The path to a high-powered career in investment banking suddenly is full of roadblocks for MBA students who have seen Wall Street drastically reshaped while they sit in the classroom.
Just as many were eyeing a job market where starting salaries can far exceed $100,000, an era of giant investment banks came to a crashing end and the need for such specialists dwindled.
Their plight may not elicit much sympathy during a financial crisis. But it has jolted some of the best and brightest in the nation's business schools to watch their would-be employers vanish or be absorbed overnight after the students staked huge commitments on their chosen fields – annual tuition at many programs tops $40,000.
“Clearly if you wanted to become an investment banker, those aspirations need a reality check at this point,” said Sandeep Dahiya, finance professor at Georgetown University's McDonough School of Business.
Justin Bakewell, 30, a second-year MBA student at the George Washington University School of Business, already has felt the changes. He was set to be a summer associate at Bear Stearns when the firm fell into trouble and was acquired by JPMorgan Chase.
At the time it wasn't clear the failure would be followed by a series of events that would radically transform Wall Street. Within a week last month, Merrill Lynch was sold under pressure to Bank of America, Lehman Brothers filed for bankruptcy and Goldman Sachs and Morgan Stanley became bank holding companies in order to stay in business.
“There are still opportunities in finance,” said Bakewell, who ended up taking the summer spot under JPMorgan Chase. “You can't just change your whole career path. I can't imagine trying to do a complete 180 just based on recent events.”
Faculty and administrators at numerous business schools describe their second-year MBA students in particular as stunned or even panicked initially.
School officials say many students are reviewing their options and looking at smaller firms in different areas or even at different fields.
“The work that investment bankers do is not going to go away. But hiring the incoming class of MBAs is not on the radar screens of these big financial institutions right now,” said Dahiya. For those set to graduate within months, he said, “it's a brutal downshifting of expectations.”