These students are moving away from investment banking and trading desks by seeking out careers in investment firms and hedge funds as banks continue to face regulatory scrutiny and curbs on pay and bonuses.
Instead, they are taking advantage of the growth in the asset management and private banking sectors, as the global fund industry continues to profit from a flow of assets into investment firms.
The consultancy PwC recently predicted that assets under management will surge from $64 trillion today to more than $100 trillion in 2020.
More students have accepted jobs in asset management and there has been some stability in the prized private equity sector. At INSEAD, asset management accounted for 21% of finance recruits in 2012, up 11% from a year earlier. At both London Business School and the US’ Tuck School of Business, investment management has risen to be the second most popular finance function.
There is strong demand for investment management staff, while sales, marketing and compliance functions are hiring strongly.
“We have so much wind on our backs in terms of the flow of assets. We are going to reach new highs,” said Elizabeth Corley, CEO of German fund house Allianz Global Investors.
Allianz GI has expanded its number of investment professionals in areas such as emerging market debt, multi-asset investing and infrastructure debt, and now has 2,600 employees globally.
A recent Robert Half survey of more than 2,100 CFOs in more than 20 of the largest US markets found that asset management firms need senior-level talent to help steer portfolio companies through to 2015, while hedge fund firms seek new trade and middle office hires to handle increased business activity.
Nearly 70% of these firms said that it is challenging to find skilled candidates.
Consultants predict that three specific types of fund houses are most likely to grow rapidly and take on new staff in the next five years. Chief among them are firms with an Asian presence.
US-based banks are seeking to expand their fee-based investment services in Asia Pacific and are hiring more staff to do so.
Bank of New York Mellon’s Hong Kong unit is launching a major wealth management expansion. The seventh-largest wealth adviser in the US, with $187 billion in private client assets, plans to expand its wealth staff in Asia.
It joins Citigroup and JPMorgan which both have long-established wealth management business in the region.
China’s efforts to open its capital markets are also creating job opportunities for people in the asset management industry.
Sales and marketing have the biggest career opportunity, suggest data from the Securities and Futures Commission of Hong Kong. In 2012, three-quarters of the territory’s 32,000 fund management employees were hired in these functions.
Robert Half says these global employers value MBA and CFA qualifications for asset management roles.
“We continue to see demand for MBAs among financial services clients,” said Bill Driscoll, a regional US president at Robert Half International.
“Finance organizations seek MBAs who have previous experience and can fill positions with data analysis, budgeting, forecasting, modelling and FP&A responsibilities,” he said.
Candidates applying for fund manager, investment analyst and valuation roles regularly require an MBA or CFA qualification. But educational requirements vary from firm to firm.
Aberdeen Asset Management, Europe’s largest listed fund house, only requires the CFA or the Investment Management Certificate for investment management employees.
Other firms such as Dutch fund house Kempen Capital Management and State Street Global Advisors, one of the world’s biggest fund houses, accept both MBA graduates and CFA holders.
But Steven Young, head of the accounting and finance department at Lancaster University Management School, said that an MBA is not the primary route to success in portfolio management.
“CFA is now emerging as the industry standard qualification… Particularly in areas such as fund management,” he said.
Derek Walker, director of careers at Oxford’s Saïd Business School, said that the CFA is increasing in value within the asset management sector.
This may be because the MBA is viewed as a more generalist qualification, according to Kate Lander who is head of education for EMEA at the CFA Institute. “The CFA program focuses specifically on investment knowledge,” she said.
The recruitment consultancy Hays notes in a recent report that investment management firms want individuals with expertise in cost-related financial analysis, modelling and finance business partnering.
Candidates who can analyse data and management information are also in demand, the firm says.
However, adapting to a new investment culture may also be critical for new hires. There is a “trust deficit” in the fund management industry, according to Allianz GI’s Elizabeth.
“We have values at the heart of our performance culture – your incentives, promotion and everything else is based not just on the outcomes, but how you behave, [and] the way you treat clients,” she said.
Business schools have been bringing asset management into their curriculums and that was a key reason for the launch of the new MSc Investment & Wealth Management course at Imperial College Business School, according to its director Professor James Sefton.
“The program brings wealth management into the picture. We look at hedge funds, bonds, private equity strategy… As well as looking at the big asset allocation questions,” he said.
The program is targeting younger professionals and is geared towards careers in investment, private equity and asset management . Imperial seeks to give students access to large global asset management firms.
“The whole process of money management is getting competitive,” added Professor James.
Fund groups with a foothold in Asia, South America, Africa and the Middle East are likely to offer the most employment opportunity – those regions could account for 34% of global assets under management by 2020, up from 10% today, according to PwC.
But the asset management industry is growing globally and there is likely to be increased opportunity in Europe. “We’ve got significant meta trends pushing cash flow towards us,” Elizabeth added.
According to Fitch Ratings, total assets under management in Europe have grown by an average of 9% over the past five years.
The industry is on track to surpass that growth this year – Fitch estimates assets under management rose 6% to a record €17.8 trillion in the first six months of 2014.