The path to a high-powered career in investment banking suddenly is full of roadblocks for MBA students who have seen Wall Street drastically reshaped while they sit in the classroom.
Just as many were eyeing a job market where starting salaries can far exceed $100,000, an era of giant investment banks came to a crashing end and the need for such specialists dwindled.
Their plight may not elicit much sympathy during a financial crisis. But it has jolted some of the best and brightest in the nation's business schools to watch their would-be employers vanish or be absorbed overnight after they staked huge commitments on their chosen fields — annual tuition at many programs tops $40,000.
"Clearly if you wanted to become an investment banker, those aspirations need a reality check at this point," said Sandeep Dahiya, finance professor at Georgetown University's McDonough School of Business.
Justin Bakewell, 30, a second-year MBA student at the George Washington University School of Business, already has felt the changes. He was set to be a summer associate at Bear Stearns when the firm fell into trouble and was acquired by JPMorgan Chase & Co.
At the time it wasn't clear the failure would be followed by a series of events that would radically transform Wall Street. Within a week last month, Merrill Lynch & Co. was sold under pressure to Bank of America Corp., Lehman Brothers Holdings Inc. filed for bankruptcy and Goldman Sachs and Morgan Stanley became bank holding companies in order to stay in business.
"There are still opportunities in finance," said Bakewell, who ended up taking the summer spot under JPMorgan Chase. "You can't just change your whole career path. I can't imagine trying to do a complete 180 just based on recent events."
There were a few more jangled nerves in the immediate aftermath of the September turmoil that toppled the remaining independent investment banks. Faculty and administrators at numerous business schools describe their second-year MBA students in particular as stunned or even panicked initially.
Students are starting to accept the new reality, school officials say, although many are reviewing their options and looking at smaller firms in different areas or even at different fields.
"The work that investment bankers do is not going to go away. But hiring the incoming class of MBAs is not on the radar screens of these big financial institutions right now," said Dahiya. For those set to graduate within months, he said, "it's a brutal downshifting of expectations."
Frank Albus, 29, who's on track to finish his MBA studies next June at the University of Chicago Graduate School of Business, admits to some anxiety about the uncertain situation. That's particularly understandable in light of tuition costs for the two-year program that run $45,840 this year.
Still, after leaving an asset management job to get his MBA, he's determined to see out his plan of working as an investment banker in New York, London or elsewhere. His mood and that of his classmates, he maintains, has switched from shock and disappointment to cautious optimism they'll still land good jobs.
"It's a little bit unsettling," he said. "But I can't help but be optimistic that hopefully the worst is over and we're in a state of picking ourselves up from near the bottom."
Prospective investment bankers at another top-rated business school across the city, Northwestern University's Kellogg School of Management, also are bracing for a longer, wider job search.
Michael Tyree, 27, who's on pace to get his MBA from Kellogg in June, came from investment banking work in New York but is considering heading in a different direction, such as asset management or private equity, with investment banking prospects having shriveled up for now.
Like Albus and others, he is relying heavily on his school's contacts and outreach programs to aid in his job hunt.
"The message I seem to be hearing is it's a rough market, you have to network your butt off," he said.
Roxanne Hori, the assistant dean and director of career management at Kellogg, said recruiting is "obviously going to be very limited" for investment banking jobs on Wall Street for the current MBA crop.
But just two weeks into the semester, she sees positive signs. Boutique firms and mid-size organizations already are recruiting for modest numbers of positions as usual, and consulting firms have said they will hire in similar numbers to last year.
"The first thing I tell our students is 'Don't panic,'" she said. "The second is to take a step back and reflect on what you really want to do and how to get there. If you want to do investment banking, maybe you're looking at a smaller boutique bank."
At Pepperdine University's Graziadio School of Business and Management, professor Ed Fredericks said students recognize that the traditional route to investment banking — getting into a company's training program, getting your MBA and getting hired back by the firm — is drying up as firms go under or are combined.
The way to get into investment banking and private equity now, he said, is for students to target an area of interest to them, such as entertainment or health care, look for the smaller firms that are still hiring and tailor their education and career experiences to what those companies want.
"Overall, it's a cautious environment," he said. "But I don't think it's a panic yet."