MBAs: Second-Year Dilemma

Many Consortium MBAs in finance returned to business school this fall with a comfortable smile on their faces. They had productive summer internships at banks, corporations, investment funds, and private-equity firms. Many of them also had offer letters, permitting them to return after graduation in a full-time role.

But many of them have "exploding" letters, which require them to make a decision to accept or reject in a matter of weeks. If they don't, the offer is forfeited. The feel-good moments in the waning days of summer can turn suddenly into an anxiety period: Do I accept or reject this opportunity of a lifetime? Do I explore something else? Do I really like banking (or trading, investing, research or analysis)? Do I prefer to do the same at another firm? Do I give myself the well-deserved chance to shop around? Do I still look for that "dream role"? Or do I try to negotiate with the company to get more time to think this through?

Some companies apply pressure and request a final decision be made before a set date--sometimes as early as October 1. Second-year MBAs face a dilemma and must make tough decisions. Outsiders might suggest that in the current environment it's a dilemma they are fortunate to have, because they have a real opportunity and a real job at graduation.

How can second-years handle this special situation?

1. Objectives. It helps for them to understand their short-term and long-term career objectives. Many times, the offer in hand might fulfill a short-term goal (business, client, deal or trading experience, upward-sloping learning curves, extended networks, organization experience, and compensation). Does, however, the short-term goal permit you to reach the long-term goal (whatever that long-term goal could be)?

Outlining objectives and examining them thoroughly might permit the second-year to make the right decision, especially if the longer-term objective is most important.

2. Aptitude. Another approach is to understand what you want to do and what you can do. Many MBA graduates want to start in positions where they will thrive and do well. They want to launch their careers as success stories.

The second-year, therefore, may choose to delineate in detail

(a) what you want to do in that first job,
(b) what you know you can do well, and
(c) what you like to do day to day.

If all three overlap in some way, or if an MBA in finance wants to, can do, and will like doing the job, then it's likely he or she will do well starting out. When the offer presents a role where all three come together, then the MBA can't go wrong in accepting the job.

If the offer doesn't permit the three to intersect in a substantial way, then it might make sense to explore other opportunities.

It's not as easy as it appears here, because often you know you can do the job and wouldn't mind doing it, but it may be something you dislike or can't tolerate. But it may be the role that is a convenient stepping stone to a long-term objective. If the long-term goal is important and if you can do the job well, then you might rationalize accepting the offer.

These kinds of self-assessments can help guide in final decisions.

3. Options, Opportunities. Second-years in these times must survey what the opportunities and options are in finance. Uncertainty in markets and in the recovery will limit options. So they must be sincere with themselves about the implications of turning down an offer that's in hand.

Banks and other financial institutions turned up the gears in hiring in early 2010. There are hints now, however, they may slow down a bit, not because business has evaporated, but because they certainly will be cautious about over-hiring.

Second-years who want to explore options and opportunities are in the best environment to do so--on campus, where banks and corporations will continue to touch bases with business schools even if they may not be recruiting aggressively.

4. Mentors, Alumni, and Networks. Second-years would benefit from discussing their situations with others who have been through the same. They'll learn how others grasped and approached the decision and understand factors in those decisions. More experienced mentors and alumni will even acknowledge whether their decisions were wrong or bad and contemplate what they might have done, if they had the same decision today.

The second-year who still has doubts about the summer experience and is frustrated by an impending "explosion" from an offer might still ask for an extension from the hiring company. There are rules, but companies bend them. A follow-up discussion with the company might give the second-year a chance to see the company in a different way, speak to others to get more details about the position, or negotiate a move to a more satisfying or vibrant group.

At some point, decisions must be made. Most second-years will agree these decisions are tough (because they often involve relocation and personal commitment of about two years to the role), but this one may not be the toughest of all. Deciding whether to attend business school and choosing which business school might have been tougher.

Tracy Williams

The MBA and the CFA: Part III

MBA students and graduates in finance, especially in current times when they seek an advantage of some kind, have wrestled with whether or not to pursue the CFA designation. They ask themselves: Is it worth the time, effort, costs, and uncertainty? Can it be used to propel a career? Some ask: Is there overlap with finance courses in business school? And many are now wondering: Does it make a difference in a career path? Or in pursuing a specific job spot?

The Consortium Finance Network is helping to respond to some of these questions by sponsoring a webinar, "The MBA and the CFA," October 5 from 5-6:30 p.m.

