In short, Dean Henry is attempting to remove Stern’s reputation as a “finance school” and instead transform the school (and its reputation) into a more diverse program that doesn’t just churn out students for careers in finance, but for a wide range of other career fields as well.

In 2007, 44% of Stern graduates entered investment banking. In 2008 that number was down to 37%. In 2009, only 32% entered that same field.

In 2008 only 8% of Stern graduates did not receive a job offer three months after graduating. In 2009 that number jumped up to 18%.

Relying on investment banking is just not as wise as it once was.

The challenge of transforming the Stern class profile is a twofold challenge: First, restructuring the career services department—this will require the addition of many new resources as new recruiting relationships need to be forged in new industries. The second challenge is more difficult—the restructuring of the academic program itself. These changes will require getting new faculty members and shifting around management duties, in addition to the actual changes that need to be made in the curriculum.

Students for the most part are welcoming these changes with open arms. Stern graduates are somewhat notorious for taking jobs in North America alone and perhaps look forward to the program’s forthcoming global footprint expansion.

The new dean makes it clear that despite his ambitious plans to expand Stern’s program and diversity, one should not conclude that he plans on severing relationships with Wall Street. In fact, Henry says “he will continue to strengthen relationships with Wall Street and the finance sector in general.”

Thomas Cooley, Professor of Economics and former Stern dean reflects on Stern’s past and present situation. He explains that this is not the first time that Stern was faced with such a challenge. In the last decade, he explains, when everyone was turning towards the dot-coms, Goldman Sachs actually had trouble recruiting.

Cooley ends by making two final points: First, he says, “[w]hatever you think the world is right now, hold on because it can change very quickly. And second, “Stern will always tilt slightly toward Wall Street, but then again most business schools do.

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Fortunately, assuming the FT is correct in its allegations, top MBA programs are addressing these criticisms and are cleaning up their acts. B-schools are tweaking their curriculums—with some changes as major as adding new classes—to transmit to their students lessons of the financial crisis. Classes on ethics and the history of financial crises are some of the new offerings at now conscientious b-schools.

Jake Cohen, dean of the MBA program at Insead explains how the economic crisis is achieving a goal otherwise overlooked in the past: the bridging of private and public sectors. Teaching MBA students about the impact of the public sector and its relationship with the private sector is now an integral learning point for current MBAs.

Harvard Business School is an example of an institution that is taking specific measures to educate its MBA students about the impact of the financial crisis. HBS has added new courses, including “The Evolution of the US Financial System” and “Managing the Modern Financial Firm.” Risk management, until now, has been a relatively undervalued focus in an MBA course of study.

Anderson School of Management at UCLA is also making significant changes to its syllabi. A first-year finance class that used to focus on stocks and bonds now includes discussions on credit default swaps, collateralized debt obligations, and mortgage-backed securities.

Kenan Flagler’s Dean James Dean is taking a more conservative approach. He explains:

“We don’t want to make knee-jerk changes, we want to be thoughtful about it. It would be a bad mistake to throw out some of the fundamentals for something that looks important now but will not be as important three or four years from now.”

I think we can all agree with Dean in hoping that these crisis-related objectives will be irrelevant in a few years.

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You will find in the special report articles on:

• Applying while or after a layoff.
• The series “MBA in Finance: Forget It?”
• The disappearance and reappearance of financial aid options.
• The wisdom of applying during times of financial uncertainly.

Please feel free to download and share Applying to Business School in Times of Crisis.

Please also use the comments to share your thoughts on the topics discussed in this special report.

“Responding to a request from the Graduate Management Admission Council® (GMAC®), a leading international bank has joined with experienced service providers in student financial aid to create a new pilot lending program for international students who attend graduate business schools around the world.

“The pilot is prepared to provide at least $500 million in loans to students in about 40 business schools in the United States and Europe, beginning with the 2009-10 academic year.

“International students, who comprise a high percentage of all U.S. graduate business school enrollment, have been especially hard-hit by the financial crisis. They are not eligible for federal loans and several major lenders have terminated the “no-cosigner” student loan programs that were widely used by this group.

“The new lending structure is designed to be school-centric and school-controlled and is not dependent on any particular bank or group of banks. Students who borrow under the program will not be required to secure co-signers. Schools involved in the program will not own loans, incur up-front costs, or have liability for individual loan defaults.

“A key participant in the project is Kevin Moehn of Moehn Management, Inc., a new company established to bring lending organizations together to facilitate student loans through a program that “delivers a sustainable and dependable structure for business schools to finance international students.’” Emphasis added.

The press release did not indicate which 40 schools will participate in the program.

