The Next Generation of Finance

Globalization, climate risks, technological innovation, unprecedented economic disruptions, and other powerful trends have steadily transformed business over the past few decades. In response, finance—the engine of business—has advanced and expanded on every dimension, says Michael Johannes, the Ann F. Kaplan Professor of Business.

“The world has become more complex, and finance is at the forefront of that,” Johannes says. “You see changes in methods and innovative new investment vehicles.”

The changes in finance also are reflected in students’ career choices and hiring trends. When Johannes joined the Columbia faculty in 2000, of the 30 to 40 percent of MBA students who seek careers in finance every year, a large number went into sales and trading at banks.

“We have almost no one going into sales and trading anymore,” he says. “Now, almost 10 percent of our finance students are going into private equity and venture capital. Twenty years ago, almost no one chose that direction.”

Today, tech giants like Amazon are among Columbia’s biggest employers.

These shifts are driving innovations across the finance curriculum, from the courses taught at the venerated Heilbrunn Center for Graham & Dodd Investing to a new core MBA finance course debuting next fall, says Johannes, who chairs the faculty committee steering the process.

While technology, data, and powerful analytics are transforming industries like finance, the Business School keeps pace with a curriculum that addresses the resulting changes in such areas as asset management, valuation and investing in tech-driven digital firms, and the rise of fintech and blockchain technology.

Updating a Legend

Investing courses at the Heilbrunn Center, where the legendary value investing approach was pioneered nearly a century ago, are continually evolving to serve today’s financial markets.

The center’s traditional focus on equity investing has broadened to ensure students also learn about other sectors, like credit markets, with the help of 42 investment professionals serving as adjunct faculty.

“The curriculum is very dynamic,” says Tano Santos, the David L. and Elsie M. Dodd Professor of Finance and faculty director of the Heilbrunn Center. “In addition to the wonderful resources of the permanent faculty, we tap into the expertise of industry professionals to offer courses that keep up with new financial markets, new possibilities, and the new economy.”

For example, the center has developed several courses that focus on technology, because students want to know how to apply the ideas of value investing to new tech companies, where assets are less tangible and harder to value with traditional accounting methods.

“Also, we are living in a golden age of activist investing,” a unique form of investing in a company and/or obtaining seats on a board to effect major change, says Santos. “The foremost scholar on activist investing, Wei Jiang, who is here at Columbia, has designed a course for the center.” Jiang, the Arthur F. Burns Professor of Free and Competitive Enterprise, is known particularly for her pioneering research in hedge fund activism.

Two courses specifically developed to share cutting-edge expertise from alumni working in the field will debut next spring. One will focus on investing in both public and private spaces. “We have alumni working exactly at that intersection,” Santos says. “We’re unique in that we can go to them and say, we need a course from you in this area.”

“The world has become more complex, and finance is at the forefront of that.”

Michael Johannes, Ann F. Kaplan Professor of Business

The second new course is a global value investing class. The Business School has distinguished alumni who, with successful careers in asset management, want to contribute their expertise, Santos says. Among them is David Samra, founding partner of the Artisan Partners International Value Team, who is driving the course development.

The move to Manhattanville played a role in driving these changes. As plans for Henry R. Kravis Hall and David Geffen Hall took concrete shape, a noticeable current of energy sparked curriculum change, Santos says. “This was an opportunity to almost start fresh.”

Meredith Trivedi, managing director of the Heilbrunn Center, is particularly excited about the potential of expanded space. Before the move, events and even courses were often held off-site because there was no room to bring speakers and adjuncts to campus.

“Now, we have an opportunity to bring people to Columbia rather than Columbia going to other people. It gives us much more opportunity to engage with practitioners in our own community,” says Trivedi.

Building Parallel Skill Sets

Real estate is another area of finance that has grown and changed tremendously, driven by vast new data sets and the emergence of a “proptech” sector of technology businesses analyzing and selling that data.

This trend led Stijn G. Van Nieuwerburgh, the Earle W. Kazis and Benjamin Schore Professor of Real Estate, to develop his pioneering Real Estate Analytics course. Using real estate data drawn from his research, he teaches MBA and master’s degree students how to code and run sophisticated problems in the programming language Python to better understand how to formulate questions and use data to answer them.

The course equips students for roles at real estate data providers like Zillow, CoreLogic, or CompStak, as well as in the mortgage industry and at agencies like Freddie Mac and Fannie Mae. While the need might be a niche today, it’s a growing niche, Van Nieuwerburgh says.

In every class he assigns “think-pair-share” exercises, where students pair up to analyze and then code a small question. This would have been impossible to teach to MBAs in the past, Van Nieuwerburgh says. “It’s possible now because Python is actually very user-friendly, with so much code that you can just plug in from elsewhere.” State-of-the-art technology in the classroom lets him share his code and seamlessly swap views to share students’ code. “What’s exciting to me is that we can open up all these really high-level skills to our students because the technology allows it,” he says.

Classes like this attract MBA students with coding experience or those who have taken business analytics, as well as students from master’s degree programs with that background. “These two audiences are not necessarily intersecting otherwise, and having them together in class is extremely fruitful. They can work together in teams and help each other from their different perspectives.”

It foreshadows the partnerships in business today, he adds. “In a startup in the new economy you need somebody with strong analytics and somebody with very good business savvy. It used to be that these groups were siloed in school and would never meet each other until in the workplace. Now, these people can meet each other in my class.”

Leveraging Capacity

With more physical space than ever before, the finance curriculum will continue to evolve, phasing in additional changes over the next year or two, Johannes says.

“The new buildings have large classrooms and rooms of varying sizes, so we can redesign the curriculum and classes to fit with the new spaces,” he notes. “We’re also going to be hiring more faculty, which we couldn’t do before because we had no available offices. It’s a natural time to make changes.”

Having new large event spaces also allows curriculum planners to better leverage a powerful asset: leading experts working in New York’s financial markets. Before the move to Manhattanville, there was no space large enough to accommodate all the students in a core course, and guests had to come in multiple times to speak to all course sections.

“That was totally intractable. Now, all the students enrolled in a course can come together for one guest speaker,” Johannes says. “That allows us to get more prominent guest speakers and to showcase the new campus. It’s a win for everyone.”

This article appears as part of a “Teaching for Tomorrow” series on curricular innovations in the Summer 2022 Special Issue of the school’s alumni magazine.