M.B.A. Candidates Spurn Bulge Bracket

Big-name investment banks are quickly losing mindshare among second-year M.B.A. students eyeing the industry's deep distress.

Not surprisingly, boutique and middle-market investment firms are shaping up as the main beneficiary, reports The Wall Street Journal. The story cites evidence from top Wall Street feeder schools like Wharton and NYU-Stern, and among M.B.A. students at Northwestern, University of Connecticut and University of Richmond.

At Northwestern University's Kellogg School of Management, banks that used to recruit there including Morgan Stanley and Credit Suisse "have dropped out completely this year," Assistant Dean Roxanne Hori told the Journal. Other banks have scaled back recruiting, including Citigroup. At the same time, many Kellogg M.B.A. students began rethinking career plans after Lehman Brothers filed for bankruptcy and Merrill Lynch agreed to be acquired by Bank of America in September.

Career services directors at various M.B.A. schools see many students turning away from investment banking toward other traditional career choices: consulting, private equity, and internal finance roles in manufacturing or technology companies. One 30-year old student at University of Connecticut said he's focusing on corporate finance and risk management for the next few years, but plans to try to return to investment banking "once the market stabilizes."

Competition Mounts For Jobs Outside Banking

If you're thinking along the same lines, be forewarned: you'll have plenty of competition. The sudden decline of investment banking has altered the supply-demand balance of M.B.A. candidates speaking with employers outside the financial sector. Philips Electronics North America - which used to have a hard time finding eight to 10 students to interview - recently had to winnow down a list of 60 applicants for interview slots at Northwestern. "One door closed," a Philips campus recruiter told the Journal, and "now we have all of these students who are essentially free agents."

And Bain & Co.'s recruiting head says a pickup in M.B.A. applicants has led the top-tier consulting firm to analyze whether an applicant is "interested in Bain because of what we offer, not just because other avenues have closed....We don't want folks to wait out the storm for 12 to 18 months on our watch."

Boutique investment firms, many relatively unscathed by Wall Street's meltdown, also are raising standards to screen their enlarged pool of applicants. And such firms hire far fewer students each year than the bulge-bracket banks did in their heyday. "We're in a position to be more selective," said the recruiting director for Harris Williams & Co., a middle-market M&A investment bank with headquarters in Richmond, Va. and offices in three other U.S. cities.