The webinar will raise these same questions and address topics related to the CFA. Most MBAs know there are three levels of exams, but what do they entail? How much preparation is necessary? How can I prepare for the CFA while in a demanding job? What topics are covered? How can an MBA student choose certain courses in business school that will help prepare for the CFA? In investment management roles, do I really need the CFA to succeed?

Charles Appeadu (above), Director of Sample Exam Development at the CFA Institute, will make a presentation, followed by questions and commentary. Appeadu was a finance professor at the Univ. Wisconsin-Milwaukee and Georgia State Univ. before joining the Institute in Charlottesville, Va. He has a Ph.D. in finance from the Univ. Washington. Not only does he have a CFA, he also has certifications in FRM (financial risk management) and CAIA (alternative investments).

Appeadu will address some of these questions. He will describe what the CFA covers and what business schools don't and tell about other topics the CFA covers in the wake of the financial crisis.

Some institutions (funds, banks or investment managers) actually require the CFA for some spots. Others are encouraging it, even if it doesn't have a direct connection to the role. Others find the CFA gives them a knowledge advantage ("oneupmanship") in traditional banking roles.

CFN members, Consortium students and alumni and others interested in finance, investments and the lure of the CFA should join the webinar.

Tracy Williams
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For more on the MBA and the CFA, see:

http://consortiumfinancenetwork.blogspot.com/2010/05/mba-and-cfa.html

http://consortiumfinancenetwork.blogspot.com/2010/06/mba-and-cfa-part-ii.html

Register on the Consortium Finance Network Linkedin: www.linkedin.com

Finance Websites: Keeping Up, Sharing Knowledge

In finance, much of success is not just about who you know and where you work--although that surely contributes to much of it. Success (if measured by progress, advancement and promotions) is also about what you know, what you are learning, and how you are keeping up: Are you aware of trends, innovations and new products? Do you understand different perspectives or insights regarding markets, corporate finance or corporate industries? Are you up to date on regulatory issues, financial reform, or global expansion? Do you have an informed view of whether we are in a period of recovery or slipping back into a recession?

That's where informative, carefully prepared blogs and websites can be useful. And that's where a few Consortium students and alumni have stepped up.


Consortium student LaMarr Taylor announced this week his new website focusing attention on relevant issues in private wealth management (PWM). PWM is a popular career choice for many MBA students. For many financial institutions, it's a targeted area for growth in the next few years.

Taylor, a second-year student at Indiana, is set to work full-time next year in PWM at a major bank. In the meantime, he has assembled a website (http://www.lamarrtaylor.com/) devoted to addressing, reviewing and synthesizing topics in PWM. Viewers to the site get a synopsis of all issues relevant to bankers, investment managers, and financial advisers.


The site, for example, currently covers such issues as toxic assets, Basel III, and the possibility of double-dip recession--topics professionals in financial consulting ought to be familiar with or at least have a framed understanding. Taylor also summarizes a conference he attended, called InvestIndiana, which featured presentations of public companies based in Indiana or with a significant impact or presence there.


Taylor has an undergraduate degree in electrical engineering, and at Indiana, he is a member of the Investment Management Academy.


He is one of a handful of Consortium alumni and students who decided it would be worthwhile to aggregate information and tackle issues in particular finance areas.

Ken Alozie, a Michigan Consortium alumnus, continues with his site http://www.bankingorbust.com/, aimed at helping analysts and associates thrive (or survive?) at investment banks or in corporate-finance roles. The site offers a primer in all important corporate finance topics, provides updates on technical topics and current issues, and in some ways is a refresher for even the most experienced finance people.

The site helps new associates use b-school finance to be effective analysts or financial modelers in mergers & acquisition or leveraged finance. Now over 18 months old, the site even dares to explain the problems from subprime-mortgage securitization or the intricacies of credit-default swaps.

After Michigan, Ken earned an M.S. in finance and is now involved in private equity.


Consortium alumnus Rob Wilson provides regular updates on money management on his site http://www.robwilson.tv/. Wilson, who is a graduate of Carnegie Mellon, appears often on local television in Pittsburgh, offering advice on investments and retirement planning. Wilson also advises many professional athletes and entertainers.

In March, he sponsored his own version of March Madness by featuring a stock-picking contest similar to the NCAA basketball brackets.

Recent Indiana-Consortium alumnus Felicia Enuha is using her blog to chronicle her first year on the job after getting an MBA: http://www.thefarembalife.com/. A recent posting offers 10 helpful hints how to be effective in the midst of networks at the National Black MBA Conference.
Other postings describe the transition from business school to work life and her thoughts about how she'll take steps to reach her long-term career goals.

