Daniel Shi's feats would impress those wanting to cement a career on Wall Street. On paper he ticks many boxes: stints at Boston Consulting Group and at financial services firms Asia Assets Limited and Guotai Junan Securities Co. But when he graduates from a Shanghai-based MBA program next year, he is in no rush to return to banking.
“I… Hope to take a rest after working exhaustedly for several years in an investment bank,” says Daniel, 29.
The income and skills one can glean from a Chinese M&A desk are often shadowed by late nights and work-filled weekends structuring deals. These deals came in an “intense and challenging” manner for Daniel, who left banking to enrol at China Europe International Business School.
He is a “millennial” – a generation born between the early 1980s and the late 1990s. They populate most MBA cohorts, which have an average age of 27-30, although there are exceptions.
This generation is placing more value in entrepreneurialism, fulfilment and careers which have a social impact. The implications for banks are that the brightest graduates see them as less attractive than smaller, more innovative organizations.
“millennials' intentions aren’t even to seek out positions in big companies anymore; it’s to start their own company,” says Tamara Freidrich, associate professor of entrepreneurship at Warwick Business School. “People are taking their destiny into their own hands,” she adds.
At Wharton School, 55 MBAs from 2014’s class started their own businesses or are self-employed, up 50% from five years ago. At London Business School, the percentage of MBA graduates going into financial services fell from to 28% from 46% between 2007 and last year.
“Millennials who are applying to business school are interested in social enterprise and ‘doing well by doing good’,” says EssaySnark, an MBA admissions consultancy. “They know that there's no such thing as a permanent job.”
For MBA graduates, they see banks and the more popular consulting firms as an opportunity to learn skills before moving on to something else.
“It is quite common for consultants to receive offers from clients that have had the chance to see how they perform first-hand,” says Carmen Gonzalez, associate director of ESADE Business School’s career services department.
For those who stay at one corporation, promotions are harder to come by. Wall Street has a “squeezed middle” of bankers in their 30s who fear it is harder to climb the greasy pole, while consultancies have little room at the top for firm partners.
Goldman Sachs, for example, now promotes a class of managing directors every two years, rather than annually, and has promoted 39 fewer new partners in 2012 than it did in 2010.
“[Consulting] firms know they only have a certain number of partner places,” says Tony Somers, director of the Career Management Centre at HEC Paris. “Only Y number of people will get to partner level – it’s a numbers game,” he adds.
Many students question the benefits of slogging it out at large banks when regulation is biting at their revenue streams and placing caps on employees’ bonuses.
Female graduates may also be put off by banks’ lack of diversity. There has been an increase in female founders taking to the e-commerce and technology sectors.
“[The] last generation of women is quite different,” says Faviola Palomino, MBA graduate and founder of e-commerce site VIP SOUL.
“As millennials, we are more focused on our career success than our male counterparts, and [we] want to drive our success working in something we are passion about,” she adds.
For some, banks also lack a sense of fulfilment. “Promising as they may look, most M&A related jobs are still unlikely to enable you to learn and grow as much as [possible] to become a dealmaker,” says CEIBS student Daniel, “or to fulfil the sense of achievement you expected in the first place.”
There are further challenges that banks face in luring the best graduates. Reputations have been chipped at since the crisis and many banks are still being hammered with large fines.
Senior bankers have had to become more involved in the recruitment process, and they are asked to stay in contact with their alma-mater to act as a gateway for current students.
“People want to find a job where they have a better work life balance,” said Matthieu Wiltz, JP Morgan’s head of sales and investor services for some European countries, at a recent HEC Paris alumni event.
Banks used to worry that a graduate would choose a rival – but now they are fighting for hires with the large technology groups as well as management consulting firms.
“JP Morgan continued hiring junior analysts even after the crash... [But] now with the upward trend in the market they have to compete with consultancies for talent, and hence stay in touch with business schools,” added Matthieu.
In response banks have begun to ease working conditions for their junior investment banking staff. Goldman Sachs discourages them from working over weekends - banks including Credit Suisse and Barclays have similar leisure policies - and JPMorgan permits a “protected weekend” once per month.
Banks are not lacking in applications – Goldman Sachs gets about 12,000 applications for 350 places on its European internship scheme – but the fear is that the best talent will be lured to other sectors and new career paths.
One of the hottest paths of 2014 appears to be entrepreneurship. Students want to make a positive contribution to society, and the thinking is that they are unable to do that in large financial services groups.
Business schools want to foster this social innovation. “This is our goal for the business school – [to] tackle world scale problems,” said Peter Tufano, dean of Oxford’s Saïd Business School, at a recent social entrepreneurship event.
Esmer Chifiero is an MBA graduate of Aston Business School. She spent three years in Nigeria with the UN Development Program but now she works as Aston’s campus director of the Hult Prize, a social entrepreneurship competition, helping the next group of graduates to make mpact.
“Creating an impact in the lives of others is one of the most fulfilling and successful ways to live,” she says.
Even if students are not founding start-ups, they are starting to join them in greater numbers.
Adam Jackson, director at London recruitment firm Astbury Marsden, says small financial technology firms are snapping up some of the best tech staff at investment banks.
“Banks do not just have to compete with their peers for these staff but… This new breed of start-ups [as well],” he says.
However, some people in the start-up community think more needs to be done to promote entrepreneurship as a career path, and to make “rockstars” of successful founders.
Gary Stewart, director at start-up accelerator Wayra UK, said at a recent IE Business School event that there should be more of a focus on entrepreneurs "instead of the bankers”.
"[We should] increase the focus on entrepreneurs as superheroes, as opposed to losers who can’t do much else,” he added.