Q. How bad is it for people working on Wall Street?
A. We haven’t seen anything like this in the financial services industry, particularly in investment banking but also in the capital markets area. The numbers change every day, but at the end of 2008 the number was that 240,000 had been laid off on Wall Street in an 18-month period. If you’re talented — and there are a finite number of individuals across every organization who are A-plus players — you won’t have any trouble getting a job. If you’re newer to the investment banking field, you’re going to have to look at different types of employment.
Q. Is it just people in investment banking losing jobs or is it also happening in other areas, like private equity and hedge funds?
A. It’s across the board. You haven’t seen private equity being hit as hard as investment banking or the hedge funds. I don’t think a day goes by when you don’t pick up a newspaper and see another hedge fund that’s closing. A lot of these individuals will either reinvent themselves in different areas of the hedge fund world or retire or do something completely different. Therein lies the challenge. What type of industries do you want to go into when you’re being compensated fairly heavily now?
Q. Where do those 240,000 people go?
A. There are a couple of things happening. When I say retool or reinvent yourself, some of the local investment banks in Chicago are recruiting people from New York. That just wouldn’t have happened a couple of years ago.
You’re also seeing people moving abroad. —
But it’s a supply and demand issue. The demand simply isn’t there for all 240,000.
Q. If many of these people were skilled at building complex financial instruments that are no longer in demand, how can they use those skills in other industries?
A. You see a number trying to go back to school. You see a number trying to get into different areas. If you’re intelligent, there will be opportunities. It will just take much longer than it used to. At this time, it could take six to eight to nine months.
But it’s tough because the areas that are looking to recruit and grow right now are energy, things that deal with the environment, pharmaceuticals and some parts of high tech. It’s tough to make a transformation from trading credit-default swaps one day to going to work for a health care company the next. They have to discover what they want to do when they grow up.
Q. Are business schools teaching people to become investment bankers when the world doesn’t need investment bankers any more?
A. There is truth in that. I’m on the board of the Fuqua business school at Duke University, and we were just having this conversation at a board meeting. If you look at all the analytical tools they’re teaching at the University of Chicago or at Wharton, they’re teaching people how to become a great investment banker, but not necessarily how to manage and lead.