European MBAs' Interests In Finance Flatlines, Schools And Recruiters Spell Out Challenges

Financiers are unable to pass the buck onto the next generation. MBAs are shunning finance roles, and schools and recruiters from top banks spell out the challenges ahead.

The hastily assembled crowd fell silent as Bocconi Graduate School's Dean began to spell out the challenges facing the financial sector in Europe.

They had arrived late and suddenly filled the plush reception hall overlooking the Thames in the heart of London to hear Professor Francesco Saita reveal the challenges facing European business schools.

He had just flown in from Italy, where he heads SDA Bocconi School of Management, and had spent the day visiting trading desks at top investment banks. The school is already partnered with a bevy of top companies and have links to some of Italy’s big-name brands.

When Prof Saita announced the challenges facing MBA graduate recruitment, it may have been seen as dramatic, as the woes of the financial crisis still creep into MBA job conversations.

But job prospects in the finance sector may now be under threat. The top recruiters have become more selective. And state funding cut-backs have cast a shadow over many schools’ places in MBA ranking tables.  

This year, leading European business schools have published figures showing that its MBA students are going into the sector in fewer numbers. The proportion of those wanting to start finance careers immediately after graduation appears to be falling.

At London Business School, the number of those entering finance has dropped to 28 per cent, down from 38 per cent in 2010.  At INSEAD, its latest employment report of the class of 2012 reveals that 14 per cent of graduates had gone into finance, half the figure of 2008 and “probably the lowest” figure the school has ever seen.

There had been an upward trend towards pre-crisis levels of finance recruitment. But INSEAD notes it "came to an abrupt halt in 2012".

SDA Bocconi’s latest career report, compiled in 2012, reveals that 11 per cent of their full-time MBA cohort went into financial services.

At IMD, a top-ranking Swiss business school, just 3 per cent of their 2012 MBA cohort went into financial services, compared with 24 per cent of the class whom went into manufacturing.

Schools have said the drop was particularly noticeable in investment banking. At LBS, 11 per cent of the 2013 class went to work in investment banks, down from 23 per cent in 2010. The fall was particularly steep for INSEAD; investment banking accounted for 46 per cent of finance recruits in 2011 but only 32 per cent in 2012.

Some may fear worse lies ahead. “In the process of not fantastic economic environment, to put it mild, Europe-wise after 2008, most of the top recruiters have become more selective,” says Prof Saita. “So there has been a clear process of, in finance, the recruiters looking only for top [business schools] and concentrating their efforts only with a few kinds of partners.

“We hear all the time: ‘We are cutting the campus visits to seven places in Europe’. It changes a lot because people who want to find top jobs, the first question is: Am I in a place which is on the radar of the top places for which I want to be recruited?”

The Dean adds that this provides a fantastic opportunity for people at the right schools. But for others, prospects are unclear.

For the last few years, the largest chunks of finance hiring have been concentrated in emerging markets. There is strong growth in demand in Asia and the Middle East, but North America and central Europe has yet to recover from the post-crisis fall.

In Africa and the Middle East, there was 29 per cent more demand for MBA hires at financial services companies, according to a survey by QS, and in Eastern Europe, demand dropped 8 per cent.

Many top financial services firms feel they need to concentrate on specific universities. “For us and for many competitors I talk to, they need to focus on specific universities in specific locations, which we know give us that level of quality that we want to see,” says Roberto Rossi, HR Manager of EMEA (non-UK) at Morgan Stanley.

“And especially since the financial crisis, which has hit the financial sector so badly in the last few years, we need to focus on fewer events, fewer universities and you go back to the places where you know you can have a big impact, and are more likely to find more talent.”

Despite less MBAs pursuing finance jobs in Europe, some commentators have suggested there is more competition. The potential rewards still remain enormous. Salaries and bonuses in financial services are close to $110,000 per year for MBAs.

But top financial services firms find it tough to advertise careers to MBAs post-financial-crisis. “We saw a bit of a drop in applications since the financial crisis; banks have been blamed a lot for what has happened… so it’s a challenge for us,” says Roberto.

“The financial sector is not the easiest brand to sell these days because we are facing a big reputational challenge. The sector is less attractive. The challenge is to be consistent and keep up with what you promised during the recruiting phase during years to come.”

Strong technical skills are a pre-requisite for finance roles, but it is flexibility that can give you an edge, says Prof Saita. “The issue of flexibility is important. We have people coming out from very specialized Master’s [programs] who are able to do fantastic trade marketing but only trade marketing. That is perceived to be a problem,” he says.

“You want somebody, if you’re working in a multinational firm, who understands the implications of microeconomic trends [and] how the firm is going to evolve in an international market. And the effort of providing this flexibility is an issue.”

Roberto agrees. “There are a lot of candidates with those [technical] skills and how do you select from among them? You look for flexibility, attitude towards change and communication [skills]. And teamwork for us is increasingly important,” he says.

Some schools in Europe may feel there is a retreat. There has been an increase in top finance firms hiring undergraduates. Roberto says that most of his new hires for Morgan Stanley are from Bachelor’s and undergraduate programs. Some banks have retreated from campuses altogether and J.P. Morgan recently stopped recruiting from campuses in EMEA for its investment bank.

However, the overall decline in MBAs entering the financial sector masks more positive trends. More students have accepted jobs in asset management and there has been some stability in the prized private equity and venture capital sub-sectors. Of INSEAD’s class of 2012, asset management accounted for 21 per cent of finance recruits, up 11 per cent from a year earlier.

Meanwhile, Roberto from Morgan Stanley remains defiant. “There are numerous opportunities to succeed in an environment which is changing and which no one can predict in a few years’ time. I think it is a challenge that a lot of people still want to take,” he says.

“We can’t predict what our sector will look like in five or ten years’ time, but we need people who will be ready to face the challenges of that time.” 

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