Finance is boring, once again

So IIMB goes to placements this week. Two months back, though, in the first class I taught there, in an attempt to “understand the class”, I asked my students to tell me their “most preferred employer”. The intention was to tailor the course in a way that would be more suitable for their prospective careers.

Thinking back at that class, there is one thing that hits me – very few want to do finance (again that’s no indication of how many of them will end up in finance jobs this week). I initially thought it was a biased sample – there was a course of the same name offered to the same batch in an earlier term, and those that had taken the course then were not eligible to take the course now. Given the primacy of spreadsheets in finance, I thought students more inclined towards finance would have taken the course in the earlier offering. But then thinking about it (without data to back me), that so few want to do finance doesn’t surprise me at all.

When I tried putting myself in the shoes of my students and thought of what jobs I wanted to take, I realised that there weren’t any finance jobs that I could think of. With the derivatives world having undergone several downturns in the last decade, no one recruits for derivative sales and trading from IIMs any more (if my information sources are right – they could be wrong). And if you were to take out derivatives sales and trading, there is very little that excites about the other finance jobs that recruit MBAs.

There is investment banking (M&A, Equity/Debt Capital Markets) of course, but the job is insanely fighter, and while it is ultimately a finance job, finance forms a small portion of your day-to-day activities there (secondhand information again). Venture capital and private equity are again ostensibly finance but again there is very little finance you use in decision-making there – other “softer” stuff (such as evaluating “quality of founding team”, etc.) dominate.

Then there is commercial banking, which is finance only in name, for most jobs for which they recruit MBAs (data from a decade back) are in the realm of sales or business development. There is the odd treasury or risk management job, but those jobs are small in number compared to the others. And corporate finance jobs see excitement very rarely (when there is M&A or related activity). You have asset management and research roles, but they are again not the kind that you would call as “exciting”.

In short, finance has become boring, again. Most jobs on offer to fresh MBAs nowadays are for roles that are fairly routine and “boring” for the most part, and while finance still pays well, there are no adrenaline-pumping jobs on offer there as there used to be a decade ago. And from the macro point of view, that is a good thing.

Because finance is fundamentally a boring job, and is supposed to be a boring job. If finance had become “exciting”, it was because finance people were doing stuff that they were not supposed to be doing! Like taking highly levered bets for example, or concocting derivatives so complicated that nobody – not even most traders – would be able to understand it.

I had written recently that people have stopped considering coding “cool”, and that we should do something about it. A similar thing is happening to finance, where MBA students are not finding it “cool” any more (but people will take up the profession since it pays well). However, this is not a problem, and nothing needs to be done about it. This is how things ought to be. Finance is supposed to be boring!

Anyway, this might be biased opinion since if I could roll back nine years and were asked to pick a job, I couldn’t see myself working at ANY of the companies that had come to recruit from IIMB back when I graduated! So perhaps my hypothesis about finance jobs being boring now is a result of all typical post-MBA jobs being boring! Perhaps that explains why I’m doing what I’m doing now – a “job” so atypical it takes a lot of effort to explain to people what I’m doing.

Oh, and coming back to finance, I’m four weeks though with my Asset Pricing MOOC, and have been totally enjoying it so far!