Examining the Big Career Problem: Is Finance/Consulting Right or Wrong?
So the recent Occupy Wall Street movement got me curious to look into what percentage of people at Columbia go into finance. I flipped through the CCE (Columbia’s Center for Career Education) website to see if they’ve got this sheet of statistic on where Columbia students end up working after graduation. It turns out they still have it. And the numbers have escaped me since I last saw them back in 2007 during my CCE orientation as a freshman…
Part I – The Stats
An astonishing 24.9% of the Class of 2010 in CC and SEAS ended up working in financial services, with an additional 9.1% in consulting. SEAS graduate programs yield a whopping 32.9% for finance and 9.2% for consulting. (For a school as specialized as “engineering,” this could almost warrant a change in the school’s name.)
Now I got really curious and, before we begin to judge Columbia, let’s take a look at Harvard.
Source: Seniors Survey, Office of Career Services, Harvard University
On the Charles River, over the past five years, we see a few trends: smaller percentage of students in finance/consulting, fewer in military, more in non-profit, health/medicine, communications/media/arts, and business (presumably this is where entrepreneurship would fall).
Since we don’t have trend data by industry for Columbia, it’s hard to make trend comparisons. But just taking the 2010 data alone, 33% of Harvard seniors planned to work in finance or consulting – almost at the same level as Columbia’s 34% (though showing a noticeable difference where consulting firms historically have a stronger preference for Harvard than Columbia). At its height, 47% of Harvard seniors planned to work in finance or consulting in 2008 (just before the financial crisis). I’d assume Columbia’s 2008 numbers were probably similar.
You can check out UPenn, Princeton, and Cornell.
So I’ve been asked this many times and have wondered this myself – why do so many students from top universities end up in finance or consulting?
Here’s my take on why.
Part II – The Qualitative Analysis
Let’s admit it – for most of us, we have no idea of what we want to do after college. For starters, we all know that this campus is skewed toward finance and consulting (because that’s all that we hear about) – but for the average-over-achieving-Ivy-Leaguers, it’s just too difficult to accept that we will end up pretty mainstream and pick what everybody else picked – finance and/or consulting.
We think somehow there’s a destiny awaiting, a path beckoning, a road less travelled-by, and honor, glory, and fame are within our grasp – and right now is the moment to capture it before we are stuck forever in some cubicle in some office building in some major metropolitan area somewhere on this planet. We misperceive the fact that we have made it to the top 1% of the higher-education population (a system based on getting good grades, being well-rounded, and/or excel in one particular area) should be automatically translated into becoming the top 0.1% of the higher-income population (a system based on hard-work, inheritance, networks, economic conditions, and chance). After all, if we have beaten the odds at getting into the best schools, shouldn’t we also beat the odds at making the most amount of money and impact? We assume that life is supposed to get better and better – the same assumption for economic growth, stock indices, and real estate prices in the long-term – and look where that’s gotten us today.
Some of us will actually take action to address this dilemma – picking the “Main Street” or being a maverick – most of us will just wait it out and succumb last minute. But even for the brave few I’ve seen, it is usually the same story: They get super excited about a seemingly brilliant idea and invest a lot of time and energy into it; a few months later, when miracle fails to surface (e.g. no venture capital is throwing down millions of dollar for them to play with, or the realization that being a real [read: poor] entrepreneur is too big a step-down from their dream lifestyle of beach-houses and Lamborghini’s), they quickly loses interest and rethink – Epiphany hits and they come to the realization that finance/consulting, and not something else, is the way to go. Because it gives you “a good training.”
