Why despite their qualms graduates are still banking on financial services

Recent findings by the major graduate employer TeachFirst claim to show that there has been a large increase in the number of graduates opting to avoid traditional careers in the financial industry in favour of more ‘socially conscious’ roles in teaching, social services, and the police. There are many problems with this assessment, not least of these being the source of the report. TeachFirst is a very biased source to provide an objective claim about a movement towards socially conscious careers. The organisation has a vested interest in encouraging students to redirect their applications from lucrative options in banking to jobs in inner-city schools.

Nevertheless, the story of graduates moving away from financial services is a popular theme in the media today. Several careers websites have run articles examining this alleged phenomenon; The Guardian’s George Monbiot wrote a well-received article encouraging graduates to avoid finance and consulting. The trend has even crossed the Atlantic, where Business Insider has expressed concern that Harvard Business School graduates are avoiding finance in favour of technology firms. For those of us who saw 2015’s The Big Short, it is easy to be swept along by this narrative, and on some level it seems convincing. Nonetheless, the claims made by detractors of finance can be refuted from a logical and intuitive standpoint.

In a Britain characterised by rising living costs, cash-strapped and heavily indebted students are likely to follow the money

Specific amongst the claims made about the decline of graduate careers in finance is that the 2008 Financial Crisis has severely damaged students’ perceptions of the City, exposing the ethical and moral corruption at the heart of this once-great institution. However, as appealing as this narrative is, I find it doubtful that this would affect graduates in their career decisions. In a Britain characterised by rising living costs, cash-strapped and heavily indebted students are likely to follow the money, even if this means working for companies that they perceive to be unsavoury.

This is not to deny that the 2008 crisis and its subsequent fallout have had no effect on application numbers for City jobs. The recession saw some suppression of profits at investment banks, wealth management companies, and private equity firms, with a corresponding effect on graduate salaries. Although profits, and correspondingly wages, have recovered since 2010, a more damaging factor has been the EU cap on bonuses, placed on large banks since 2015. The cap limits bonuses to 100% of salary (or 200% with the agreement of shareholders), and in practice may reduce the potential future earnings of graduates, reducing their enthusiasm to enter the field.

To an extent, all careers are morally ambiguous

Despite these recent changes, the money in finance still outstrips most competitors by far, with starting salaries in investment banks ranging from £40,000 to over £50,000 per year, far more than most other fields with the exception of law. Moreover, thanks to the intervention of the Bank of England, the EU bonus cap only applies to the very largest firms, with executives at smaller firms still able to acquire significant wealth through cash bonuses and stock options. Thus there are still significant rewards available to students willing to embrace the demanding pace and 90-hour working weeks that this career entails. The sheer amount of money on offer will make this proposition an attractive option for graduates for the foreseeable future.

One final point in this discussion is that, to an extent, all careers are morally ambiguous. Consider, for instance, a career in media, where one may be compelled to exaggerate or understate the truth in order to sell a story to the public. Alternatively, retail may seem like a more moral proposition than finance,  but the nature of modern supply chains means that products like food and clothing may have been produced with child labour or unethical farming practices that are not known to retail chains in Britain. Even the charitable sector is not a moral safe haven, as it has been engulfed by recent scandals involving wastage of funds, embezzlement and corruption.

Ultimately, it is up to every individual to decide what career they can square their conscious with. However, in a world of imperfect options, why not pick the graduate career with the highest financial rewards?