Pursuing a career in finance, but don’t know where to start? According to Lakshmi Bhojraj ’95 MBA ’01, the Parker Center — a Cornell hub that educates students on fund management — is a great starting point for students to learn more about the investment industry and hone their professional skills.
What is the best way for undergraduates here to get involved and take advantage of the resources at the Parker Center?
Bhojraj: I encourage students to walk into the Parker Center and ask how they can get involved. Don’t be shy! I think for finance careers in general, students typically think about investment banking, especially at the undergraduate level. Part of that is because the investment management industry is not as visible on campus, they don’t tend to recruit in as great numbers as investment banking or consulting. However, this is an area that can be very rewarding, intellectually stimulating and lucrative. If you are interested in that blend of quantitative and qualitative skills, this is a profession you should consider.
One of the first things we did was to start a stock pitch challenge back in 2011. The Undergraduate Stock Pitch Challenge allows Cornell students to benchmark their performance against their peers and lets them go through this exercise of what it means to be an investment professional, to analyze stocks within an industry.
We also started the undergraduate Women in Investing conference based on the MBA version which I founded in 2010. Investment management is a field where women are vastly underrepresented. It’s something that firms have wanted to change to allow for better representation, and because several studies have also affirmed that a diversity of perspectives leads to better business outcomes. That was the rationale for us to start a Women in Investing Conference. It helps inform undergraduate women about the field, network with industry professionals and get a sense of their different career options
Our faculty director Prof. Scott Stewart, finance and accounting, also teaches a course on equity analysis that undergraduates can take in the spring of their junior year, so that in their senior year they can get involved with our student-managed Cayuga Fund, which is a real fund with Cornell University endowment assets under management.
Where do students end up after graduating with experience from the Parker Center?
Bhojraj: Forty percent of MBA alums go into buy-side roles, 35 percent go into sell-side roles, and the rest are in investment banking, private wealth management or corporate finance.
Which hires more: Asset Managers or Research Houses?
Bhojraj: A sell-side research department at an investment bank will hire about six to 10 interns, very small compared to banking. Asset managers hire anywhere as few as two to 10 per department. The big difference there is that there are hundreds of buy-side shops, so the opportunities are there in totality, but recruitment is very fragmented.
Seeing students go through the process of recruitment today, do you see a large difference relative to your own experience?
Bhojraj: There are similarities and differences. In terms of differences, there is so much more information and resources now than when I was a student, in addition to on-campus opportunities. I think the fundamental process of self-reflection is the same as it has always been: Where do I see myself? What do I enjoy doing? That’s a critical part of the job search process. Don’t just do something because it is the most popular or coveted field, or most lucrative. Think: What skill sets do I want to be using that would be the most stimulating and rewarding to me?
From the standpoint of an academic in business who has also had years of experience at banks and financial institutions, do you believe there are cultural components of finance that are still antiquated?
Bhojraj: Things have definitely come a long way. Especially since firm environments are becoming more diverse and inclusive. A lot of firms have mentorship programs and diversity initiatives that they have put into place, and they’ve created metrics around diversity.
At the same time, there can be little groups or firms where the culture may not be so conducive to these improvements that we’ve broadly seen. It’s important for students to get a sense of the culture: How many women are in high positions at the firm? Do they have a good work-life balance?
There are some who believe that finance will be an algorithm in the future. To what extent do you see this actually happening? How do you envision the field changing in the next few years and how do students prepare for this?
Bhojraj: I definitely feel that coding skills, artificial intelligence, all of these things will come into play in a big way in the finance industry. I don’t know if eventually, all finance will be an algorithm. I think there will always be a need for human judgment, as flawed as it may be. There is also a need for relationship management skills.
What would you say is the biggest misconception students here have about Wall Street?
Bhojraj: I don’t know that I would call it a misconception. I think students are typically well informed about their initial professional years, but I don’t know if a lot of them spend a lot of time reflecting on how a role can change to be completely different six or seven years into that path that they’ve embarked on. In certain fields, the higher up you go, the more of a sales-relationship role it becomes. For example, in investment banking, you’re going to need to bring those deals in as a managing director, and at that point, it is less about the technical skills that are in play in those initial years in the role.
Another thing for students to think about is finding the right group for them. For students interviewing for sell-side roles, you really have to meet with that team to make sure it is the right “home” for you. The unspoken elements are also very important because if the human dynamic doesn’t work, then you won’t be happy.
Due to the increase in regulations, banks’ equity research operations have been on the decline. How do you think this will shape the future employment field of sell-side equity research?
Bhojraj: There’s definitely pressure there, but I think the sell-side will survive this because, in the end, the sell-side is valued not really for analysts’ specific investment opinion on stocks, but more so for their industry and company insights. There’s always going to be a need for that: someone in the role of disseminating information to the marketplace.
What do you think will be some interesting trends that will shape the asset management and research industries over the next 10 years?
Bhojraj: In the money management role, we have this big structural shift that’s taking place, which is the rise of passive funds. 2019 was a milestone year, when the amount of [passive] assets under management became on par with actively managed funds. That has been in the making for many years because people were unhappy with the performance of active funds, relative to the low-cost option of investing in passive funds that capture the [whole] market.
You may see some changes in the way that fees are charged. You’ll see smaller shops unable to survive in this environment, and you’ll see bigger firms lowering fees because they have the economies of scale to lower them, so there will be consolidation. I think these past trends we’ve observed will continue to play out.