So we see that in many threads, noobs are told the importance of networking. Undoubtedly I used to support the notion that networking skills are important because we get to enhance our circle and we get to stay abreast with latest in the industry. However, recently I have heard/read some comments which really raise a few red flags (to my mind): 1. It is not important what you know in finance, it is important who you know. 2. If you know the right person, he will tell you *what the ultimate ratio/figure/news that will be*. (And this comes from a Charterholder’s mouth… where are the ethics eh?) 3. The most important benefit of an MBA is networking. Are these statements superficial/exaggerated, or are they genuine and 80% true? Please comment. Also, are some of these activities not a straight violation of ethics/duty of maximizing shareholder’s wealth/glorified nepotism? I mean if CFA Institute (or some other institute) claims that the CFA Charterholder will be preferred over some other candidate if the interviewer happens to be a Charterholder, do they imply that this is because the interviewer understands that this was a tough test to pass or because of some sort of camaraderie? And if latter is the case, then how justified is it?
I believe your points (definitely #1 & #3) are mostly true. My observation has been that people in this industry: a) Place a premium on working with someone they know b) Despite willingness to take risks from an investment perspective are unwilling to take risks around the talent they hire. The teams are small in many cases and being close knit is important. Also, there is tremendous pressure to perform even for star hedge funds. From that perspective, when they hire they will not just go by your quals (i.e. what you know) but who else you have worked with and would anyone (especially those that they respect) vouch for your ability and talent. That is where the “who you know” comes into play. The more you network and become a known commodity, the better it is. Your quals including your CFA are almost a hygiene factor. My 2c, IMHO.
I used to dislike networking because I thought it was basically asking for nepotism. But it’s not really that way. Networking is about getting past the stage where there are 200 resumes on a desk and some guy (usually often HR manager who you won’t be working for anyway) has to whittle it down to maybe 10 possibilities by looking at each resume for about 10 seconds. Networking is about bypassing that stage because you’ve had a conversation with someone and they have a better picture of your personality. Maybe they know your skills better, maybe they just like your personality, maybe they just had a friend say, “just talk to them and see what you think.” Networking is to get you conversations and interviews. You still have to qualify for the job. But you improve your chances greatly by getting past the resume-sorting stage. Nepotism is when someone you know gives you a job you aren’t really qualified to do, and passed over substantially more qualified people because they know you. I say “substantially more qualified” because it’s actually ok to pass over *marginally* more qualified people (at least in my book) if the reason you are doing it is because 1) you feel you can trust them better, 2) there is better/clearer communication going on between you, or 3) you appear to “fit” the organizational or interpersonal culture better.
Networking is much, much bigger in the US than in Europe. Very few people get their break this way in London and, when they do, the rest of us look down on them (well, I do). If you look at studies by international bodies, the US, despite being the purported land of opportunity, actually has some pretty awful stats on social mobility. What you have alluded to is perhaps part of the problem. I would concede right away that any international comparisons are difficult. I was pondering a slightly different subject this morning. I was thinking that it is amazing that individuals like Joe Biden and Sarah Palin can rise to the top (or v close) of US politics, despite being thoroughly mediocre at the point of entering the working world (at least). Biden was a worse than average student and Palin bounced around a bunch of no-name colleges. I was thinking about whether this was a peculiarity of US politics, so I checked out the French President, Sarkozy, and found that he had failed a year at middle school, much to my disappointment. The UK is certainly more elitist in this regard. Tony Blair went to Oxford, even if he did only graduate with a second class degree. Gordon Brown was a minor prodigy and went to the University of Edinburgh aged 16, which must have been impressive even back then.