• Don’t forget finance and investment banking! It is critical to business. It may be down, but it’s not dead. It will resurrect itself in a new form, but it won’t disappear.
• Be prepared to discuss intelligently the challenges in the field.
• Have a realistic plan for achieving your goal.
• Most indicated that a Plan B, especially for career changers, is a good idea.

To further the last point, we received several detailed interview reports today in the MBA Interview Feedback Database, including one for NYU. As if on cue, this applicant wrote in response to “What was the most difficult question [in your interview]?”:

Given today’s economy, what is your Plan B if you can’t get the summer internship or job that you are interested in? Even though I was prepared to answer this question, my interviewer mentioned that a lot of prospective MBA students are so locked into their plan that it’s almost like tunnel vision and they haven’t giving much thought to a back-up plan.

My question:

Given the weakness in investment banking, hedge funds, and financial services in general, how do you react to applicants who say they want an MBA to enter IB, PE or a related field that has been devastated by the economic downturn? Is the reaction “What planet have you been on?” Or, are you willing to consider those applicants because you feel the market for these skills will come back in a couple of years?  Would you like to know that IB et.al. is the primary goal? Would you like to see a Plan B? Is your reaction different if the applicant is coming from IB or a related field as opposed to someone seeking the MBA to change careers?

Bruce DelMonico, Director of Admissions at Yale’s School of Management, responds:

Thanks so much for your email.  That’s a really good question.  Our reaction is definitely not “what planet have you been on.”  We understand that finance hiring is down right now, but i-banking, private equity, and finance generally are not going away, so we want to make sure we continue to train future leaders in these areas.  The same firms that came to campus to recruit last year are back this year (other than, of course, those like Lehman and Merrill that have morphed into Barclay’s and B of A).  They are still making offers and hiring our students, just not always as many as in the past, for obvious reasons.

What they and other companies who recruit here tell us that they learned from the last downturn, where they stopped hiring entirely and realized later that there was a gap in their talent pool.  So firms may be scaling back in their hiring given the current financial situation, but they realize that they still need to cultivate talent and promote a steady stream of employees through their ranks.  We’re taking the same attitude – finance may be down right now, but it’s not out, and we want to be there helping with the solution.  It may be easier and more natural to run away from the industry because it’s down, but I think the better – and bolder – move is to stay in when things are down and try to figure out how to make them better.  That’s what we hope our finance students will do.

That got a bit philosophical near the end.  But the bottom line is that we’re not trying to market-time things here – we want to bring in the strongest class possible.  Who knows what the economy will be like two years from now, when these students will graduate.  If they’re strong candidates and can articulate a compelling reason why they want to go to business school, we will give them a hard look.  In terms of people coming from i-banking versus those who are changing careers, for everyone we look for the same thing: are you willing to put in the effort to make your goals a reality?  It’s very tough to go straight into a hedge fund or PE firm from business school (although we do have, for example, a first year who beat out a lot of top candidates from other schools to land an internship this summer at Paulson & Co, so it is possible).  Students should be willing to take the steps necessary to position themselves for success.  So if they don’t have a finance background, they need to know that they’re not going to jump straight into PE.  They need to get more general finance exposure first, build their skill set, and work their way up.  The same with students who have a finance background but who want to move higher up in the finance food chain.  It’s a matter of being patient, having a plan, and then executing on it.  We’re looking for people who understand this and are willing to put in the effort.

My question:

Given the weakness in investment banking, hedge funds, and financial services in general, how do you react to applicants who say they want an MBA to enter IB, PE, or a related field that has been devastated by the economic downturn? Is the reaction “What planet have you been on?” Or, are you willing to consider those applicants because you feel the market for these skills will come back in a couple of years?  Would you like to know that IB et.al. is the primary goal? Would you like to see a Plan B? Is your reaction different if the applicant is coming from IB or a related field as opposed to someone seeking the MBA to change careers?

Rod Garcia, Director of MBA Admissions at MIT’s Sloan School of Management, responds:

On the contrary, we don’t react negatively to candidates who want to be in financial services. There are still jobs in finance; it’s just not in Wall Street anymore. I see this period much like October 87; the people who wanted to study finance are the ones who are serious about learning the fields rather than going to it because of bonuses. So, from MIT’s standpoint, we look at them kindly.

My question:

Given the weakness in investment banking, hedge funds, and financial services in general, how do you react to applicants who say they want an MBA to enter IB, PE or a related field that has been devastated by the economic downturn? Is the reaction “What planet have you been on?” Or, are you willing to consider those applicants because you feel the market for these skills will come back in a couple of years?  Would you like to know that IB et.al. is the primary goal? Would you like to see a Plan B? Is your reaction different if the applicant is coming from IB or a related field as opposed to someone seeking the MBA to change careers?

The response from Peter Johnson, Director of MBA Admissions at UC Berkeley’s Haas School of Business:

Thanks for writing and for your question, which I’m sure is on the mind of a number of candidates.

