We head toward yearend. For almost everybody, that means a welcome break and the upcoming holidays. For many in finance, it means something else: yearend reviews, budgets, evaluations, appraisals, last-moment client meetings, deal closings, balance-sheet and P&L assessments, forecasts for next year, and, yes, speculation about bonus payouts.
For many, yearend is hectic, busy, frantic, and exhausting. Approach most people in finance in December, and they will hint (a) they need a break and will get it in January and (b) they don't want to add anything more to an already suffocating schedule.
Yearend is also a time for finance professionals, MBA students, and MBA alumni (including those affiliated with the Consortium) to reflect and ponder what's next. Where do they want to go from here? What does next year bring? Is it time to make a move? Is it the right moment to approach managers about how they feel about career paths, expected promotions and compensation? Is it time to devise personal strategies to follow through in the upcoming year?
Consortium students, alumni and others in finance are contemplating a lot these days. They sort through opportunities and options, and they struggle to figure out whether we are really over the hump headed toward an economic and markets recovery.
What's on the minds of many this yearend?
Consortium Students
1. Some continue to assess whether investment-banking, trading or investment management is still what they want. A few have even decided to take a different path or turn down lucrative offers to accept similar positions in finance in industrial companies or in business strategy, where there are opportunities to get promoted fairly, work-life balance, and hands-on experience in operations. They have learned and decided they can do corporate finance or M&A at places like GE, Pepsi, or Eli Lily.
They are making the tough decisions to bypass what they may have gone to business school to attain, yet they are comfortable and excited about veering off the original track.
2. On the other hand, some are deciding go head-strong into investment banking, private banking, and investment research or management. That was a primary reason for going to business school, and they are hopeful and confident that the opportunities, deal flow, and rewarding experiences will continue.
Consortium students will be joining firms like Goldman Sachs, JPMorgan, Citigroup, Deutsche and Barclays in the year to come. They know, too, they will benefit from spending the next few years in a grueling, in-depth apprenticeship in corporate finance or investment analysis.
Many prefer to pursue private equity or venture capital and have tried. To get there, however, has been hard and puzzling, because those firms recruit erratically or informally. Students realize it takes contacts to get inside for the few spots that open up. Not surprisingly, some haven't given up.
3. Some Consortium students went to business school with one objective in mind, but discovered another more interesting path once they got there. Hence, they've decided to try something new and different. For example, a few have decided to pursue opportunities in energy, community banking or microfinance. One wants to return to his hometown one day and help boost the family business. And they are enlivened by decisions.
4. Many Consortium students have an exceptional opportunity to study abroad or work as interns in another country during the spring. They cherish the experience and discover when they graduate they want to start out or eventually work in a foreign country. Consortium students last year worked or studied in Peru, South Africa, Tanzania, China and many other countries. One recent graduate decided to accept a banking position, where he is in training in Singapore and will work full-time in Ghana.
5. A few students returned to their second year with meaningful summer internships, but now know they won't return or are no longer interested. Internships served a different purpose. It helped them decide what they don't want to do.
Those second-year students are now back at the starting point drafting a new, better post-grad strategy. Time is of the essence, as they try to find a good offer before they graduate, before they no longer have access to their school's career-advisory resources. And they are trying to avoid a panic situation. But improvements in markets and the economy, they aren't panicking yet.
6. Today's Consortium students lived and worked through the crisis and gladly returned to school. While times are slightly better and opportunities slowly open up, memories of the crisis, the collapse of markets and the aura of a debilitating downturn still linger. Thus, many students are making decisions that would insulate them from another big collapse or downturn, even if the likelihood is low.
They may choose to avoid certain banking jobs, knowing that hints of a downturn will spur managers to lay off new associates. They consider areas where they can focus on learning a new role and gaining maximum experience without having to worry who's the next to go.
Consortium Alumni and Others
1. Consortium alumni today, more than ever, know the value of being ready--being ready for the next opportunity, the next door that opens. Alumni today keep their resumes' up to date, join networking groups, update their skills and are watchful of ugly trends or signs of things not going their way. Long gone are the days when alumni joined a major financial institution two weeks after business school and settled into what might be a 25-year career.