From what my friends have said the ^^ is not so true. In france for example I was told that where you work is largely decided by where you went to school. I have also been told that the English are still having difficulties truly ridding itself of classism when it comes to education and upper echelon employment. (I think a lot of this still exists in the USA too- so its not a jab 
From what I’ve heard the most open realm is Asia, where they don’t care if you’re pink as long as you bring in a buck. As far as networking goes, I think its crucial and I don’t liken it to nepotism in any way. In my opinion networking is more about exposure and advertising one’s competencies than getting undeserved ‘favors’ based on personal relationships. Having someone personally vouch for you a professional setting is priceless since hiring is such an expensive commitment (less so in USA than in parts of Europe). Furthermore, it seems win-win to me bc you get some help in being ‘seen’ and the employer know that someone is putting their reputation on the line for you. The incentive chain just makes sense in this example. I don’t thing when ppl say network they are alluding to handing out favors for sub-par misfits. The idea is that you’re on the mind of many and eventually someone may just have the perfect position that fits just right.
akanska Wrote: ------------------------------------------------------- > From what my friends have said the ^^ is not so true. In france for example I was told that where you work is largely decided by where you went to school. I second this. As being French I can tell you that if you are not from the Top 3 Business Schools and Top 5 Engineering Schools, you are basically worthless in many HR’s opinions regarding banking positions (the one I can speak about). This is not true though for Consulting. And no matter what you do in the beginning of your carreer, when you are back to France your salary will still depend on the name of the school you come from (they have grids for that, no kidding). In that way, networking is pretty limited in France when you start. As you get experienced though, your origins start to faint and then, the value of networking grows. (there is another form of networking regarding politicians but I guess it’s not the subject here) That was the French lesson of the day, for who cares 
^^ Actually, I agree with both the above. Elitism - and perhaps classism - are rife in the UK and Europe, but that is different to nepotism. I meant that in the US, people spend time tapping up relatives, contacts and alumni networks to try to score interviews (nepotism). In the UK/France, you may have had to go to one of a handful of schools (elitism), but in my book that is more meritocratic. Bear in mind that university fees do not vary significantly across UK institutions.
Etienne Wrote: ------------------------------------------------------- > ^^ Actually, I agree with both the above. > Elitism - and perhaps classism - are rife in the > UK and Europe, but that is different to nepotism. > > > I meant that in the US, people spend time tapping > up relatives, contacts and alumni networks to try > to score interviews (nepotism). In the UK/France, > you may have had to go to one of a handful of > schools (elitism), but in my book that is more > meritocratic. Bear in mind that university fees > do not vary significantly across UK institutions. I agree 100%.
Etienne Wrote: ------------------------------------------------------- > I meant that in the US, people spend time tapping > up relatives, contacts and alumni networks to try > to score interviews (nepotism). In the UK/France, > you may have had to go to one of a handful of > schools (elitism), but in my book that is more > meritocratic. I think it the issue here is simple semantics. When you say in the US ‘networking’ equates to nepotism I’d have to disagree. I don’t know many that when saying ‘networking is crucial’ are referring to getting their contact to hire them over more qualified ppl. Instead I believe the majority is referring to creating more opportunities to 1. discover job opening leads and 2. expose their availability and qualifications to those directly in the in decision making positions. I see it as more of a ‘foot in the door’ in the process and once you’re considered its about the qualifications and reputation you bring. I don’t think having a friend who knows you on a personal and professional lay his reputation on the line by vouching that you are responsible, reliable, ect. is in any way nepotism. These personal qualities are important and should weigh in meritocratic assessment just as college grades do- they are just more difficult to judge. I’ve worked with many ppl and if ever in the position to hire someone, I would consider some and instantly deny many. This is based on my first-hand knowledge of their work-ethic, attitude, etc; not due to our friendships. Some look great on paper even though in actuality they are not ideal co-workers.
MBA gives you the networking and a good business base. it is what you make of it. the BIG takeaway is the network you build. you may not get a job off an alum right away, but having that school link means people will take your call later down the road. and if you go to a smaller program, that is maybe not top 10, you have a “closer” knit group that wants to help alums out b/c they all have the same incentive: get people placed at a good firm, and hopefully they do well, so that the schools climbs from say #17 to #11, etc… there is a LOT of info on MBA programs and I would suggest the business week site and blogs as a good starting point