Abandon Wall Street dreams? Not just yet.

With the recent collapse of major banking firms, recruiters disappearing from the Yale campus and the threat of more bankruptcies looming on the horizon, job prospects are looking grim for those Elis planning to enter finance.

But it could be worse. All of this could have happened a few weeks from now.

Students once bound for Wall Street are now considering business school, increasing SOM applications.
Daniel Carvalho
Students once bound for Wall Street are now considering business school, increasing SOM applications.

Instead, Yalies are taking advantage of the timing of the collapse — still early in the recruiting season — to seek out post-graduation alternatives, including professional school. At the same time, an unlikely undercurrent of optimism among administrators, students and employers is inspiring hope that banking may still be a viable option.

A detour from Wall Street

In the face of an uncertain economic future, some Yalies said they are seeking alternatives to the finance jobs they once coveted. One Pierson senior, who interned at the investment bank Lehman Brothers this past summer, said students may now be more open to applying to law school and business school. He asked to remain anonymous so he could speak freely about the job market.

“We are very lucky this happened now and not two weeks or a month from now,” he said. “We can now react and move to a new position.”

Lehman filed for bankruptcy early Monday morning, closely following Bank of America’s purchase of Merrill Lynch. And yesterday, AIG was saved from a similar fate when the Federal Reserve bailed out the company with an $85 billion loan.

Despite the current crisis, though, the senior said he was relieved to avoid a repeat of last March, when the investment bank Bear Stearns was sold to JP Morgan Chase to avoid collapse, leaving the Yalies who planned to work there suddenly jobless. As most other investment firms had already ended their admissions process by that time, the unexpectedly unemployed looked to alternative post-graduation plans, including jobs with the Yale Admissions Office or seats in law schools.

Director of Admissions at the Yale School of Management Bruce DelMonico said last year he saw a continuation of the recent trend of a steady increase in applications. The admission rate this past year was 14 percent, compared to 28 percent just three years ago.

“We have also seen an increase in the overall quality of the applicant pool,” he wrote in an e-mail.

The economy, DelMonico said, is partly a factor in driving application numbers.

“I don’t think it’s so much that people are applying after they are laid off as that young professionals, in looking down the road at their next steps, see diminished opportunities for advancement where they are and look at professional school as a way to ride out the economic downturn while they burnish their resumes,” he said.

He also noted that the majority of the application increases over the past couple of years have been from international rather than domestic applicants, which suggests that the state of the U.S. economy may not be as relevant to these applicants as some other factors that are driving them to business school, like the new integrated MBA curriculum at SOM and the growing currency of an MBA in one’s professional development.

Given the unsteady economy, Ivan Dremov ’07 SOM ’10, who is one of the handful of students chosen for the Silver Scholars Program, said he will be glad to return to school next year instead of entering the tumultuous business world. As part of the program, Dremov spent his first year at SOM and now works for an executive search firm on a full-time internship. He will return to campus in his third year to complete the Silver Scholars Program, which is well-known for accepting undergraduates fresh out of college.

Looking back at his years living in Pierson College, Dremov said he made the right decision opting out of the job application process in October and November of his senior year.

“It’s a super-competitive process, and I think it’s only going to get worse.”

The light at the end of the tunnel

Yale administrators said Tuesday it is too early to say what fate will befall this year’s crop of graduates.

“In years when the economy is a bit shaky and in flux, we’ve had companies unclear about what the situation is,” Director of Undergraduate Career Services Philip Jones said in an interview with the News last week. As of last week, only a handful of companies had cancelled their appointments, which Jones said is not an anomaly. But several cancellations since Monday — including information sessions for Women on Wall Street, as well as Goldman Sachs and equity group Sanford C. Bernstein — sparked concerns among students that the repercussions from the crisis could be severe.

Jones could not be reached for further comment about the cancellations.

Retired Managing Director of JP Morgan Chase Tracy Williams ’79 said Monday that some banks are still hiring, although the incoming numbers fluctuate from year to year. He said the turmoil is sending senior analysts packing, and companies are ready to replace them with younger employees. He noted, however, that companies recruit most heavily among students who had interned with them the previous summer — so the outlook may actually be brighter for current juniors.

“If you’re a first-year analyst in the midst of turmoil and the market turns, you’re in the right place in the right time,” Tracy Williams said. “You’re there where all the talent will start to come in.”

And many Elis said they remain optimistic about their prospects in finance.

“I’m definitely sold on staying in the industry from my summer experience,” Bradford Williams ’10, who interned this past summer at Lehman, said. “Because I had one of the best times in one of the worst times.”

Bradford Williams said he will consider applying to Goldman Sachs and Morgan Stanley, two of the Wall Street powerhouses that are still holding on. While the financial crisis is bad timing for seniors, he said, he hopes the markets will be better in two years. Ideally, he said, juniors will enter a bull market — a period in which investment prices rise — upon graduation.

Even in the bear market, the interest in economics among Yale students is holding strong. Department of Economics Registrar Qazi Azam said the number of students enrolled in economics courses from other departments has fluctuated in recent semesters, with 1,629 in the fall of 2006, 1,766 in the fall of 2007, and 1,511 in the spring of 2008. But this year, he said, he anticipates more than 2,300 students — although, he added, that number may decrease before course schedules are finalized.

