Wall Street, once a magnet for America’s best and brightest, is facing a recruiting problem.
The industry’s cachet, which was tarnished during the financial disaster, has been further stained by the lingering economic slowdown and a series of highly visible industry scandals that have drawn critical attention to the big banks.
The most recent public relations storm came from the resignation letter this week in The New York Times Op-Ed section written by Greg Smith, a former Goldman Sachs executive director. Smith, who took the bank to task over what he described as a “toxic and destructive’’ culture at the firm, said his moment of ultimate realization had come while extolling the benefits of a Goldman career to college students. “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work,’’ he wrote.
The controversy has raised fears - perhaps within Goldman itself - that skittish clients and down-in-the-mouth employees could bolt. But financial firms should also worry that the incident might scare off college and business school students, some of whom are looking askance at once-prestigious jobs in finance.
Cory Finley, a recent Yale graduate, applied to work at Bridgewater Associates, a large Connecticut-based hedge fund, during his senior year of college. Finley, 23, said there was “definitely something tempting’’ about the structure and prestige of a high-paying finance job. But he decided to follow his dream of becoming a playwright instead. “It’s something that fulfills me in a deep way,’’ said Finley, who has written a play called “The Private Sector’’ that is set at a hedge fund corporate retreat. “I don’t judge people who do go into finance, but it’s not for me personally.’’
College students who were once attracted to prestigious banks are increasingly turning to other industries in search of success. Insiders say that harsh testimonials of industry life can deter would-be financiers from even applying for jobs at the most selective firms.
“This is a significant problem for Goldman,’’ said Adam Zoia, chief executive of the placement firm Glocap Search, whose clients include aspiring big-bank employees and hedge fund workers. “Their perch of being the investment bank to go to is definitely at risk.’’
The smaller paychecks - and wave of layoffs - are only making the decision easier for some students, who no longer view Wall Street as a fast track to seven figure salaries. Last year, flagging profits at many financial firms reduced some bankers’ compensation from stratospheric to merely generous. At Morgan Stanley, cash bonuses were capped at $125,000; some Goldman employees saw their annual cash payouts cut in half.
Adding to the chorus of dissent, students now face criticism on their own campuses. Groups of protestors at Yale and Harvard stood outside bank recruiting sessions last fall, shouting slogans and holding signs with messages like “Take a chance, don’t go into finance.’’ At Princeton, a group affiliated with the Occupy Wall Street movement interrupted sessions by JPMorgan Chase and Goldman Sachs, urging their fellow students to rebel against what it said was “the campus culture that whitewashes the crooked dealings of Wall Street as a prestigious career path.’’
“Everything from Occupy Wall Street to larger critical discourses of ‘fat cats,’ all of that has had some trickle-down effect’’ to young people, said Karen Ho, an associate professor of anthropology at the University of Minnesota, who has studied the culture of Wall Street.
The decline in the finance industry’s allure has been accelerated by the explosion of the technology industry. A 2011 survey of 6,700 young professionals by the consulting firm Universum ranked Google, Apple, and Facebook as the most-coveted workplaces; JPMorgan Chase, the highest-ranking bank on the survey, was 41st.