Wall Street and the Failure to Prepare Graduates for the Real World

The financial services industry is growing its proportional share of national GDP and has done for decades. The best and brightest flock to Wall St with Goldman Sachs, Morgan Stanley, #hedgefund iconic names that call like sirens to our graduates. Literally, tens of thousands of our best minds work on Wall St inventing new methods of securitization and instruments.

While there are many reasons for our best minds to join Wall St, I believe that universities are failing to prepare students for the real-world and in failing to do so leave them vulnerable to bright shiny objects and paths of least resistance.



Since 2008, we've come to rue the size and power of Wall St - the leverage, financial instruments, and too-big-to-fail institutions that have been bailed out but not fixed. Moreover, there is an acute sense of resource misallocation. What are the long-term costs of so many talented young people investing their talents, drive, and innovations in finance?

I graduated from Harvard in 1994. Shortly after graduation, I reported for duty at 1251 Avenue of the Americas, the then-home of Morgan Stanley. Along with scores of my classmates, we descended on Manhattan to begin work as analysts, junior traders, and future financial mavens. Why did so many of us join Wall St?

I see three key drivers:

  1. Path of least resistance
    1. Banks run incredibly efficient recruiting processes. With young alums driving the process, the banks make it incredibly easy to interview, visit, and ultimately accept banking offers.
    2. Dinners, lunches, senior banker discussions...the recruiting process hoovers up talented young people, mostly unsure of what to do next.
  2. Money
    1. Finance companies pay materially above the mean and provide cash-strapped graduates with ready income and a path to income growth.
  3. Failure to Educate
    1. Lastly, most colleges do a terrible job preparing graduates for the real world. At Harvard, the career counseling center and the College do very little to educate graduates about options, choices, and career paths.
    2. Education demands preparing students for life and giving them the intellectual tools and frameworks with which to develop and grow. Little emphasis, however, is formally placed on preparing college graduates for life as working professionals.
    3. The liberal arts bias makes such mercenary education an anathema, however, in hindsight the lack of real-work preparation is inexcusable.
    4. The completely random nature of how most people choose their first jobs is shocking. Think of the preparation we place on SATs, AP exams, GPAs, majors, and yet we don't work with our kids to lay out, explore, and select vocations with equal verve and discipline.

Recent research suggestions that the human brain does not reach maturity until ~25 years old. College students are early on the development path, often aimless with respect to major and vocation, and leave school book-smart but far from educated with respect to the super-set of career paths and vocations possible. This lack of education and preparation leaves students vulnerable to the siren song of corporate recruiting processes.

As a father of two boys, I talk to them about gap years – allowing them to live, work, and experience the real world, while continuing to reinforce the importance of education. We are, I am afraid, not providing a balanced approach to education and the imbalanced focus on academics leaves young graduates truly ignorant about life as working professionals and how best to map their interests, passions, and talents to the wide variety of possible career paths our economy offers.

How can we better prepare students for a life of work? How can we balance liberal arts educations with greater insight into vocational choices and possibilities?

Follow me on Twitter: @pricew

Charles E. Faron

Intermediary - Connecting People, Opportunities & Capital

10y

On average I typically uncover the unpreparedness of MBA's within the 1st 4 mins. of an interview. Academics with only theoretical business experience of their own cannot come close to preparing even less experienced B-school grads for the real world. I've experienced it dozens of times. Even the best schools need to change their related cirriculum.

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ULISES ALBERTO PAIVA PALACIOS

EJECUTOR COACTIVO en MUNICIPALIDAD DE CATACAOS-PIURA

10y

Wall Street, finances donater for education!!

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Lillian Lee

Graduation Specialist at Sonoma State University

10y

As a Student Services Professional at a California State University, I assure you we do our very best to augment our students' degrees with programs that teach life skills, career planning, and searching for a job. We teach our students to be active in the community. Our students learn how to become leaders and get to practice what they learn. And we take very seriously our university's mission to instill the love of learning throughout one's life. As SSP's we must not only overcome the bias against a liberal arts and sciences education, but the bias against co-curricular programs, both without and within the university. In the face of each student's mad dash to get a degree to get a job, their impatient parents tapping their feet each time they get a payment notice, a legislature bound by voters' initiatives and powerful special interest groups who don't care about education, and those among our own faculty who see our profession as something less, it is difficult to advocate for our programs and get them funded. It is the students who are the key to creating change. One hundred SSPs can stand and say how important these programs are and that they need to be funded and staffed but no one will move a muscle. It's only their labor union wanting more money, critics will say. (I live in a two-bedroom walk-up and don't own a car because I can't afford the insurance and upkeep.) But if one student, and in this case, a college graduate stands up and says, you know, it would have been great to have had a career center on my campus when I was going to school, then legislators and university presidents and CEOs will listen. If one hundred graduates stood up and said the same thing, it would be even more effective. Better yet as alumni they now have resources, connections, and life experience to add to their college career and degree. They can not only support their alma mater through alumni dollars, but bring community partners with them to develop internships and service learning opportunities. They can offer to teach a co-curricular course through their university or through Extension or online. They can go to their local community college and teach. They can give talks at their community center or church. They can start scholarships and mentorships supported by their current employers. Meanwhile my colleagues and I will hold up our end.

Kerry White, MBA

Financial Services Executive | Client Advocate | Stakeholder Engagement Expert | Board Member | Speaker | Subject Matter Expert

10y

Will - you make some very good points here. Many young finance majors also have an unrealistic view of what a career on Wall Street may entail. However it is the lure of the buck that has a material influence in terms of many not choosing to have a gap year, particularly for those saddled with mountains of student loan debt. (aka the next financial crisis)

Aidan Ruffinato

Divisional Manager - Permanent Division at Vetro Recruitment - Specialist in Senior Management Roles Within the Care Industry

10y

Great peice! Your point which reads 'the completely random nature of how most people choose their first jobs is shocking', is a global problem with graduates, as all companies want 'experience', but for many graduates this is the first job that they are applying for. Do you think there could be a solution to this? Such as a training course which all last students, graduands and graduates can take, which enables them to work for a network, which has real paid project work on offer. This project work will then offer 'employment' and a chance to develop key employability skills.

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