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