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 publicized industry scandals that have drawn critical attention to the big banks.
The most recent public relations storm stemmed from a resignation letter this week on The New York Times Op-Ed page, written by Greg Smith, a former Goldman Sachs executive director. Mr. 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. Mr. 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 Mr. 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 like moths to bonfires 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, the chief executive of the placement firm Glocap Search, whose clients include many aspiring big-bank employees and hedge fund workers. “Their perch of being the investment bank to go to is definitely at risk.”
One former Goldman analyst recently decided to leave the firm after the rewards of a finance job no longer seemed to outweigh the costs. He is now working at a small technology start-up for less money.
“Perhaps Smith is a catalyst,” said the employee, who spoke on the condition of anonymity because many of his friends still worked at the bank.
“There have always been unhappy people” in finance, he added, but “this is the year people are realizing things are structurally different.”
Smaller paychecks and waves 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; annual cash payments for some Goldman employees were 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.
At this year’s SXSW Interactive conference in Austin, Tex., a panel called “Keeping Kids off the Street: Wall St. vs. Start-ups” was convened to address questions including whether the finance industry was to blame for what organizers called a “failure to nurture a culture of innovation” in New York. Chris Wiggins, an associate professor of applied math at Columbia University who sat on the panel, said he was seeing students shy away from Wall Street and veer toward industries where they could work and profit without bringing their morality under the microscope.
“The claim of investment banking that it serves a social purpose by ‘lubricating capitalism’ has eroded,” Professor Wiggins said. “It’s simply very difficult for young people to believe that they’re serving any social purpose now.”
Even at top colleges and business schools, where Wall Street was once considered hallowed ground, the focus is shifting. In 2008, the last recruiting year before the financial crisis, 28 percent of the employed seniors in Harvard’s graduating class went into finance. Last year, that number fell to 17 percent, as students opted for other fields and investment banks cut their ranks.
Ben Pruden, a second-year student at the McCombs School of Business at the University of Texas at Austin, said on Wednesday that he planned to go into technology, not to Wall Street, after receiving his business degree. He has a job lined up at salesforce.com after graduation, and said that although he knew people working in finance, including his sister, Wall Street held little sway with him.
“I have no interest in working at Goldman,” he said. “I want to build something. I don’t want to be working in an industry that effectively leeches off other industries.”
Mr. Pruden added, “it’s not creative enough for me.”