

Diverting talent out of Finance will revive Britain - danw
http://business.timesonline.co.uk/tol/business/economics/article5439295.ece

======
gamerates
Maybe. I currently attend McIntire @ the University of Virginia, a top
undergraduate business school
([http://bwnt.businessweek.com/interactive_reports/undergrad_b...](http://bwnt.businessweek.com/interactive_reports/undergrad_bschool/)).

The majority of our class majors in finance, and 30% of the recent graduating
class ended up at I-banks and 20% at consulting firms
([http://www.commerce.virginia.edu/career_services/Destination...](http://www.commerce.virginia.edu/career_services/Destinations%20Report%202008.pdf)).
With that said Lehman Brothers was the sixth top employer and I doubt those
recent graduates still have jobs.

People are still applying to I-banks, but now every person is now applying to
one of the top consulting firms as well (McKinsey, Bain, BCG, Monitor, etc.).
Offers were being rescinded to a lot of my friends in the class of 2009 (I'm
2010) and Goldman Sachs just cut it's salary 45%
([http://www.bloomberg.com/apps/news?pid=20601087&sid=aQjV...](http://www.bloomberg.com/apps/news?pid=20601087&sid=aQjVhGLMflj8&refer=home)).
For many it's been a rather depressing year. Our new business school is
flooded with 50 inch plasmas and stock tickers all over the place so the class
of 2009 literally saw many of their companies collapse in real time. I found
it very exciting from an academic perspective however.

A lot more people are looking at corporate jobs as well with GE, G.Mills,
Rolls-Royce, P&G, Fortune 500 etc. and the accounting firms such as Deloit and
Ernst and Young being overrun with applications. Some of the recruiters I've
talked to from larger and smaller firms that never see the "I-bank crowd" are
now getting swamped with top applications.

I think it's important to remember that complex instruments that _properly_
evaluate risk and allow for huge influxes of money into companies that make,
"cars, phones, computers, teaching tools, Internet programs and medical
equipment that could improve the lives and productivity of millions." is
rather important. When that stream is turned off it's more than the financial
industry that suffers, it's the lifeblood of our economy. Although you may be
able to bootstrap an internet startup it's not as easy to bootstrap a
revolutionary new technology or new cancer drug.

The reason people go after jobs at I-banks and consulting is the top salaries
and more importantly the chance for fast advancement based on pure meritocracy
(in theory) that most traditional corporations lack. Us B-students are a bit
of a sucker for prestige as well. Until more traditional companies allow for
greater meritocracy and faster advancement they won't be able to hold the top
talent. The top talent is more than willing to work hard and produce results,
they can't help it. Many of them have a sort of irrational drive for success
even in the face of the philosophical absurdity of the concept of "success".
They want to be rewarded for it. The problem isn't so much finance, it's that
other companies didn't create programs to attract top talent and finance did.

With that said as I write this I'm working on my cover letters for consulting
summer internships. The vast business experience and name attached to a
consulting firm is still worth the investment, even if it's only for two years
or a way to kick start a career (or become a career, depending on if you like
it I guess).

Ultimately, however I plan to continue my entrepreneurship which I've been
doing since a kid (three past internet startups; and two I'm involved in right
now). Then again at 21, who knows what I will be thinking in two...five...ten
years.

I must say it does help starting out with some nice savings in the bank from
these ventures, and knowing that if things get worse I'm confident I can
always find ways to scrap things together to pay the rent.

~~~
gaius
_Some of the recruiters I've talked to from larger and smaller firms that
never see the "I-bank crowd" are now getting swamped with top applications._

They'd be bonkers to hire any of them, they'll all jump ship at the first sign
of the economy recovering.

 _Until more traditional companies allow for greater meritocracy and faster
advancement they won't be able to hold the top talent._

Agreed. Here in the UK one of the remnants of the old class system is that
managers will never pay a worker more than themselves. Its never been a
problem in the City as the place was just awash with cash (and the traders and
their managers were of the same "class" anyway, and they all made much more
than the programmers). But in other companies, someone on the "graduate
management fast track" will feel a sense of entitlement (comes from being
institutionalized) and will bitterly resent anyone with technical skill,
whether that's someone who operates a compiler or a lathe. I'm fortunate to
have mainly worked for enlightened employers (the CEO of my current company
was formerly the CTO) but I know that's not the case in most of the IT world.

------
old-gregg
Well, finance may be dead but we still have two more talent graveyards to deal
with: law and healthcare. These two fields offer generous paychecks without
offering anything valuable to the society.

Yes, not all smart kids want to be doctors, dealing with blood, death and
nearly ten years of school isn't easy. It's not doctors who I meant by
"healthcare" - we're wasting a giant percentage of premium brain tissue on
lawyers and medical equipment and drug sales force. There is a big, hairy and
disgusting reason why a short stay at the hospital will cost you $50K in the
US: the food chain of various middlemen that feed off your illness is huge.

"I want my kid to be a doctor or a lawyer" problem needs to be dealt with. A
nation of lawyers and doctors isn't competitive.

