The new employment reality for financial MSc graduates

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Taking a pre-experience Masters degree in a finance-related course used to be a golden ticket into a front office investment banking role. Graduates came armed with the sort of quantitative skills and industry knowledge that would give them an edge over undergraduates. Schools were actively targeted and post-degree employment rates hovered at the 90% mark. As banks pull back from graduate recruitment, can the same be said now?

One of the biggest challenges that financial MSc students face is that an increasing number of investment banks are now filling all their front office positions with internship conversions. Finishing a year-long course with the right industry know-how is one thing, but in a tight job market, competing against students who can leverage their work experience for a full-time position is incredibly difficult.

Barclays Investment Bank, Deutsche Bank, J.P. Morgan, Morgan Stanley and Nomura all filled their 2013 front office positions in early September, suggesting that intern conversions received the lion’s share.

“It’s an incredibly tough market for graduates, particularly in investment banking,” says Charlie Statham, MSc relationship manager at Cass Business School. “The MSc in Finance will enhance an already good CV, and needs to be combined with work experience and extra-curricular activities.”

Employment rates for MSc students have remained high. At Imperial College, for instance, 87% of the 211 graduates on its MSc Finance course were employed within three months of completing the programme, with 17% moving into sales and trading and 17% into M&A. Investment advisory/professional services also took in 17% of the students.

“The volume of applications for the MSc in Finance has grown in recent years, which meant we’ve been more picky with who we accepted and only took on well-rounded students,” says Mark Davies of Imperial’s Career & Professional Development Service. “This means not just having good academics, but also demonstrating clear career goals and going some way to achieving that.”

Most graduates from these courses may still be receiving employment offers, but it’s questionable whether many are landing the plum front office positions in bulge bracket investment banks.

Our own rankings show that employment in the top investment banks among Masters in Finance students hovers between 35-60%, and some graduate career destinations in the leading schools aren’t exactly glamorous. At Skema Business School in France, for example, some of the class of 2012 ended up in audit, pricing or cash management and within Cass Business School’s latest crop of graduates, a decent proportion ended up in IT, retail banking or a ratings agency or – in one case – working for the central bank of Trinidad and Tobago.

Are MSc students having to adapt their expectations to the new reality of the job market?

The new targets for MScs

The careers advisors we spoke to said that five years ago, Masters students were interviewing with, on average, ten financial institutions and juggling multiple offers. These days, appetite to hire MScs has dropped by “around a third”, according to one recruiter, and graduates are exploring increasingly obscure avenues.

“MSc students are targeting smaller organisations where their skills can be applied without the need for a formal training programme,” says Derek Walker, director of the careers service at the University of Oxford: Saïd. “We’re seeing more students gravitate towards boutique investment banks, where they can hit the ground running and demonstrate more practical skills than undergraduates going for the same position.”

Wealth management, risk and financial consulting are all becoming more popular with MSc Finance graduate as investment banks pull back their hiring plans, says Colin Hudson, director of the career development service at Cranfield School of Management. But some students are moving out of finance entirely.

“We are seeing more students look to consulting with an emphasis on finance and also movement into FTSE 100 firms, in particular fast-moving consumer goods (FMCG), as financial analysts,” he says.

Is everyone just going home again?

A large proportion of those studying financial MScs in the UK are foreign students – anything from 40-80% in the schools we spoke to – and many are coming here with one eye on the City job market.

As Imperial’s Davies tells us, even students from France and Germany come to “access a new employment market” in the UK, but there’s also a high proportion of students from Asia hoping to crack the City job market. Unfortunately, with London arguably hardest hit by the latest rounds of redundancies in the financial sector, many struggle.

“We’re seeing an increasing number of international students choosing to return to their home countries to find work,” says Cass’s Statham. “The largest proportion still find work in the UK, but India, China and Scandinavia are also popular destinations.”

At Imperial, 44% of this year’s graduates have found work in Asia, followed by 43% in the UK and 7% in Europe.

“Asia hasn’t been as badly hit as Europe, and Asian students have a competitive advantage in their home countries with language skills and experience of the working culture,” says Walker.

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