Move over investment banking, make way for asset management. Experts agree that careers on the buy-side are becoming increasingly appealing. Masters of Business Administration (MBA) students, graduates and sell-side staff are queuing up for some of the feel-good factors no longer available at the banks.
At the London Business School, 4% of MBA students went into asset management last year. This may be a trickle rather than a flood, but it is thought to be the start of something more substantial. 'We are seeing the beginnings of a trend for students to move in favour of asset management and private wealth management,' says Natalie Nahum, associate director in charge of finance placements. The London Business School has only just started bringing out figures for students going into asset management and has not tracked such statistics before.
The trend is being encouraged by recruiters themselves, who are more frequently targeting MBA students. Cigna and Merrill Lynch Investment Managers are among those to have recently begun recruiting at the London Business School.
A similar trend is in evidence at graduate level. 'Asset management is tempting students away from investment banking,' says Gordon Chesterman, the deputy head of the careers service at Cambridge University. 'It's the new kid on the block.'
Karen Hoggard, head of HR at Merrill Lynch Investment Managers, confirms the sector's growing appeal. 'Recruiting higher numbers of graduates and MBA students has not been a problem. Fund management today is seen as a far more glamorous career than it was in the past. Having long been the little sister of investment banking, it's finally reaching maturity.'
Uncertainty at investment banks is contributing to asset management's allure. 'The career on the buy-side is more stable,' says Luke Chua, a student on the Masters in Finance at the London Business School. Headhunters confirm that the industry offers good potential over time.
'Asset management is a more structured environment. Client relationships are very enduring and there is a good career path,' says Petra Rickmeyer at Hoggett Bowers. Although asset management firms have also been consolidating, demographic factors such as the rising number of pensioners, and hence rising savings, mean that the industry is set for long-term growth.
Stability is not the only thing on offer. Life in asset management can be more sedate than in investment banking. Globalisation means that investment bankers in corporate finance and M&A are at the mercy of clients' demands 24 hours a day, seven days a week. For a fund manager days are long, but weekends are invariably his or her own. Those seeking a less frenetic existence tend to prefer asset management as a result.
'Running yourself ragged in a given day or week doesn't necessarily help a mutual fund make money, but hustle may make or break you in investment banking,' says Martin Steinik, former researcher at Templeton Investment Management and second-year MBA student at the London Business School.
As quality of life becomes more important the absence of hustle may weigh in asset management's favour. 'There are people in my class for whom the better quality of life offered by asset management firms is a very important consideration in choosing between asset management and areas of investment banking,' says Chua.
Relative to investment banking, the industry is already attractive to women. Across the firm, JP Morgan received the highest proportion of female applicants to its asset management division last year. Karen Falcocchio, head of HR, says that asset management is getting its message across on campuses, and women now view it as an excellent career. Perhaps the industry is seen as a more equal opportunity employer. High-profile women such as Nicola Horlick, Carol Galley, and Nicola Ralston make for strong role models.
Asset management's appeal is not restricted to the so-called 'soft areas' such as quality of life. 'Hard' issues are also being addressed. For top performers, the differential in pay between investment bankers and asset managers is decreasing. 'The opportunity is available for smart and well-motivated people to form well-rewarded careers. The strongest contributors have the potential to earn a lot more now than they could have hoped to a few years ago,' says Andrew Skirton, global chief investment officer at Barclays Global Investors.
Backed up by hard cash, asset managers are finding it possible to poach from investment banks. In an increasingly complex investment climate, asset management firms are placing a premium on the risk management expertise possessed by those on the sell-side.
Some are happy to make the move. Peter Smith, chief investment officer in fixed income at HSBC Asset Managers, was previously one of the star traders at CIBC. He left in 1999. Smith disputes the idea that asset management offers a quieter life. 'It's not a route to pasture. Sell-side people aren't coming to hide out on the buy-side. But this is a growing area. I'm hiring and not firing people, which is good.'