Darden professors have written several related cases.

"Bear Stearns and the Seeds of Its Demise" (by Susan Chaplinsky) presents the series of events that led to Bear's collapse. And it plants students in the middle by posing them as a hedge fund interacting with Bear two months before JPMorgan acquires it over a weekend in March, 2008. The case challenges students to decide what they would do, based on the facts at hand and the rumors engulfing Bear's management.

Darden's career-services office has also stepped up by assisting students in interview preparation at financial institutions and by holding workshops for alumni in financial services.

Darden isn't the only top school to have responded in a focused, purposeful way. Other top schools, too, are tweaking courses in ethics, finance and business policy and preparing new cases or introducing crisis-specific subjects. Darden's response is an example of how top schools can turn an upheaval in markets and the economy into learning opportunities for students. And it shows how b-schools are already scrambling to present solutions to help avoid this kind of collapse in the future.

(For more information about Darden's response to the crisis, see http://www.darden.virginia.edu/ or contact its communications director Juliet Daum at daumj@darden.virginia.edu.)

Tracy Williams

Saturday, July 18, 2009

List of Investment Banks

In this difficult economic environment, summer internships seekers must be willing to reach out to every potential employer. Below is a comprehensive list of firms linked to their home pages. If you are looking for an internship, I recommend you begin reaching out to your network early in the fall by setting up as many informational interviews as possible with alums (Read more on Informational Interviews)

Complete List of Investment Banks from Wikipedia:

* Allen & Company
* AllianceBernstein

* Allianz
* Ambrian
* Bank of America Merrill Lynch
* Barclays
* BNP Paribas
* Boenning & Scattergood
* Brown Brothers Harriman
* Brown, Shipley & Co.
* C.E. Unterberg, Towbin
* Calyon
* Canaccord Adams
* Cantor Fitzgerald
* Cazenove
* Citigroup
* Close Brothers Group
* Cowen Group, Inc.
* Credit Suisse
* D.A. Davidson & Co.
* Deka Bank
* Deutsche Bank
* Dresner Partners
* Evercore Partners
* Financo, Inc.
* Fox-Pitt, Kelton
* Friedman Billings Ramsey
* G.H. Walker & Co.
* Genuity Capital Markets
* Goldman Sachs
* Grace Matthews
* Greenhill & Company
* Greif & Co.
* Grupo Santander
* Hambrecht & Quist
* Hambros Bank
* Harris Williams & Company
* Hilco Corporate Finance, LLC
* Houlihan Lokey Howard & Zukin
* Imperial Capital, LLC
* ING Group
* Investment Technology Group
* J. & W. Seligman & Co.
* Janney Montgomery Scott
* Jefferies & Co.
* Jordan, Knauff & Company
* JPMorgan Chase
* KBC Bank
* Keefe, Bruyette & Woods
* KeyCorp
* Kleinwort Benson
* Ladenburg Thalmann
* Lazard
* Lazard Capital Markets
* Legg Mason
* Macquarie Bank
* Miller Buckfire
* Mizuho Financial Group
* Monte dei Paschi di Siena* Montgomery & Co.
* Morgan Stanley
* N M Rothschild & Sons
* Needham & Company
* Neuberger Berman, LLC
* Newbury Piret
* Newsouth Capital Management inc.
* Noble Bank
* Nomura
* Oppenheimer
* Park Lane - Investment Banking Services
* Perella Weinberg Partners
* Peter J. Solomon Company
* Piper Jaffray
* Prudential Securities
* Putnam Lovell
* Rabobank
* Raymond James
* Robert W. Baird & Company
* Robertson, Stephens
* Royal Bank of Scotland
* Rutberg & Co.
* Sagent Advisors
* Salman Partners Inc.
* Sandler O'Neill + Partners
* Schroders
* Societe General
* Stephens Inc.
* Stifel Nicolaus
* SVB Alliant
* T. Rowe Price
* ThinkEquity Partners, LLC
* Thomas Weisel Partners
* Toronto-Dominion Bank
* TSG Partners, LLC
* Unicredit
* Wells Fargo
* William Blair & Company

* Federal Reserve Bank of New York
* List of Banks World Wide

I hope this list is helpful in your efforts to land a summer internship.
- Camilo

Friday, July 10, 2009

Credentials beyond the MBA

Does a CPA, CFA or MA in finance, financial engineering or computational finance make sense when you already have an MBA?

Many MBA graduates have asked themselves the same--especially in the current environment when they look to gain an edge, set themselves apart or prove they bring something special to the table.

It's fair to ask the question; it's harder to answer it. Weighing the costs vs. benefits is complex. For experienced MBA graduates, time is another variable. Is it worth the time away from a defined career path or time away from family?

Some executive coaches and recruiters say it can make a difference. It can be a meaningful advantage--particularly in the first rounds of recruiting new candidates. Employers, they say, in the initial-screening stages look carefully for credentials--experiences, degrees, certifications, responsibilities, titles, etc. Having a CFA designation certainly doesn't hurt among a stack of MBA resumes'. The same credential, however, may count for less in final rounds of interviewing.

For finance positions requiring special technical prowess, the designations wouldn't hurt. Employers looking for competence in, say, equity or investment research, mergers/acquisitions, or structured finance (i.e., post-crisis structured finance) tend to look for those who can shine with well-honed technical skills. Having the MBA proves technical skills, but having the CFA (on top of the MBA) or more might prove exceptional ability.

In the post-crisis periods, the study of finance (including accounting, capital markets, and investment analysis) will likely evolve. It will include some lessons from the past year and will emphasize topics it neglected in previous years: risk management, financial systems, asset valuations, etc.

Some finance experts even say finance needs a new approach or needs to be re-taught differently. (Old models--for example, "Black Scholes" or "capital-asset pricing" or "efficient markets"--will be taught, but will be challenged or not always accepted as gospel.)

No doubt, pursuing that extra credential will introduce you to novel or updated approaches to finance. You would be in the middle of something new.

In finance, the MBA alone is still a strong degree--having covered important financial topics and issues, having introduced graduates to all aspects of financial theory, and having provided a foundation to pursue other topics in depth. The CFA, CPA or MA is icing on the cake.

So as with many career-oriented subjects, for those already armed with an MBA in finance from a strong program, the answer to the above question comes down to you--your goals, your interests in specific topics, your long-term objectives, and of course your time and budget.

Tracy Williams