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Banking on the future

Ryan Rosztoczy '12 is one of many Stanford students who still aspires to work in the financial sector, despite the recent economic downturn. (HELENA VILLALOBOS/Staff Photographer)

“We’re not all crazy greedy people!” said Ryan Rosztoczy ’12. “It kind of sucks to have everybody hate on you–every time someone asks me what I want to do, I now have to start with a preliminary ethical defense.”

With the recent financial crisis and public grilling of Goldman Sachs executives on national television, investment bankers have become some of the most vilified people in America.

“My friends laugh that I’m selling my soul by going into investment banking,” said Cameron Mullen ’11. “Popular media makes it seem like Wall Street is this terribly corrupt place where everyone gets ridiculous bonuses.”

Prospective bankers have definitely found it increasingly difficult to defend this future plan against the masses of social entrepreneurs, pre-meds and environmental engineers on campus. Has the alluring glow of Wall Street finally faded?

“When times were flush, Stanford students were as eager and diligent about beating down the doors to investment banks as students anywhere else,” said law and business Prof. Robert Daines. However, he feels that the enthusiasm for Wall Street has tempered slightly, and perhaps for good reason.

“Fewer students right now are pursing these jobs, but I think that is because jobs are scarce and students are sensibly considering other options,” Daines said. “As a general rule, it’s probably good to have more people working in the ‘real economy’–making and selling stuff–than we’ve had in the past decade.”

But for those who have found their calling in investment banking, the ridicule, uncertainty and possibly reduced salaries do not serve as deterrents. Motivations vary widely, but the standard image of “doing it for the money” doesn’t seem to be as prevalent as many might believe.

“I’ve been doing it every summer since Stanford, and I really enjoy the fast-paced lifestyle and getting involved in some of the biggest transactions in the economy,” Mullen explained. “There is a lot of intellectual rigor that goes underappreciated.”

“You have to do it because you love it–the ones who think they’re going to make a lot of money, they’ll last two years and leave,” Rosztoczy agreed. “If I could do anything for 12 hours a day, it’d be finance–I love it that much.”

Some have even been motivated to go into finance by the mistakes, and subsequent possibilities, stemming from the crisis.

“As we’ve seen lately, the various professions on Wall Street all wield great influence in our economy,” pointed out J.R. Riggs ’12. “Working there offers an opportunity to really affect how our economic system functions, which is an exciting possibility to me.”

In fact, for current undergrads and recent alumni, the crisis might even be beneficial in terms of getting employment.

“Banks over-fired, so there’s a staff shortage,” Mullen said. “It’d be the beginning of a new boom, with huge amounts of hiring.”

Once he enters the field, Rosztoczy is also eager to apply what he has learned while working with the Blyth Fund, Stanford’s undergraduate student-run portfolio of the University, as well as the wide range of ethics and philosophy courses that he has pursued at Stanford.

“How do we make things more transparent?” he asked. “How can we shape public opinion of bankers through our actions? What can we do to prevent this from happening again?” Such burning questions are what drive Rosztoczy and many other Stanford students to create change in the banking sector.

They think the first step is awareness. It seems almost counterintuitive to be advocating for people pulling six-figure incomes fresh out of college, but those in the field are quick to point out that there is more than meets the eye when it comes to bankers.

“[The] current climate makes it very easy to scapegoat investment banks for everything,” Daines said.

“A lot of people who complain about finance…don’t really understand the role of banks and finance and how it helps the economy,” said Alex Hoffer ’13. “Without them, almost all business in the U.S. would not be able to function.”

Furthermore, some seasoned interns argue that investment bankers really don’t make that much money when you consider how much time they put in. They say it’s important to look beyond that enormous starting salary.

“We’re on call, just like doctors,” Mullen said. “Investment bankers wake up at 5 a.m. and work till 10 p.m. We pull all-nighters and we’re always working, yet we make about $11.25 per hour after taxes. That’s less than the hourly wage for a campus job at Stanford!”

For some, helping to improve bankers’ public image is both an important and a seemingly impossible task. The public simply does not seem interested in understanding the complexities and differences in finance and the economy. But even if investment banking is no longer the hottest post-collegiate career of the moment, students like Riggs are undeterred.

“There is a popular stereotype out there that the typical Wall Street banker is extremely corrupt and doesn’t care about anyone but themselves,” he admitted. “[But] at the end of the day, I feel that how you carry yourself is more important than how your profession is perceived.”

  • Quinn Slack

    Regarding the following quote: “Investment bankers wake up at 5 a.m. and work till 10 p.m. We pull all-nighters and we’re always working, yet we make about $11.25 per hour after taxes. That’s less than the hourly wage for a campus job at Stanford!”

    I am unable to recreate your math here.

    First, you are comparing your after-tax salary with the pre-tax wages of campus jobs. That doesn’t make any sense.

    Anyway, suppose you work 17 hours per day (5am-10pm) for 315 days in the year. (I-bankers work a lot, but that is probably an overestimate.) This means an hourly equivalent wage of $22.40, assuming your starting salary is $120k. Even ignoring your signing bonus, benefits, and other perks, that is WAY above an on-campus job. It’s only equivalent to the pre-tax earnings of an campus job if your effective tax rate is 49%, at which point I would suggest you get a new tax preparer.

    But even an on-campus job is subject to tax. So, you need to compare your hourly equivalent wage to something well below $11.25.

    This is also ignoring your bonus, which can be huge (many times your starting salary, even). And in ten years, if you can do the work, you are highly likely to be earning 7 figures.

  • SL

    Agreed with the comment above. I’m not one to vilify bankers, not in the least, but the oh-the-plight-of-the-misunderstood-banker routine doesn’t cut it.

  • RR

    Actually, first year starting salary (what the man who commented on the lower wages will most likely be making) is closer to between 50-60K. With a first year bonus of between 30-50K, you are quite off on your projection of how much they make. Also, since they work 7 days a week most weeks, 315 days per year is a very low estimate. Hours range from 14-17 on average. People who go into finance for the money are more likely to take buy-side jobs, where both the real risk is taken and big money is really earned. Banks are extremely socially important as well. While some aspects are not, I’m sure you could point out many industries where that is true. Without the important aspects however, the American Dream and other American ideals would not be possible. I trust you know what a CDO actually is and what the American Dream actually is when I make that statement.

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    Thank you for a great post

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