But it’s not just the Ivy League, it’s everybody. To quote Seth Davis from the opening scene of Boiler Room (2000):
I read this article a while back that said that Microsoft employs more millionaire secretaries than any other company in the world. They took stock options over Christmas bonuses. It was a good move. I remember there was this photograph of one of the groundskeepers next to his Ferrrari. Blew my mind. You see s*** like that, and it just plants seeds, makes you think it’s possible, even easy. And then you turn on the TV, and there’s just more of it. The 87 million dollar lottery winner. That kid actor that just made $20 million on his last movie. That Internet stock that shot through the roof. You could have made millions on it if you’d just got in early. And that’s exactly what I wanted to do: get in. I didn’t want to be an innovator. I just wanted to make the quick and easy buck. I just wanted in.
Notorious B.I.G. said it best: Either you’re slinging crack rock, or you got a wicked jump shot.’ Nobody wants to work for it anymore. There’s no honor in taking the after school job at Mickey D’s. Honor’s in the dollar, kid. So I went the white boy way of slinging crack rock. I became a stock broker.
[Fast-forward to 2011] “… so I went the Asian kid’s way of becoming a stock broker. I became an investment banker.”
The movie version of the finance world is a bit exaggerated because it focused on the worst portion of the industry. But the dilemma of being a maverick vs. choosing the main road nonetheless exists.
Part III – Is this a problem and, if so, is there a solution?
Trends are difficult to resist. It’s how they became trends in the first place. You use an iPhone? Own a pair of boat shoes? Ever noticed how many Macs users are on college campuses? We follow trends. Because trends exist to appeal, because most people want to be liked, and because there is usually very little justification for not following trends.
When I spoke at the GCC-Carnegie Conference in June, Chenggang Rui, CCTV’s star anchor who goes around interviewing prominent businessmen and politicians, wrapped up his keynote address with a serious concern over the world’s (and China’s) talent pools. “If the guys working for Wall Street are more well-rounded and always had better grades in college than the guys working for the government, then how can the regulators ever outsmart the regulated?” He asked the audience. This talent dynamics is a losing proposition for the government and can only result in more problems in financial regulation down the line.
While Rui’s concern may be an over-simplification of the US political system and Wall Street, his concern is right in that too many people want to work in finance… especially in China.
In China, everybody and his grandma wants to major in finance and work in an investment bank. I’ve seen people with Masters, JD’s, and even PhD’s in fields completely unrelated to finance/economics dishing out resumes to banks and consulting firms.
Sadly, we should probably acknowledge to ourselves that our best educated people will be a generation of financial professionals – at least among the ethnic Chinese.
So we’ve identified the problem, but very few solutions – encouraging students to participate in government, non-profit, education, and business sectors outside of finance/consulting? But what’s the best way to “encourage”? Run a calculation on the expenses associated with college education (especially at the top schools) and you’ll find justification for why everyone wants to make more rather than less. How about teach less about finance and teach more about happiness? Maybe, but it needs to become mainstream to make a real impact (e.g. One day becoming part of the CORE curriculum at Columbia). During my time at Columbia, a new major called “Financial Economics” emerged, and a new minor in “Business Management” is on its way to become one of the most popular selections. Corporate Finance and Accounting and Finance expanded into two sections due to popular demand, and the neighboring Barnard College also began to offer more courses in economics.
College students like to blame the banks for spending money to recruit on Ivy League campuses. But the relationships between college caree officers, banks/consulting firms, and the student job-seekers are a matter of freedom of choice. Government and non-profits can either pay the same kind of money to recruit on college campuses, or they can shift people’s opinions to a point where the honor associated with working for government/non-profit is greater than the monetary gains of working anywhere else. Until then, those percentages shown at the top are unlikely to move significantly.
There is a bright side to this: most people stay in finance or consulting for only a few years before moving onto something else. So perhaps there is an alternative solution, not at the undergraduate level, but at the white-collar working level, capturing those career-changers and guide them to making real impact. Perhaps there can be organizations that group ex-bankers and ex-consultants together to create businesses, to consult non-profits, and to sit in workshops to discuss how to find the meaning of life through exploration and self-actualization.
Whatever the solution may be, the problem isn’t going away any time soon – especially not in this economy.