2. Many MBA alumni have wrestled with the difficult decision of whether to add another credential, degree, or certification. To add it requires time and money. They are asking themselves whether they need it to set themselves apart, to add something notable to the resume' or to amass more knowledge in a certain field.
One Consortium alumnus added an MS in quantitative finance this year, and it likely made a difference as a explored roles in start-up finance and private equity. Many others are considering the CFA, and it's not unusual for many Consortium students and alumni to have studied for and passed Level 1. Yet others say an MBA is sufficient and more learning or credentialing should occur in actual experience.
3. Like some students, some alumni have decided to leave traditional banking or positions in finance. They are re-examining their careers and exploring less-conventional fields or less-confining career paths. They still want to use their finance skills. Many say they want one more chance to pursue something that they can be passionate about, regardless of compensation--something about which they would enjoy waking up and doing.
They appreciate the exposure, the experience and the live transactions and client contact in a current role, but they are ready for something more interesting, more dynamic.
4. Alumni, no matter where they are on a finance career path, make tough decisions about family, priorities, values and reality. Alumni in recent years have endured crises, industry upheavals, dot-com crashes, and market turmoil. They have reason to remind themselves of what comes first or what might interfere with their values or priorities.
5. Consortium alumni appreciate and are happy with the contacts, knowledge, skills and confidence that comes with the MBA and are always inclined to put it to work.
7. Alumni are constantly assessing what it takes to move to the next level, get promoted, get noticed and make meaningful contributions. Having come from top-notch schools with rigorous preparation, they tend to set high standards for themselves and push themselves to the next step.
Or they see the success stories of alumni a few years ahead of them and decide they want to follow behind. Hence, they often ask mentors and each other questions about what does it take to advance, how much preparation is necessary, whom to know, or what learning or experience is required.
It's 2010, about to be 2011; students and alumni are asking these questions and reassessing where they are, where they want to be, where they deserve to be, and whether it's time to make a move in some way.
Tracy Williams
Sunday, December 12, 2010
Wednesday, December 8, 2010
What's Around the Corner in 2011?
Will 2010 be memorable in finance circles? There was no major institutional collapse, no memorable moment, or no defining memory. There were financial reform and confirmed regulation, but they had been contemplated the year before. There were no notable financial-institution mergers.
There were occasional scares from European debt markets and the struggle for certain European countries to get their finances in order. There were, as there are always these days, ripple effects all over the globe. There were continual worry about another recession, unemployment trends that never got better, and non-stop chatter about China.
There are worries in municipal markets, as people fret about the deficits and debt among states and local governments. There are faint signs of a revival among those in private equity and venture capital.
The year didn't bring threats to the financial system, an imminent collapse in capitalism, or a demise in hundred-year-old institutions. For many, that was a good thing, signs of times getting better.
As 2011 looms, what can we expect? Or what do we hope for? Where do Consortium students and MBAs wish to be? What career paths do younger finance professionals yearn to plan? Will 2011 bring more of the same--long debates over tax structures, disagreements over whether the recession is over, and little progress in unemployment trends?
What might happen in 2011?
1. Banks are still coming to grips with financial reform and regulation. But the rules of the road are not clear or well-defined. They will adapt institutionally and structurally. But they worry reform and regulation will narrow profit margins and reduce returns on equity. They will, therefore, look for novel, clever ways to boost profitability (new businesses, higher prices to customers, expansion abroad, etc.). The efforts to do so, however, won't be easy.
Restructuring or re-situating themselves while trying to maintain profitability might be enough challenge for big banks--enough to keep them focused inward, instead of outwardly eyeing possible acquisitions. Some might look to acquire smaller institutions if it means getting a quick boost in revenues and if it can be done without exorbitant costs.
2. Everybody is hopeful for continued economic recovery. But everybody--markets, job-seekers, businesses, consumers--has grown fatigued waiting for a sustained upturn, not the quarterly teasers or hints they observed in 2010 or a recovery empowered by government stimulus. Hurdles still exist; perhaps 2011's second half will be the start of the real thing and for the long term.
