Credit: Molly Collins
Last year, when Northwestern University senior Will Whitehearst* was trying to get a summer internship at a major Wall Street investment bank, he knew he was at a disadvantage.
Unlike his peers applying from Ivy League schools, Whitehearst attended a university that the most prestigious institutions had abandoned when hiring. In 2009, the world’s largest and most profitable investment banks, a.k.a. the “bulge bracket” banks, limited on-campus recruiting to a core group of schools—the Ivies and the business schools at Boston College and Villanova.
“In the 1990s during the tech boom, you could be an English major at Elon and have no trouble getting a job at one of these banks because they needed to throw people at this bubble,” says Whitehearst, who will work as an analyst at Barclay’s Capital after he graduates in June. “After the recession, they tailored recruiting to the Ivies, but if you’re not at an Ivy, you had to fight and scratch and claw your way.”
Banks hiring fewer grads
The bulge bracket consists of Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup, Barclay’s Capital, Deutsche Bank and Credit Suisse. Even though these big banks have suffered due to a down economy and have been made the villain following a bank-triggered global recession and vitriolic anti-Wall Street movement, finance jobs remain some of the most coveted for soon-to-be graduates of elite universities.
“There are fewer openings because the banks don’t expect to grow in the near future,” says Dale Mortensen, a Nobel Prize-winning professor of labor economics at Northwestern.
At Princeton, 33 percent of 2009 graduates and 36 percent of 2010 graduates entered the finance sector. Those numbers are much lower than before the recession, when almost 50 percent of elite universities’ graduating classes headed to Wall Street. At Harvard, 17 percent of last year’s graduate class took jobs in finance, down from 47 percent in 2007.
The drop may have more to do with banks hiring fewer analysts than a diminished interest in finance. “There are fewer openings because the banks don’t expect to grow in the near future,” says Dale Mortensen, a a Nobel Prize-winning professor of labor economics at Northwestern. “Their demand is less than it was before.”
In November, DealBook reported the number of investment bank and brokerage firm employees between the ages of 20 and 34 fell by 25 percent from the third quarter in 2008 to the same period in 2011, a loss of 110,000 jobs from layoffs, attrition and voluntary departures. That means snagging a job as a college senior has become more competitive.
Stephanie Shore, the North American head of Asset Management recruitment for JPMorgan Chase, declined to comment whether the branch of the bank was recruiting fewer college grads. “We continue to recruit top talent at schools across the country,” Shore says. “Our commitment to building a pipeline of talent remains consistent year after year.”
Wall Street still a hot destination
Banks’ commitments to recruitment has made the profession so appealing to so many students at elite universities, says Columbia University professor Chris Wiggins, who is an organizer of HackNY, a technology-focused group that tries to steer engineers and programmers away from Wall Street.“Zero percent of people show up at the Ivy League saying they want to be an I-banker, but 25 and 30 percent leave thinking that it’s their calling,” Higgins told DealBook. “The banks have really perfected, over the last three decades, these large recruitment machines.”
High starting salaries and a clearly defined path are still attracting students to finance. While bulge bracket banks cancelled their full-time recruitment this year even at core universities for budgetary reasons, they still head to these elite college campuses each winter to recruit summer interns, Whitehearst says.
“A successful internship during the summer between junior and senior year is the best way to land a job upon graduation,” says Michael Bergman, a first-year analyst at JPMorgan. Bergman was a summer analyst for Goldman Sachs and was then hired by JPMorgan in the fall of his senior year.
High starting salaries and a clearly defined path are still attracting students to finance.
In the past, students who worked internships could test the waters and possibly receive offers from other bulge bracket banks in the fall. For the Class of 2012, however, all hiring took place at the end of the summer.
“Usually about 85 percent of interns get offers, and 85 percent of those accept,” Whitehearst says. “This year 98 percent of those with offers accepted. That’s because everyone knew the banks wouldn’t be recruiting in the fall.”
College seniors are usually hired into one of three business areas: investment banking, trading and sales and asset management. A student can earn up to $20,000 during a summer internship at a big investment bank, and starting salaries for a first-year analyst are in the $60,000 to $70,000 range in addition to a large signing bonus, Bergman says. Yet showing up at a university information session doesn’t give an applicant much of a leg up. Interns are chosen for a first-round interview after engaging in extensive alumni networking and are only hired after interviewing for a second time.
“Ideally, you try to get internships summer of freshman or sophomore year that are business-related,” Bergman says. “It’s less about being a finance major and taking finance courses and more about building your story. At least have a base knowledge of the industry you’re trying to get into.”
*Name withheld because Barclay’s Capital does not allow individual employees to speak to the press.