How much does the prestige of a university matter in finding a job in the financial/economic/banking industry?


#1

How much does the prestige of a university matter in finding a job in the financial/economic/banking industry?


#2

I would say there is no industry in which prestige of your university matters more than in the finance, economics and banking industry.

Depending on what university you study at, the difficulty of getting a job at a place like Goldman Sachs goes from virtually impossible to very doable.

It is not uncommon for Goldman Sachs to make more than 25 full-time employment offers to students at Harvard whereas for a lot of universities around the world, it is rare if even 1 student gets offered a role from these universities. Naturally, there are other factors at play here like Harvard has a lot of people applying for these jobs (but that’s largely because there’s a clear and well-trodden path through to offers).

Why a prestigious university is important is because top finance companies can’t expend their efforts “recruiting” at every university in the world. This leads to the following dynamics:

  1. Companies want to spend the time of their partners, analysts and associates efficiently so they need to choose specific universities to focus on where they can get a lot of talent quickly when they send their staff on recruiting trips.

  2. They want smart, hard working and competitive hires so going to universities which already have a rigorous filtering mechanism (the US or UK application process) helps to achieve this. If you’re already recruiting from the kids Harvard decided were good enough to get in, chances are you won’t bump into too many total time wasters.

  3. It’s easiest to recruit talent from the same universities current employees come from. Banks use their staff to reach out to their alma mater so you see graduates currently employed at investment banks, sending out emails to student groups, tapping individual students etc at their old universities. This creates a bit of a self-fulfilling prophecy where the easiest talent to reach is the talent from the same universities their staff went too.

  4. In the banking and finance industry (as well as the consulting industry), the client is paying massive sums of money for a service (a consulting report, merger and acquisition advice etc) and it is much easier to package that product and sell it to the client when the people performing the service come from very prestigious universities. The client feels like they are paying for the smartest minds to help them solve their (often most) important problems.

I would also add these industries generally place very heavy emphasis on your undergraduate degree contrary to the myth in many countries that studying an undergraduate degree at a less prestigious university is okay because you can do postgraduate somewhere else. It is always better to go the best university possible as fast as possible.

I’ll give you an anecdotal example. At the hedge fund I work for, here is the background of the analysts:

  1. Yale Undergraduate, Stanford MBA (admit)
  2. Duke Undergraduate, Wharton MBA
  3. Duke Undergraduate, Wharton MBA
  4. Yale Undergraduate, Harvard MBA, Oxford (Rhodes Scholar)
  5. Duke Undergraduate
  6. Harvard Undergraduate, Harvard MSc, Stanford MBA (admit)

Long story short, in finance your “pedigree”, the institutions you studied at play a very important role in breaking into the industry. It’s not impossible to get jobs at these firms without these backgrounds and it is definitely very doable if you work hard with the right advice but it’s much easier with the backgrounds. Once you’ve broken into the industry, your pedigree becomes less important (but still relevant).