3. Business-school students in 2011 will have been through rough waters from crisis times. Students will go through school with a different, more realistic mindset. They will still ponder or dream of careers in consulting and investment banking. But they will be more open-minded, will consider broad options, and will be interested in exploring something different. It may no longer be just about the money. Having a life, making a difference, making a contribution and trying something new will count for something, too.
B-schools, including the Consortium 17, continue to attract young professionals as students, and they try hard to convince enrollees that the two years away from job markets will make them better off in the long term--especially those who are in career transition.
4. Banks, financial institutions, and funds will still attract the hardcore finance types into corporate finance, trading and markets. Those who enjoy and are entranced by financial models, quantitative analysis, firm valuation, mergers and acquisitions, and the vagaries and phenomena of capital markets will still head toward banks and funds to be bankers, traders, researchers, investors, and analysts.
5. Presidential politics will gear up in full swing by mid-2011. Market watchers, economists, businesses and traders will look to see which direction political winds might blow in 2012. Will there be more reform and regulation? Will a lackluster recovery justify more stimulus or government intervention? Will new advisers in Obama's economics circle step up and have a voice? Will a Republican majority in Congress overwhelm those who might have novel ways to spur employment?
6. Municipal-bond markets are fluttering; the year to come could be a pivotal one for municipalities struggling to make ends meet and avoid accumulating more debt. And no one has a catch-all solution to how states and cities will grapple with deficits while still trying to support social programs, pensions, schools and universities. A collapse or a default by one large state could have a detrimental ripple effect across other debt markets.
7. European debt markets have sputtered, too, the past year. Every few weeks a country slips into a precarious fiscal state and dominates the news (Greece, Spain, Ireland and others in 2010). And so in 2011, we'll continue to hear discussion, fuss and debate about the value and meaningfulness of the Euro and a European Union.
8. Derivatives trading and derivatives clearance will be better defined, even if it's done among private-sector participants (exchanges, banks, funds, etc.). Financial reform tried to kick-start efforts; more derivatives activity (at least basic, simple trading) will migrate to exchanges, but progress will be slow and deliberate because private-sector participants don't want to risk losing profits or reducing profit margins from trading amond the top dealers. And they must decide who will or should do what and how.
What about the expansion of carbon trading and the market's efforts to put a real price on pollutants and emissions? That, too, will be slow, deliberate, almost a crawl, in part because Congress and Presidential politics never seem to get around to providing the jolt this specialized market requires.
9. Private-equity firms, venture-capital firms and financial sponsors will dare to be aggressive or adventuresome in 2011. They came out of hiding in 2010. With too much capital not doing much at all, many of these firms will decide it's time to put that money to work and take meaningful, measured risks.
As 2011 looms, nobody is predicting surges and booms; nobody is hinting a doom and collapse. A cautious confidence is on the horizon.
Tracy Williams
There were occasional scares from European debt markets and the struggle for certain European countries to get their finances in order. There were, as there are always these days, ripple effects all over the globe. There were continual worry about another recession, unemployment trends that never got better, and non-stop chatter about China.
There are worries in municipal markets, as people fret about the deficits and debt among states and local governments. There are faint signs of a revival among those in private equity and venture capital.
The year didn't bring threats to the financial system, an imminent collapse in capitalism, or a demise in hundred-year-old institutions. For many, that was a good thing, signs of times getting better.
As 2011 looms, what can we expect? Or what do we hope for? Where do Consortium students and MBAs wish to be? What career paths do younger finance professionals yearn to plan? Will 2011 bring more of the same--long debates over tax structures, disagreements over whether the recession is over, and little progress in unemployment trends?
What might happen in 2011?
1. Banks are still coming to grips with financial reform and regulation. But the rules of the road are not clear or well-defined. They will adapt institutionally and structurally. But they worry reform and regulation will narrow profit margins and reduce returns on equity. They will, therefore, look for novel, clever ways to boost profitability (new businesses, higher prices to customers, expansion abroad, etc.). The efforts to do so, however, won't be easy.