The advantage of sites like these and others is that while informing others (peers, colleagues, students and other graduates), they offer a special perspective, a Consortium view.

Tracy Williams

OFN: Taking the Lead in Community Development

There is an organization and network many in finance ought to know about, if they don't already and if they want to know about financing programs that make a difference and have immediate impact in communities. The Opportunity Finance Network, with programs, activities and funding relationships all over the U.S., acts in the hub of all of community-development finance.

"Our mission," says Donna Fabiani, OFN's Executive Vice President for Knowledge Sharing, "is to bring the whole industry (of community development finance) to scale." OFN (http://www.opportunityfinancenetwork.net/) is membership-based and connects investors and lenders to financial institutions and funds that finance low-income and low-wealth communities.

Today 180 Community Development Financial Institutions (CDFIs) are members and beneficiaries of OFN. Over 900 CDFIs exist in the U.S., many with a certification from the U.S. Treasury, based on critieria. CDFIs may themselves be small banks or funds with direct ties to the low-wealth community. OFN acts as an adviser or facilitator to CDFIs, who are funded by investors/lenders and, in turn, lend directly into the community.

With OFN's guidance, those who invest or lend (to CDFIs) may include investment funds, venture funds, larger banks, and other lenders. Some are unregulated; some regulated. OFN's role assists investors who seek to engage in "socially responsible investing." The funds and banks lend to CDFIs or make investments in them. Or they may arrange co-investments with CDFIs. OFN, since its inceptions, has arranged over $23 billion in financings with CDFIs.

CDFIs, in turn, use the funds to make loans to small businesses, consumers, or non-profit organizations or make loans to facilitate housing and microfinance activity.

Many of the funds that invest in CDFIs are non-profit organizations with goals to boost economic development in certain areas. Others have other objectives: achieving a target return on investment, providing job opportunities and growth in designated geographies, or (in some cases with banks) seeking CRA-related ("Community Reinvestment") credit.

OFN also manages a CDFI fund to make investments and loans to CDFIs. Thus, investors contribute to the fund, which invests or lends directly to the CDFI. In some ways, Fabiani says, OFN is a "fund of funds."

OFN's role extends beyond arranging financing and acting as the go-between that pulls it all together. It also greases the wheels to keep all participants informed, updated, and aware of policy and economic issues. It sponsors an annual national conference on community development where participants (investors, funds, banks, CDFIs, policy-makers, economists, and others) meet to discuss current topics, issues, lessons learned, current, pending legislation, and knowledge sharing.

OFN administers its own ratings system (CDFI Assessment and Ratings System or "CARS") to help investors and lenders decide which CFDIs they may want to finance. The ratings offer not just a financial assessment of the CFDI, but a community-development-impact assessment. The ratings help investors/lenders in managing investment risks and in determining determine whether the investment meets social-responsibility objectives.

This year, OFN's 26th annual conference will take place in San Francisco November 2-5 and will be one of the largest gatherings in the U.S. on community development, bringing together hundreds of important participants, including lenders, investors, CDFIs, and government agencies. At this year's conference, Federal Reserve Bank-San Francisco president Janet Yellen will be a keynote speaker.

In other sessions at the conference, OFN will outline a 15-year community-development (or "opportunity finance") strategy. There will be programs focusing on green finance, consumer finance, risk management, housing finance and small-business finance. Seminars or events on selected topics will be scheduled: e.g., CDFI board management, loan participations, social media and online funding, the disabilities market, and managing delinquencies.

Consortium MBAs and CFN members (including students, alumni and supporters) interested in community-development finance, socially responsible investing, microfinance, small-business lending, and housing finance should consider attending. They get the chance to connect with participants from all facets of the industry and learn about career opportunities. They can learn more about the funds or organizations that invest or the institutions that lend directly into the community.

OFN sponsors smaller, regional conferences. They, too, focus on important industry topics or programs and efforts to increase knowledge in a special topic or provide invaluable updates. The next regional conference will be in December in Dallas.

OFN is not yet a Consortium sponsor, but is interested in establishing ties with the organization, Consortium schools, students and alumni by acting as a conduit to community-development finance.

Those interested in following up or learning more can explore the website or contact Fabiani at dfabiani@opportunityfinance.net.

Tracy Williams

The FARE MBA Life: National Black MBA: Are You READY!!!!

