Despite the stream of finance scandals, enthusiasm for financial training is high. Spurred by tasty earnings and strong recruitment — from asset management to investment banking and private equity and venture capital —record numbers are pouring into finance programs everywhere.
Yet financial training has had to adapt to a radically altered post-crisis environment.
As if to underscore the point, just as the world’s top business schools revealed recruiting data last month, six global banks including UBS and Citi were reeling over the order to pay more than $5.6 billion over the foreign exchange rate rigging scandal.
Greater emphasis is being placed on risk management, financial regulation and ethics, as employers demand greater rigour in the way financial sector employees are trained.
Stephen Horan, managing director of credentialing at CFA Institute, the association of investment professionals, says: “Since the financial crisis, there has been a growing emphasis on professionalism and the need to demonstrate an adherence to professional standards in addition to technical competence.”
The demands placed on financial workers are greater than ever before, owing to competitive and investor pressures, and tighter regulation. Ethics, sustainability and responsibility have come into focus since banking crisis, says Dr Julia Knobbe, program director at the Frankfurt School of Finance & Management.
Like its competitors, Frankfurt School has changed its curriculum. Students on its Master of Finance program are now required to complete a core module in risk management. It also struck an academic partnership with the Global Association of Risk Professionals.
Such changes are yielding results — applications have surged 25% over the past two years, boosted by an influx of international financiers.
Across the board business schools are seemingly moving on from the crisis. At ESADE Business School applications to the MSc in Finance have increased three-fold over two years, says Santiago Forte, academic director. Em Lyon in France, Cambridge Judge in the UK, and Sweden’s Stockholm School of Economics all report increases in applications.
Tom Robinson, president and chief executive of AACSB International, the business school accreditation body, says: “There has been a shift of interest from MBA or general business masters degrees to those with a more specialized focus.”
The number of specialist degree programs in finance offered by schools has increased by nearly 25% over four years, according to data from the AACSB.
“The depth and breadth of knowledge needed to practice in finance is higher than it has ever been….Students must acquire the right knowledge, skills and abilities to distinguish themselves,” Tom says.
Demand for financially fit graduates is high. There is a growing need for talent with professionalism coming from financial employers and even regulators.
Viet Ha Tran, a senior associate director for the master in finance programs at IE Business School, says the surging number of prospective students is the result of the “brighter picture” in the global financial careers market.
“The job market remains very favourable for business school graduates,” she says.
Students are keen to study at a school close to the world’s financial centres to boost job prospects. Increasingly, there is a globalization of financial training.
“The applicant pool is now very international,” says Professor Bo Becker at the Stockholm School of Economics. “Ten years ago it was almost exclusively Swedish, but now the Master in Finance is equally split between Swedish and international [candidates].”
One sign of the recruitment frenzy is the whopping earnings being offered by investment banks for junior bankers. Goldman Sachs, Morgan Stanley, Credit Suisse, Deutsche Bank, and Bank of America Merrill Lynch have all increased junior employee pay, by as much as 20% in some cases.
Graduates of the finance master’s at MIT Sloan School in the US are earning more than $113,000 on average; at China’s Peking University more than $97,000.
But as the nature of financial training has changed so too have the skills required to work in global finance.
In addition to greater knowledge of risk and compliance, quantitative, econometric modelling and even some computer programming skills are sought by financial sector employers, according to Steven Young, head of the finance and accounting department at Lancaster University School of Management.
Soft skills, such as critical thinking, leadership, and the ability to deliver concise and coherent presentations continue to rank highly, he says, while internships are starting to emerge as a key requirement.
Differences also exist in the jobs students seek after completing their studies. “There are fewer students going into sales and trading and more students going into M&A and strategic consulting,” says Jacques Olivier, program director for the Masters in Finance at HEC Paris.
“We also see students doing the transition from investment banking to the buy-side — private equity, hedge funds — much faster than before the crisis,” he says.
Alex Stremme, assistant dean for the MSc Finance at the UK’s Warwick Business School, acknowledges the shift towards employers demanding a wider range of skills from financiers.
But he is in no doubt about the current skills focus: “Risk management, in particular credit risk, has received much more attention,” he says.
Risk and compliance have evolved from the need to “make the regulators happy” to an operational focal point. “With the wave of astronomical fines imposed upon some banks, most players in the industry are almost paranoid about compliance,” he says.
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