Restructuring or re-situating themselves while trying to maintain profitability might be enough challenge for big banks--enough to keep them focused inward, instead of outwardly eyeing possible acquisitions. Some might look to acquire smaller institutions if it means getting a quick boost in revenues and if it can be done without exorbitant costs.
2. Everybody is hopeful for continued economic recovery. But everybody--markets, job-seekers, businesses, consumers--has grown fatigued waiting for a sustained upturn, not the quarterly teasers or hints they observed in 2010 or a recovery empowered by government stimulus. Hurdles still exist; perhaps 2011's second half will be the start of the real thing and for the long term.
3. Business-school students in 2011 will have been through rough waters from crisis times. Students will go through school with a different, more realistic mindset. They will still ponder or dream of careers in consulting and investment banking. But they will be more open-minded, will consider broad options, and will be interested in exploring something different. It may no longer be just about the money. Having a life, making a difference, making a contribution and trying something new will count for something, too.
B-schools, including the Consortium 17, continue to attract young professionals as students, and they try hard to convince enrollees that the two years away from job markets will make them better off in the long term--especially those who are in career transition.
4. Banks, financial institutions, and funds will still attract the hardcore finance types into corporate finance, trading and markets. Those who enjoy and are entranced by financial models, quantitative analysis, firm valuation, mergers and acquisitions, and the vagaries and phenomena of capital markets will still head toward banks and funds to be bankers, traders, researchers, investors, and analysts.
5. Presidential politics will gear up in full swing by mid-2011. Market watchers, economists, businesses and traders will look to see which direction political winds might blow in 2012. Will there be more reform and regulation? Will a lackluster recovery justify more stimulus or government intervention? Will new advisers in Obama's economics circle step up and have a voice? Will a Republican majority in Congress overwhelm those who might have novel ways to spur employment?
6. Municipal-bond markets are fluttering; the year to come could be a pivotal one for municipalities struggling to make ends meet and avoid accumulating more debt. And no one has a catch-all solution to how states and cities will grapple with deficits while still trying to support social programs, pensions, schools and universities. A collapse or a default by one large state could have a detrimental ripple effect across other debt markets.
7. European debt markets have sputtered, too, the past year. Every few weeks a country slips into a precarious fiscal state and dominates the news (Greece, Spain, Ireland and others in 2010). And so in 2011, we'll continue to hear discussion, fuss and debate about the value and meaningfulness of the Euro and a European Union.
8. Derivatives trading and derivatives clearance will be better defined, even if it's done among private-sector participants (exchanges, banks, funds, etc.). Financial reform tried to kick-start efforts; more derivatives activity (at least basic, simple trading) will migrate to exchanges, but progress will be slow and deliberate because private-sector participants don't want to risk losing profits or reducing profit margins from trading amond the top dealers. And they must decide who will or should do what and how.
What about the expansion of carbon trading and the market's efforts to put a real price on pollutants and emissions? That, too, will be slow, deliberate, almost a crawl, in part because Congress and Presidential politics never seem to get around to providing the jolt this specialized market requires.
9. Private-equity firms, venture-capital firms and financial sponsors will dare to be aggressive or adventuresome in 2011. They came out of hiding in 2010. With too much capital not doing much at all, many of these firms will decide it's time to put that money to work and take meaningful, measured risks.
As 2011 looms, nobody is predicting surges and booms; nobody is hinting a doom and collapse. A cautious confidence is on the horizon.
Tracy Williams
Wednesday, December 1, 2010
Where Do We Go From Here?
The times are peculiar. Here we are, two years beyond the collapse of Lehman Brothers and the near collapse of the financial system of the fall of 2008. The system--thanks in part to bailouts and quick marriages of top firms--picked itself up, and a slow recovery ensued.
Yet we haven't returned to the euphoria of pre-2007, where deals proliferated, trading indices surged steadily and bankers could be choosy about what they wanted to work on and which clients they wanted to work with. Two years after the tumultuous fall, 2008, everybody acknowledges the end of the crisis. But few will admit times are booming in finance (or in certain sectors of the economy). And if there are faint signs of a sharp upturn or a flurry of new deals, transactions, and upward-moving markets, everybody treads carefully, as if to always prepare for the worst.