"I will be attending the National Black MBA Association's Annual Conference which is being held in Los Angeles, California.  I have only been as far west as Las Vegas so I'm super pumped about this trip in less than two weeks.

I have registered for the Leadership Institute and I'm super stoked to be attending as a member and participant of the conference for the first time.   Shout out to my company for supporting what's important to me.... [continue reading]

By Felicia Ann Rose Enuha

Consortium Alumna, Indiana University, Class of 2010

Autumn: Conferences and Career Fairs

August is often a time of planning for the fall and the months thereafter. It's commonplace to slow down during the last weeks of the summer and defer projects until September and October or prepare for big events, big deals, big transactions, and big roll-outs of new strategies or business plans. Or attend big conferences, conventions and network gatherings. Professionals in business and banking roll up their sleeves and get back to trying to finish the year with a big bang.

In finance, there is an eye on the November elections. Many want to see who will emerge as victors in Congress and who will influence the follow-up steps in financial reform or determine whether there will be another round of Government stimulus.

And there is another eye on financial reform itself, as Congress hands off responsibility to many agencies and regulatory bodies to decide in detail what will happen to the structures and size of banks or the ways derivatives and other complex financial instruments will be traded and priced.

It's an important time for recruiting at top business schools (including at the Consortium 17). Top companies, banks and firms head to campus in September and October to sell and show off the best of themselves to students--even if they aren't yet sure how many they intend to hire in 2011.

Nonetheless, it's conference season, too.

Right now there's buzz about the National Black MBA Association Conference in Los Angeles (Sept. 21-25) (www.nbmbaa.org). MBA students, alumni, and professionals turn out annually for the event. This year's event is practically in the backyards of Consortium schools USC and UCLA. Many banks and corporations make it a priority to participate in its career fair. (The Consortium, too, always has a presence at the conference.) This year's theme is "Blink--the speed of change."

The conference is an important networking event; over 12,000 are expected to attend a five-day series of events geared to MBAs of all interests--marketing and sales, finance, business management, and operations.

"National Black MBA" is not the only game going on this fall. The Opportunity Finance Network is hosting its annual conference in San Francisco Nov. 2-5. OFN (www.opportunityfinance.net) is a seven-year-old organization that facilitates financing to support low-income, low-wealth groups in the U.S. It arranges funding for community development financial institutions and now has over 170 members in its network. It has arranged over $23 billion in financings.

This year it reached out to the Consortium to establish ties, learn more about the Consortium and use the Consortium's own networks to spread the word about its mission and purpose. Donna Fabiani, an Executive Vice President at OFN, says at its annual conference this November it expects "over 600 community development practitioners, investors, funders, and policy makers from around the country to attend."

MBAs and finance professionals interested in community development in all phases and segments will want to attend or learn more about OFN's role. (Contact Fabiani at dfabiani@opportunityfinance.net to learn more about OFN. The Consortium Finance Network plans to highlight more about its programs and financings in the periods to come.)

Amidst a brisk conference season, don't forget the National Society of Hispanic MBAs (www.nshmba.org). Its annual conference will be in Chicago October 21-23. Its agenda will include several professional-development seminars, including some finance-focused. A highlight of the conference is its CEO speaker series. CEOs from Humana, Campbell Soup, and State Farm are scheduled to appear. The Consortium will make appearance in Chicago, as well.

For young entrepreneurs and those interested in the next earth-shaking startup, there is the "Lean Startup Machine (New York)" : www.theleanstartupmachine.com. Says Kyle Kelly, a co-founder of the New York group, "for an early-stage start-up, the idea is to build something that people want."

The organization hosted a conference for budding entrepreneurs in New York in July. Its next event is in Chicago November 6.

It emphasizes developing a product or service based on what a customer specifically wants and doing so before reaching out to investors for funding. Kelly described the methodology as a "customer discovery process," where entrepreneurs learn what the customer wants and analyze feedback during product development. The entrepreneur uses an iterative feedback to design and tailor the product to a customer base. In the end, when the product is fully developed, a known market already exists.

LSM intends to teach and spread its principles at weekend sessions (like the one in July) and hopes to lead more sessions elsewhere. At the events, experts and entrepreneurs show how the principles lead to a defined market base, funding, and business success.

The principles are based on methodology developed by Eric Ries, an advisor for many technology startups and venture-capital firms and a co-author of books on entrepreneurship. He shares his experiences and lessons learned in his own blog (www.startuplessonslearned.com).

Tracy Williams