Great challenge equals great opportunity

We speak to Darragh McCarthy of Morgan Stanley
Investment banking
Commercial awareness

What has been your take on the events of the past few weeks?

Since September 15 when Lehman Brothers filed for bankruptcy the chain of events that has transpired has been unprecedented. That was shortly followed by the AIG bailout and Bank of America's takeover of Merrill Lynch - three 'once in a lifetime' events in the space of a week. It has undoubtedly been a very unusual period in which to be working in financial markets but the upside of the situation is that the demand for financial advice is currently unparalleled. Our firm has found itself the most sought after financial advisor over the past few weeks as the amount of advisory work we've carried out has quadrupled.

Having weathered the worst of the storm, how is Morgan Stanley placed going forward?

Morgan Stanley is a leader in investment banking and is well positioned to weather the current industry-wide crisis. We've become a bank holding company, which will ensure we have both the stability and flexibility to deal with current market conditions. We have a robust infrastructure across each of our divisions - Sales and Trading, Investment Banking, Global Wealth Management and Asset Management - and strong company management, which should stand us in good stead. We've also entered a strategic alliance with Mitsubishi UFJ which puts us in an even stronger position. Our focus continues to be on providing world-class service and outstanding advice to our clients, as well as delivering long-term value to our shareholders.

To what extent do you think greater risk controls are a good thing going forward and how long do you think it will take for the appetite for risk as it was two years ago to come back, if at all?

In the current climate risk-taking has been severely dampened by what has taken place, whilst fear has quadrupled. When fear overtakes risk-taking to the extent it has done, people are no longer willing to take risks - and without any risks you find yourself in a stalemate. The 'belief' which is now lacking in the market will come back, though it may take another 12-18 months for 'normality' to return. I would agree with those who have pushed for greater regulation of the kind of risks that financial institutions had been taking. Strong risk management and controls are an essential part of investment banking in any climate. That's unlikely to change - as is an appetite for much greater risk - especially as markets remain cautious and banks look to maintain the most robust practices possible.

Should recent graduates be particularly worried about starting a career in investment banking at this time?

In this current economic downturn it is only natural to worry. The bleaker picture across the industry is in stark contrast with last year, when universities and employers reported robust hiring, and students in finance, accounting and other fields were choosing among numerous offers. However, graduate talent management happens regardless of market conditions and the search for top talent is a continual process and one that requires careful planning. For those entering the profession at the moment the opportunities that will come your way are going to be unprecedented. It is easy to be a star when things are good but the greater challenge of working in the current environment is where the truly great individuals will shine. Like most things in life, financial markets are cyclical and if you join at the bottom of the cycle you will be in an extremely advantageous position when the economy and markets rebound. As a young person working in banking in an ever smaller pool of firms, the volume and scale of the projects you will have the chance to work on will be immense and there will be a real opportunity to rise up the ranks in record time.

Do you think people will be put off from pursuing a career in investment banking following everything that has gone on?

I think those who are truly committed to working in this field will and should persevere. At Morgan Stanley we have never avoided telling students the truth about the nature of the environment they are going into. They will be required to work hard, and be incredibly focused. We want the best employees and that means people who are flexible, ambitious, hard working and successful. That's not to say they won't have a great time working here - the culture we have here is one of partnership and of trust so they will have plenty of support from peers and superiors. We want people who fit well into this culture who are trustworthy and enjoyable to work with. If you believe you tick all these boxes and have a real desire to work in financial markets then you should certainly think about applying.

Are there any myths or rumours around at the moment that you think need to be dispelled?

Some rumours say that investment banks will not be recruiting graduates this autumn. Certainly as far as we are concerned, that is inaccurate. In comparison to hiring efforts in previous years, numbers are likely to be less aggressive, making it a more competitive career to get into - but those of us that have seen downturns in the economy in the past know that a recruitment freeze is not the answer. When the market returns, organisations need to know they have the people in place to deal with new business, regardless of the industry or sector. What is certain is that we will need to be more selective in our recruitment policy. We will look to choose from the very best of the talent available so those we take on will not just have to be good but exceptional. Also, whilst there may be less full-time opportunities available, there are still numerous placement schemes open to students looking to get their foot in the door. We run various programmes for undergraduates and Masters students including the Spring Insight Programme, Summer Internships and Industrial Placements.

What can graduates do now to prepare themselves for the likelihood that there will be fewer job opportunities in the sector over the next two years or so? How can they ensure they are amongst the lucky few who are chosen?

Be flexible. Recruiters may look to match you to roles you didn't directly apply for, simply because they feel your skill set may suit that opportunity better, so be open to that. In addition to the usual interpersonal, communication and team working capabilities, graduates should focus on developing their negotiating, networking and self-reliance skills. Career transitions are more frequent, and we require talent to be able to manage uncertainty and change, possessing the ability to respond to, pre-empt, and ultimately lead it. Needless to say, some areas will focus on you demonstrating a real appetite and ability to do the job with a proven track record of relevant work experience. Changes in the industry will present a variety of opportunities and challenges. Today's globalisation had led demand for graduates with international skills, fluency in a number of foreign languages, as well as the willingness to be mobile and consider a career path anywhere in the world - not just London.

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