Students Turn From Banking Careers

More Business Students Look Into Consulting as The Investment Banking Industry Struggles

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With the last two Wall Street investment banking giants announcing their exit from the high-risk trading industry Sunday night, UC Berkeley students interested in business said they are turning away from the struggling banking industry.

According to the Federal Reserve System, Goldman Sachs Group Inc. and Morgan Stanley announced that they will transform themselves into bank holding companies, which are subject to far greater governmental regulations than investment banks are.

Jonathan Cheung, the professional chair of the Alpha Kappa Psi business fraternity at UC Berkeley, said it will now be difficult for the two banks to make risky, high-return investments, a hallmark of investment banking. Due to this shift, there will be fewer opportunities for students in the industry, he said.

"There won't be as many positions out there, so a lot of people are looking into other jobs, like consulting," said Cheung, who is currently interning at the investment bank Revolution Partners. He said he is now seriously reconsidering the banking industry in light of the recent Wall Street shake-up.

Jobs at investment banking firms are considered infamous for their long, grueling hours, but appeal to students because of their high pay, Cheung said. Investment banking associates earn median salaries of $77,487 during their first year and $85,635 after one to four years, according to PayScale, the world's largest employee compensation database.

"There will be a lot of new restrictions," Cheung said. "It'll be a lot harder to make a lot of money."

Mark Friedfeld, the marketing manager of Haas' graduate career center, said approximately 8 percent of Haas' graduating class of master's students pursued investment banking, which he called a "top industry."

According to the Full-time Program Class of 2007 Employment Report, 17.5 percent of master's graduates go on to work as consultants, while 23.1 percent enter the financial services industry, which includes investment banking.

Asian Business Association President Sarina Ying, who worked as an investment banking intern at J.P. Morgan this summer, said one-half to two-thirds of senior members in the association are looking into positions in banking.

"A lot of our seniors are worried about getting positions in banking and finance," she said. "The industry isn't doing that well. A lot of companies aren't spending money and time hiring more people."

While many financial experts said it is too early to know the effects of the banks' shake-up, some said opportunities in investment banking have already been diminishing.

"Investment banking has been shrinking as we have seen finance careers fragment into other specialities like private equity, venture capital, hedge funds, money management firms," said Robert Joss, dean of the Stanford Graduate School of Business.


Contact Alex Gong at [email protected]

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