~~~
Prrometheus
I'm getting tired of populist vilification of finance. We went through a
bubble and too many resources were devoted to finance lately, just as too many
resources were devoted to technology in the bubble of the late 90s. However,
finance is not a "talent graveyard". It is "useless" only as your circulatory
system is "useless" to the "real work" of your body's organs. Allocating
resources to all available investments in society is valuable, which is what
finance does. It creates value even if that value is less visible than the
product of the coal mines that your grandpa used to work in.

~~~
ricree
I tend to look at it as an economic lubricant. It makes things run smoother,
and as complexity increases things would break down if it wasn't there, but at
the end of the day it is there to enable the parts of society that produce
valuable things and ideas.

I agree that it is useful and its existence is desirable, but the problem is
that it is often overshadowing the parts of society that it is supposed to be
supporting. Because of this, it is drawing a disproportionate number of smart
people who might otherwise be having a greater impact elsewhere.

------
theoneill
For American readers: the City = Wall Street, not London.

------
bootload
_"... When I visited Japan last month to study its successful high-speed rail
system, its transport minister told me that Japan’s first railways were built
by Edmund Morell, a British engineer, in the 1870s. This is the time for
Britain to seek to regain its world-class engineering skill base and to lead
in new industrial sectors such as low carbon technology. This will happen only
if pioneering companies recruit top talent now. ..."_

Good idea, but will regrettably not happen because after the grads are trained

\- where is the industry into which they can be recruited?

\- what market is willing to pay for these products now & in the near future?

\- where are the English entrepreneurs?

The UK made a deliberate decision to specialise in finance at the same time
winding back engineering. A shame really because English engineering is first
rate.

~~~
danw
Good points, but please refrain from using British and English
interchangeably.

~~~
bootload
_"... please refrain from using British and English interchangeably ..."_

Why out of curiosity?

~~~
danw
As a British engineer who is not English it can be seen as offensive.

Here's a nifty diagram to illustrate:
[http://upload.wikimedia.org/wikipedia/en/thumb/9/96/British_...](http://upload.wikimedia.org/wikipedia/en/thumb/9/96/British_Isles_Euler_diagram.svg/537px-
British_Isles_Euler_diagram.svg.png)

~~~
bootload
_"... As a British engineer who is not English it can be seen as offensive
..."_

Hey thanks danw for distinction.

------
dotcoma
Absolutely: yes! As said in the NY Times piece, Time to reboot America...

>To top it off, we’ve fallen into a trend of diverting and rewarding the best
of our collective I.Q. to people doing financial engineering rather than real
engineering. These rocket scientists and engineers were designing complex
financial instruments to make money out of money — rather than designing cars,
phones, computers, teaching tools, Internet programs and medical equipment
that could improve the lives and productivity of millions.

------
gaius
No it won't, because the UK govt spends vast sums on high-priced "management
consultants" and that's where these people will go. Think about it, if you're
an investment banker, what else can you do? It's not like you can become an
engineer or a doctor or a teacher overnight. You'll take the shortest path to
the money. That's what these people do, why they went into banking in the
first place!

~~~
Prrometheus
>Think about it, if you're an investment banker, what else can you do?

You can read a balance sheet, research an industry, make a presentation to
sell something expensive, and work 80 hours a week at something no matter how
tedious.

There's got to be some demand for those skills.

~~~
gaius
What does "research an industry" mean, tho'? It doesn't mean anything about
how to _do stuff_ in that industry. It means knowing that if the price of oil
goes up, sell your airline stock. It's an open secret in finance that when an
analyst says "buy" he means "hold" and when he said "hold" he means "sell SELL
_SELL_ ". I'm not clear where the value-add is there.

~~~
Prrometheus
Tell you who the major players are and how they differ. Estimate a value
function for the equity of firms in that industry. Find out how large the
market is, how it has changed over time, and how it differs across countries.
Research the regulations that effect the industry and give a concise
explanation of which rules are normally constraining and which rules can be
worked around. Find out what companies have been bought or sold in the sector,
who has been doing the buying, and who has the balance sheet to do more deals
in the near future.

~~~
gaius
Sounds like someone who'd be ideally suited... to working in an investment
bank!

~~~
Prrometheus
Yeah, maybe. Might be useful in internal management and strategy divisions of
large firms, too. It would probably be good to have an ex-investment banker
somewhere in the high level management of your firm.