MBA recruiters in finance continue to knock on the doors of business schools, make elaborate, impressive presentations to first-year students. They try to lure students and impress them. But they recruit and hire with caution--with a steady peek at markets and business in the year ahead to assure themselves they won't stockpile their banking teams with associates only to be forced to downsize shortly afterward.
Still, post-crisis, there are deals to be done, investments to be analyzed, portfolios to managed, clients to be wooed, and business objectives to be met. New bankers, associates, and analysts are necessary to get it all done. Nonetheless, in the back of the minds of senior management at banks, insurance companies, investment firms, and funds is a lingering question: Has the tide turned for sure? The dark memories of 2008 continue to haunt.
Because of financial reform (including recent legislation and Basel III guidance), banks are treading most carefully. They must restructure vast parts of their businesses and are deeply entrenched in strategy sessions figuring out how to do it--how to conduct business, do trades, and make investments with a constrained balance sheet, with increased capital requirements and with rules that don't permit them to trade for their own accounts.
They must respond to questions: What do we do with our proprietary-trading desks? What do we with businesses that invest in new ventures and hedge funds? How do we make loans, underwrite securities, or trade derivatives when new rules that limit how much we can do or what we can do? And who will do it? How many are necessary to do it? For new MBA graduates or more junior finance professionals, what career paths will there be? And how do we attract top talent into a profession besieged by much uncertainty?
Meanwhile, financial institutions are pressured to show stable profits, revenue growth and business expansion. They ask: In the new environment, where will revenue growth come from? From a renewed focus on retail activities? From international expansion? From new products? From investing in businesses and products to boost market share?
Some have begun to take those first steps. JPMorgan announced expansion in international sectors earlier this year. Other big banks (including BoA-Merrill, JPMorgan and Credit Suisse) have begun to emphasize corporate banking more. Just about everybody wants to grow their private-banking and investment-management groups.
Because they must graple with these tough, strategic questions, financial institutions become hesitant about hiring too swiftly and too much. They are careful about making lateral hires, adding experienced talent or opening their doors to large numbers of new MBA graduates until they are sure the business opportunity is there or the returns on capital are sufficiently achievable. And until some of them figure out how to weave through the regulatory requirements.
Some are being forced to shed parts of their businesses (proprietary trading, hedge-fund-like activities, etc.). But even that's not easy, as they tenderly extract the parts (assets, people, systems, software, etc.) and then sell them or spin them off. That will take time, while they figure how to do it and to whom to sell. Some must decide what they want to be and do (Be a regulated bank? Be a pure brokerage outfit? Be a prop-trading fund?). That, too, will take time, as they weigh input from various stakeholders (shareholders, employees, the board, senior managers, etc.).
And some have decided that the best strategy is to become what they once were: a commercial bank with basic deposit and lending businesses, a brokerage firm without trading or banking units, an investment bank with no brokerage and lending units, an insurance company with no ties to banking and brokerage, etc.
Most will contend current times are better than crisis times--that financial institutions are hiring, not reducing staff significantly; that they are doing business, not tending to emergencies or trying to save themselves, and that they are generating profits and satisfactory returns, not hunkered down to pare down losses. Nevertheless, there is still a feeling we're on the hump, just not yet far over it.
Tracy Williams
Yet we haven't returned to the euphoria of pre-2007, where deals proliferated, trading indices surged steadily and bankers could be choosy about what they wanted to work on and which clients they wanted to work with. Two years after the tumultuous fall, 2008, everybody acknowledges the end of the crisis. But few will admit times are booming in finance (or in certain sectors of the economy). And if there are faint signs of a sharp upturn or a flurry of new deals, transactions, and upward-moving markets, everybody treads carefully, as if to always prepare for the worst.
MBA recruiters in finance continue to knock on the doors of business schools, make elaborate, impressive presentations to first-year students. They try to lure students and impress them. But they recruit and hire with caution--with a steady peek at markets and business in the year ahead to assure themselves they won't stockpile their banking teams with associates only to be forced to downsize shortly afterward.
