Equipped with the disarming candor that has earned her the distinction of “Cruz Missile” among contemporaries, Morgan Stanley’s Acting President, Zoe Cruz (MBA ’82), had several pieces of wisdom to share with those contemplating their own forays into financial services as recruiting season officially kicks off. What you’re learning in LEAD matters, having fun in life is important, and this is an exciting time to pursue a career in banking. And, by the way, hedge funds are not necessarily the surest path to unstoppable success.
Morgan Stanley, the platinum sponsor of the first annual HBS Finance Conference held on campus last month, deployed one of the most potent weapons in the firm’s powerful arsenal to address the over 350 students, faculty members and finance professionals in attendance. Indeed Cruz’s ascent through the ranks at Morgan Stanley and ability to perform consistently amid a changing environment has captured the watchful eye of such prestigious publications as Fortune, Forbes and The Wall Street Journal.
Cruz first joined Morgan Stanley’s foreign exchange effort in 1982 before eventually becoming Global Head of Fixed Income, Commodities and Foreign Exchange in 2000 and Acting President of the Firm earlier this year. Under her watch Morgan Stanley’s fixed income division reported a record $6 billion in revenues for 2004 – and with the Firm now coalescing under the leadership of CEO John Mack, many predict that her best days lie ahead.
Cruz shared her recipe for success, citing three key ingredients: self-awareness, understanding of the rules of the game, and ability to add value. First she recommends, “understand what kind of human being you are and what makes you tick.” Next, consider the rules of engagement that govern various functions. “If you don’t like shooting first and driving later,” for example, fixed income may not represent the best career option, as traders face an environment characterized by “instant decision-making, a sea of humanity all the time, and no private conversations.” Finally, add value and positive energy to your surroundings, keeping in mind that “the touchy-feely stuff does matter.”
By her own admission, Cruz’s journey to the number two position at one of Wall Street’s most prestigious institutions has not come without adversity. Cruz shared with attendees what she considers a significant crucible early on in her career – not getting promoted to the next level while a Fixed Income Associate. After talking to her husband she decided to “cry [her] eyes out, stay in the game” and regroup before respectfully advising her boss that she did not intend to make a career of being an Associate. “Having an emotional reaction to things is where I’ve made most of my mistakes,” allows Cruz, and “if you do not learn from your mistakes, you will not do well.”
To be sure, Cruz appears to find solace in a work/life balance that allows her to remember that “having fun in life is important.” Cruz is half of one of Wall Street’s reputed power couples; her other half, Ernesto, is Global Head of Equity Capital Markets at CSFB. The couple spends much of their time outside of work with their three children. Their rationale? “Children need unconditional love and to have their own choices,” says Cruz. “My social life oscillates slightly above zero as a result, but I love the choices I’ve made.”
Another choice that Cruz has made has been to stay at Morgan Stanley as others around her have flocked to the buy-side. For some with an entrepreneurial orientation who do well in a less structured environment, this may be a move worth contemplating, allows Cruz.
Still, subscribers to an increasingly popular theory that hedge funds offer an unparalleled path to a career nirvana might benefit from weighing certain considerations. “From a personal finances standpoint, statistically speaking, hedge funds tend to trigger a binary outcome. Either you’re a billionaire by age 30 – as opposed to Morgan Stanley, where you’re only a millionaire,” notes Cruz, “or you become unemployed. And being an unemployed hedge fund person is not what I look for when I hire.”
Indeed, perspective may in some ways be lost when it comes to working in financial services. “It’s that time of year when you give people billions of dollars and they’re all unhappy about it,” jokes Cruz.
MBAs might also take into consideration the training options that come with various finance career paths. While many established investment banks devote substantial resources to comprehensive training programs that provide instruction on topics from WACC calculations to exotic financial instruments, hedge funds operate differently. “In a hedge fund, people sit in a room like Buddhas and talk to you if they feel like it. You learn through osmosis – but there is no training in a formal way,” says Cruz.
Cruz believes that recent trends have added to the appeal of a career in a more established financial institution. For one thing, whereas in the past investment banks played a relatively narrow advisory role to clients, the 1999 repeal of the Glass-Steagall Act dramatically increased the breadth of opportunities available to banking professionals. In addition, increased commoditization and compression of product life cycles have made innovation and a broad understanding of the field particularly critical. In addition, Cruz cites a “huge mega-trend towards globalization that has made the friction of the movement of capital close to zero.” Taken together, these developments have translated into greater mobility and virtually limitless possibilities for industry professionals.
Morgan Stanley may be in a better position than ever to ride this wave, having undergone significant internal changes, including the integration of Morgan Stanley and Dean Witter, in the last several months. Cruz notes that while some perhaps wish that changes had been slower-paced and less sensationalized by the press, “change is good, and any institution that doesn’t evolve is destined to die. And with vaunted CEO Mack back at the helm, Morgan Stanley has once again “become a vibrant place, starting to exude the old confidence it had.”
Whether contemplating a career at Morgan Stanley or elsewhere, however, Cruz urges career-seekers to keep in mind her definition of success, “To me success is defined by how happy a human being you are.”