Finance MBA Programs Seek to Retain Appeal Despite Downturn

In today's economic climate, is now the right time for a finance-focused MBA or MSc?

"Fascinating" probably isn't the first word most finance-focused MBA students would use to describe the current economic downturn. Browsing around MBA student blogs these days, you're more likely to encounter words like "scary" or "despondent." 

After all, these students and recent grads are the ones facing one of the most challenging job markets in decades. For those who left finance or banking jobs back in 2007 to start at two-year MBA program, the jobhunting landscape looks rather different today, regardless of whether they are bound for investment banking, consulting, or other pastures.

Some business school professors, however, admit that watching the financial crisis unfold has been...well, fascinating. But rather than rejoicing at financial turmoil, these professors believe that recent events have enriched the classroom experience.

"One positive thing about what is going on right now is that we can learn a lot from it," says Markus Rudolf, finance chair at WHU Otto Beisheim School of Management in Germany. "You can empirically analyze how markets react in extreme scenarios."

Greg Hallman, finance professor at the University of Texas at Austin McCombs School of Business, agrees.

"The financial downturn has actually made teaching finance a little easier," explains Hallman. "The past couple of years in the market have given today's students a perfect illustration of risk and the downside to investing."

Virtually all MBA programs offer finance courses as part of their core requirements and electives. But some schools are better known as major feeder schools for finance jobs. In the United States, these include McCombs, Wharton, Harvard, Columbia, NYU Stern, Virginia Darden, Chicago Booth, and Michigan. Worldwide, that list grows to include Toronto Rotman, London Business School, Manchester, Vlerick Lueven Gent, HKUST, and CEIBS, and many other business schools with strong finance faculties and concentrations.

In addition, dozens of UK and European business schools - including Warwick, Hult, LSE, Cass, Imperial, Durham, EADA, IE, HEC Paris, SDA Bocconi, and St. Gallen - offer Masters (MSc) programs in finance, or related subjects like banking, accounting, investment, and risk management.

Changing formulas

But is now a good time to do a finance-focused MBA or MSc? Optimists say an economic recovery could come within the next few years. So for them, it makes sense to use this lull to go get "skilled up" at business school, and return to a job market in upswing in a year or two.

In any case, some business schools are trying to prepare finance-bound MBA students for change in the sector. For Greg Hallman at McCombs, this means partly orienting his finance courses around "cleaning up the excesses of the past few years" and "understanding where value might be found in the wreckage."

"I think finance skills that help to identify truly valuable assets from assets that were valuable only when debt money was essentially free will be very useful," adds Hallman. He adds that some of the other valuable skills for next few years could include a knowledge of real estate, structured debt, and bankruptcy law.

In terms of landing a job, the outlook for the short-term is still anyone's guess. Business schools remain cautiously optimistic, noting that even in the current crisis, hiring in the finance sector has not stopped completely.

True, some of the Wall Street or City juggernauts might not be snapping up MBA grads like in the past, but some smaller, niche (or "boutique") firms are still on the lookout for qualified MBA grads with a strong finance background. So a little flexibility and shifting career expectations away from the big names - at least in the short term - could be a key strategy for those headed into the job market.

Geographic flexibility could be another major asset. A year ago, Singapore native Clarissa Tan left an accounting and controlling job at an international bank to pursue an MBA at CEIBS in Shanghai, which she hopes will lead to private equity opportunities in China.

"With the negative impact of the financial crisis on several investment banks on Wall Street, and with the demand for securities work comparatively still flourishing in China, finance MBAs may need to be flexible pertaining to where their work will bring them," says Tan.

"The gradual opening up of the banking sector in mainland China and China?s foreign exchange reforms present many opportunities for finance professionals in the near future," says Tan. "By doing an MBA in China, I can re-tool my skill set, gain some China-specific knowledge of its economy and industries, and network with China-focused individuals."

The crisis and a number of major scandals have thrown the "excesses" of the marketplace into the limelight. As a response, employers are increasingly called upon to prove their engagement in the areas of corporate social responsibility (CSR), sustainability, and ethical business practice in order to attract and retain talent.

Jobseekers may also be asked to flash their "green" and ethical credentials, as well. Perhaps the clearest recent evidence of this trend was the widely reported student oath to "create value responsibly and ethically," signed by hundreds of students at Harvard Business School and other business schools this spring.

Across the Atlantic, Markus Rudolf at WHU in Germany also sees that values and interests are changing among MBA students and more broadly in the finance world.

"Everyone I know in the sector is thinking about the business model, and it's quite obvious that the business model of the past will not be applicable to the business model of the future," says Rudolf.

"It is quite obvious that there have been mistakes made," he adds. "My impression is that the finance sector has not exactly found it's place in the future, but many people are thinking about it."

Photo: epicharmus / Creative Commons

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