Despite the current challenges in the financial services industry, there are still great opportunities as well, and I do expect the industry to recover over the next two years.  It won’t be the same, however–Wall Street will reinvent itself, and I think it’s hard to guess how the investment banking industry will emerge from the current crisis. Suffice it to say, there will be great opportunities for the right people.

As with all candidates, we are always looking at the underlying motivations for career direction.  If an applicant wants to switch careers, do they really seem to understand what their target industry is all about?  Has their past work experience given them the opportunity to begin developing the necessary skills? Do they understand that challenges they will face in pursuing the career they seek?

If a candidate can demonstrate a legitimate interest in a financial services career and can demonstrate that they understand the challenges they will face and how we might help them to prepare, they’ll be just as attractive this year as they were in the past–in fact, perhaps more attractive, since we know they are not pursuing a career only because they think it’s a guaranteed route to a lucrative career, but instead based on professional challenge, satisfaction and financial reward.

My question:

Given the weakness in investment banking, hedge funds, and financial services in general, how do you react to applicants who say they want an MBA to enter IB, PE or a related field that has been devastated by the economic downturn? Is the reaction “What planet have you been on?” Or, are you willing to consider those applicants because you feel the market for these skills will come back in a couple of years? Would you like to know that IB et.al. is the primary goal? Would you like to see a Plan B? Is your reaction different if the applicant is coming from IB or a related field as opposed to someone seeking the MBA to change careers?

Isser Gallogly, NYU Stern’s Director Full-Time MBA Admissions, and I spoke on the phone. The paraphrase of his response follows:

NYU Stern is, as always, seriously considering applicants who express interest in a career in finance. Financial services firms are still hiring our students. Yes, finance will evolve and change as a result of the financial crisis, but it will not disappear.

Applicants need to be aware of change in the financial markets and field, which is rapid now. We want informed students. When we review applications and interview applicants we want to see how informed they are. Are students actually absorbing and studying the situation? Are they reading The Wall St. Journal? Are they reading the headlines or the full articles? Are they networking in their industries? Can they bring specifics to bear? I sometimes will ask an applicant, “How would you advise Barack Obama?” Some applicants have fantastically informed and specific ideas. Others provide more general and generic responses. That tells me something about the depth and seriousness of that applicant’s interest in finance and economics. Considering the historic events of the last six months, if you are serious about your career in finance, banking, or a related field, you should have an informed opinion.

When the economy is down, we frequently like to know about contingency plans for applicant’s post-MBA career. Students need to be flexible. We are interested in hearing about related, secondary choices.

As I said, finance is not going to disappear. Companies are scaling back, but have not stopped hiring. Stern finance students are still getting multiple offers. When I last checked with Career Management the numbers were looking solid. Some companies are hiring fewer students, but there are companies recruiting too.

Given the weakness in investment banking, hedge funds, and financial services in general, how do you react to applicants who say they want an MBA to enter IB, PE or a related field that has been devastated by the economic downturn? Is the reaction “What planet have you been on?” Or, are you willing to consider those applicants because you feel the market for these skills will come back in a couple of years? Would you like to know that IB et.al. is the primary goal? Would you like to see a Plan B? Is your reaction different if the applicant is coming from IB or a related field as opposed to someone seeking the MBA to change careers?

UCLA Anderson’s Assistant Dean and Director of MBA Admissions & Financial Aid, Mae Shores, responds:

A few thoughts come to mind:

There is often a spurious relationship between what individuals identify in their applications as their intended career goal post-MBA and the careers they eventually purse. In some cases, prospective students make their original career plans based on incomplete information or are attracted to IB, PE or VC for their “sex appeal.” In other instances, students have gained exposure to a wider variety of academic disciplines and career areas during the MBA and change their professional goals based on new knowledge and skills.

We are facing an unprecedented time in the history of the global economy, where all the rules that applied to past economic downturns may not apply. While the shape of financial services and how business is conducted may well change, there will always be room for the brightest MBA students to pursue careers finance and economics and be a welcome asset to the marketplace.

Given the uncertainty over the kinds of transformation that will occur with changes spearheaded by President Obama and the Economic Stimulus package, we do prefer that incoming students interested in IB, PE or VC have back-up plans or possess the flexibility to adjust to market demands. The beauty of the MBA, unlike degrees that are strictly devoted to finance, is the breadth and depth of skills one acquires that are applicable to broad industries, including the private, not-for profit and international agencies.

As admissions officers, we seek the best and the brightest students across industries and disciplines. We do not admit individuals based on their areas of interest as these do change during their two-year exposure to not only finance, accounting, statistics, and operations, but communications, leadership, entrepreneurship.

Please let me know if I may help in any other way.