“It is an incentive to take economics courses, because more jobs are available to economics students than students in any other field,” he said.

Azam offered a borrowed analogy to explain the current situation: If a monitor next to a hospital patient beeps up and down the patient is alive, and if the line is straight the patient is dead. But if the market is going up and down, it is a sign that it is alive.

“Nobody has shown me hesitation about entering finance positions,” he said. “Who doesn’t want to be involved in money? People will always be interested in money and how can you make more of it.”

—Catherine Cheney contributed reporting

Comments

  • Dave-O

    This is the third article in as many days on the same subject. Not once has anyone suggested that perhaps this turmoil would aid in creating a little post-graduation job diversity by having people go into other careers. 1/4 yalies work for an investment bank after graduation. That seems like an awful lot for a school that encourages academic diversity. I've always been perturbed by the lack of imagination in Career Services in suggesting alternative careers. Maybe some students should take a hard look at the situation and consider that their Yale education can get them more than an extra $15k dollars(which for you economists out there, seems to be wasted by living in manhattan). I'm not a bleeding heart that thinks everyone should work for Non-profits, I'm just a little ashamed that so many of my fellow Yalies are lured to the vapid existence of making profit for profits sake.

  • What to do?

    Business School is the best option for us.

    Just looked into the law school application time table and LSATs are coming up way too soon to prep.

    But GMATs are basic math/reading. Any associate/analyst should be able to crush this test and enter in Spring 09, Summer 09, or Fall 09 without much problem.

    I for one don’t want to wait a year for law school (or spend 3 years in school, or entirely switch careers)

    IMHO- Duck into the nearest B-school for 2 years, reemerge w/ some new flashy skills and sheepskin, and try to avoid this mess all over again.

  • OR …

    Or you could find something interesting and meaningful to do with your lives?

  • Yale 08

    To Dave-O,

    Use your brain, some Yalies go into banking to make a ton of quick (and HARD earned) cash before entering public service or using those funds to support private charities, or to start families, etc.

  • Goldie '08

    So Dave-O, me banking to make some $$$ to pay off 80 grand in student debt is a "vapid" existence? Guess if I were rich then I'd be debt-free to make my life less "vapid." I know you're probably way out of touch with the normal student, but lots of us have loans and banking is the best way repay what we owe as fast as possible.

  • Yale 07

    Most don't.

  • alumnus

    In years past, new grads could ride out a bear market by doing business school or grad school and get back into banking and finance when the waters grew more placid.
    Ducking into business school won't work this time because we are experiencing a MAJOR and permanent change in our economic landscape. These big wall street firms are disappearing and they ain't comin' back my friends. And the bloodshed has only just started. It will get much worse before it gets a little better, but in the end it will still be very much worse than it ever has been.

    And by the way, law school ain't looking much better either because there has been some major downsizing by big NYC law firms, all secondary to wall street's collapse. This thing is like poison spreading throughout the blood stream.

  • Dave-O

    I have 30K in debt from college and am not rich. Use your brain, no one makes that much more money in just a few years that they can cash out and take a pay reduction. Most of the extra money goes to living in Manhattan so that you don't have an hour commute home on top of your 11 hour work day. If you've fooled yourself into thinking you'll pay off your loans and then sock away tens of thousands of dollars and feed the homeless maybe you deserve a soul crushing, meaningless job. Perhaps some people are capable of doing this, but the typical Yale graduate investment banker, is the one discussing going to business or law school as "something to do" for a few years until the markets stabilize. At least if I have a heart attack at 60 I'll have known I made a difference in this world and fun doing it.

  • Yale 08

    Alumnus,

    This is a mere self-correction. Enough of the hyperbole.

    You will be amazed at the firms created by this suddenly independent group of very smart people.

  • Lord Haw Haw

    "[A]mazed at the firms created by this suddenly independent group of very smart people," - good, then maybe you, Yale 08, can actually get a job and not waste the workday reading and posting in the YDN. (cough) loser (cough)…

  • Yale 08

    Lord Haw Haw,

    I go to Yale. I am in no hurry to enter the job market.

  • anon alum

    dave - i believe you are broadly correct but for the wrong reasons. yes, career services needs to get a little more creative to find jobs for all of our liberally educated brethen. But the proportionality of students landing in banking is due the fact that most Yalies go on to some sort of graduate school and, for those that do enter the job market, most businesses now want to recruit people with very specific "pre-professional" educations. The accounting, marketing HR services etc. majors. Banking is one of the last remaining place that values the ability to think & learn over skills based training though even that has greatly evolved over the last 10 years or so.

    but your original point remains - time for career services to start developing additional opportunities.

  • Alumnus

    Yale 08: I will be amazed by the firms created by these suddenly independent group of smart people? Wherever will they get the financial backing to start these firms? No one is just giving out money any more. And I should say that no one will hand out money to some 23 year-old former analyst to start a firm. This is not merely a self-correction - this is a shift in paradigm that will alter the financial landscape for a generation.

  • Yale 08

    There are needs out there, and this people are the smart ones who will figure out to fill them.

    One key area to look at:

    A lack of transparency was a major component of the current situation- I would be willing to bet that a large number of analysts will find themselves at work solving this issue.

    Think of a niche(industry specific) fund that primarily makes money through information bulletin subscriptions.