Still, post-crisis, there are deals to be done, investments to be analyzed, portfolios to managed, clients to be wooed, and business objectives to be met. New bankers, associates, and analysts are necessary to get it all done. Nonetheless, in the back of the minds of senior management at banks, insurance companies, investment firms, and funds is a lingering question: Has the tide turned for sure? The dark memories of 2008 continue to haunt.
Because of financial reform (including recent legislation and Basel III guidance), banks are treading most carefully. They must restructure vast parts of their businesses and are deeply entrenched in strategy sessions figuring out how to do it--how to conduct business, do trades, and make investments with a constrained balance sheet, with increased capital requirements and with rules that don't permit them to trade for their own accounts.
They must respond to questions: What do we do with our proprietary-trading desks? What do we with businesses that invest in new ventures and hedge funds? How do we make loans, underwrite securities, or trade derivatives when new rules that limit how much we can do or what we can do? And who will do it? How many are necessary to do it? For new MBA graduates or more junior finance professionals, what career paths will there be? And how do we attract top talent into a profession besieged by much uncertainty?
Meanwhile, financial institutions are pressured to show stable profits, revenue growth and business expansion. They ask: In the new environment, where will revenue growth come from? From a renewed focus on retail activities? From international expansion? From new products? From investing in businesses and products to boost market share?
Some have begun to take those first steps. JPMorgan announced expansion in international sectors earlier this year. Other big banks (including BoA-Merrill, JPMorgan and Credit Suisse) have begun to emphasize corporate banking more. Just about everybody wants to grow their private-banking and investment-management groups.
Because they must graple with these tough, strategic questions, financial institutions become hesitant about hiring too swiftly and too much. They are careful about making lateral hires, adding experienced talent or opening their doors to large numbers of new MBA graduates until they are sure the business opportunity is there or the returns on capital are sufficiently achievable. And until some of them figure out how to weave through the regulatory requirements.
Some are being forced to shed parts of their businesses (proprietary trading, hedge-fund-like activities, etc.). But even that's not easy, as they tenderly extract the parts (assets, people, systems, software, etc.) and then sell them or spin them off. That will take time, while they figure how to do it and to whom to sell. Some must decide what they want to be and do (Be a regulated bank? Be a pure brokerage outfit? Be a prop-trading fund?). That, too, will take time, as they weigh input from various stakeholders (shareholders, employees, the board, senior managers, etc.).
And some have decided that the best strategy is to become what they once were: a commercial bank with basic deposit and lending businesses, a brokerage firm without trading or banking units, an investment bank with no brokerage and lending units, an insurance company with no ties to banking and brokerage, etc.
Many, too, must patch up their reputations post-crisis and determine how to present themselves to the mass market--to consumers, to corporate clients, to trading counterparties, to regulators, and to the media and politicians. That hasn't been easy, because 2008's near collapse can is tied to--among many factors--behavior and activities from some financial institutions.
Financial institutions, too, continue to try to figure out the compensation puzzle--how to pay people handsomely, how to attract smart people to the profession, but how to do it in a way that will not irk shareholders and the public or draw gnawing attention from the media. How do they assure themselves they can show up at top business schools and attract eager, motivated students to join their institutions? What can they do to ensure that top mid-level talent (the deal-doers, the traders, the investors, the salespeople, the researchers, the operations experts) will not flee for other options?
With so much to figure out, so much soul-searching and so much trying to visualize what they want, can and need to be, they proceed or plod with caution. So instead of hiring 100 new MBA associates as they might have done in 2005, they settle for 50 or 75. Instead of bring aboard 20 new experts or professionals to take on a new product, new venture or new client base, they show restraint and start out with just 5 or 10--just in case the new business doesn't take off or regulation and balance-sheet constraints force them to grow slowly.
Most will contend current times are better than crisis times--that financial institutions are hiring, not reducing staff significantly; that they are doing business, not tending to emergencies or trying to save themselves, and that they are generating profits and satisfactory returns, not hunkered down to pare down losses. Nevertheless, there is still a feeling we're on the hump, just not yet far over it.
Tracy Williams
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