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Investment banks are turning away from high society jocks

USA, Arizona, Scottsdale

USA, Arizona, Scottsdale

Pity the moneyed, lacrosse-playing Harvard graduate – his or her days on Wall Street are numbered. Investment banks are recruiting from a broader pool of talent, and upper class elite jocks are no longer the automatic choice for a front office job at Goldman Sachs, Morgan Stanley, J.P. Morgan and the like.

Investment banks have long placed importance on extra-curricular activities in the graduates they hire, and the sorts of sporting activities favoured by the U.S. upper classes – lacrosse, squash, field hockey and tennis – were more likely to be viewed positively.

Various studies, particularly those by Lauren Rivera, an assistant professor of management and education at Kellogg School of Management, have suggested that candidates who play these sports – especially at elite universities – are more likely to be hired by bank recruiters seeking a ‘cultural fit’. Inevitably, this implied that banks hire upper and middle class candidates over those from lower socioeconomic backgrounds.

Times may have changed. A new study by Douglas Coate, professor of economics at Rutgers University, suggests that new investment bank analysts who have played varsity sports at an elite university are now a tiny minority.

Coate analysed the LinkedIn profiles of thousands of bulge bracket employees hired between 2007-2014, as well as the new analysts taken on this year. He found that college athletes are a dying breed in investment banks.

For every 100 investment banking analysts hired in New York, the average proportion of people who participate in varsity sports is just 6.4%, he says. The proportion is slightly higher for those hired from Ivy League schools (15%), but still – a history of varsity-level sports isn’t going to swing it.

Rivera’s research is “overdrawn”, wrote Coate. “A small proportion of investment banking analysts at top firms have been college athletes in recent years,” he says.

Nonetheless, to suggest that social class bias has been eradicated from investment banking, which has traditionally favoured more well-heeled candidates, would be naïve. But Coate’s research backs up more recent analysis suggesting that banks no longer needed ex-football, wrestling or lacrosse stars on the trading floors as markets businesses become more electronic and Wall Street firms battle for more cerebral knowledge, PhDs and maths or computer programming backgrounds.

There’s also the fact that big investment banks appear to be no longer hiring from a select band of universities. Coate’s research concluded that “the majority of analysts come from undergraduate colleges outside the top five or 15 undergraduate colleges and universities”. Coate found 69 2017 New York-based analysts at Coate Morgan Stanley, for example, and they came from 38 different universities. Of every 100 analysts from top investment banks, there were 60 different universities.

So maybe this is the new reality? Unable to rely on a steady stream of elite athletes from Ivy league universities, investment banks are having to cast the net wider than ever. Captaining the lacrosse team isn’t the game-changer it used to be.

Have a tip, story or comment? Contact: pclarke@efinancialcareers.com

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