Americans are not saving enough for retirement, and new research co-authored by Professor Johan Walden shows one reason why: They’re misled by conspicuous consumption in their social networks.
“Our neighbors don’t put out a sign showing how much they’ve set aside for retirement, but it’s easy to see the new car sitting in their driveway,” Walden says. “The fact is, observations of someone consuming are more salient than observations of someone saving, and so we observe more of those signals, and we give them more weight in our own decision-making.”
Modeling the effect of visibility bias
A recent estimate suggests that the gap between what U.S. consumers are saving and what they’ll need to retire is almost $3.7 trillion. Some simply don’t have the income they need to set money aside. But that’s not the whole explanation.
In an article published in The Journal of Finance and co-authored with colleagues from the University of Toronto and the University of Southern California, Walden shows that “visibility bias” contributes to this chronic undersaving. Because people don’t tend to publicly share their savings habits, consumers’ social networks provide inaccurate signals about peers’ financial behavior. Consumers tend to think their peers are spending more than they are. This, in essence, makes people believe that it’s safe to consume more.
In modeling this dynamic, the researchers find that this effect feeds back on itself. As people see their neighbors and friends buy more, they may raise their rate of consumption; in turn, their neighbors see this increase and bump up their own levels of consumption, continuously squeezing savings out of the picture.
The research also shows that denser and more extensive networks are likely to intensify visibility bias. Given this, city dwellers are more likely to undersave for retirement. Growing connectedness through social media, as well as the window it gives into other people’s purchases, is also likely to exacerbate the problem, though Walden’s study did not research this specifically.
Finally, the demographics of a person’s social network could naturally reduce the strength of this bias. People who are more financially sophisticated tend to consume less as do people who are older. If someone’s social network contains more of these types of people, “then we find a dampening effect, as you’re receiving signals of low consumption from these groups,” Walden says. “But this doesn’t completely offset overconsumption among younger generations.”
More disclosure could increase savings
The effects of undersaving ripple across society, pushing people to work into older age longer than they otherwise would. People take on more debt, which, in turn, drives up interest rates. Fortunately, policy interventions may be relatively straightforward.
“The fact is, observations of someone consuming are more salient than observations of someone saving.”
One solution the researchers suggest is to reveal information about savings and consumption within social networks. Policymakers or marketers could publicize how and how much people save, thereby illuminating the unseen and reducing the influence of visibility bias. Marketing campaigns could also clarify how much people actually consume. One study from 2020 shows that giving people who overconsume information about average consumption reduced their spending by 3%.
But given people’s propensity to believe that others consume more than they do, it’s important toprovide appropriate information, Walden says. Simply publishing aggregate saving and consumption data may not be helpful, since these are already affected by visibility bias. Policymakers should take social networks and demographics into account—for example, by emphasizing consumption habits of older adults. “The more specific, the better,” Walden says.
Spring 2024|By Katie Gilbert| Photos by Gareth Brown
Haas alumnae help evolve finance in Asia.
Christina MA, MBA 01 (shown at top), found her way into finance serendipitously. As an undergrad at Georgetown University, she had planned on becoming a diplomat but changed her mind before graduation. All she knew when she earned her diploma was that she wanted an international career in a dynamic city bursting with opportunity. Given her language skills, Hong Kong seemed a good bet. This was the mid-1990s, and China was in a stage of dizzying economic growth as it opened itself to capitalism and foreign investment.
After three months of networking, she landed a role as a proprietary equity trader at an Asian bank, a career she’d never considered largely because it was such a male-dominated field. “I had visions of Gordon Gekko from the movie Wall Street, of big guys in suspenders and slicked-back hair,” she recalls.
Indeed, as a woman, Ma was in the extreme minority on the trading desk. For some long periods over the course of her career, she was one of only a handful of women on the trading floor and in an even greater minority as a senior female trading manager globally. While the finance industry has made strides toward gender parity since the mid-90s, it remains male-dominated. According to a 2022 report from Deloitte, 19% of C-suite roles within the world’s financial services institutions belong to women—but just 14% in Asia.
Like Ma, the Haas alumnae featured here are impacting their respective niches of Asian finance. They represent both seasoned executives and up-and-comers, speaking to how the Asian finance industry has evolved and what’s on the horizon from their respective perches. Whether it’s helping to bring ESG (environmental, social, and governance) to prominence, establishing a burgeoning venture-capital market, or pushing for gender parity, all of these women are finding ways to encourage the many transformations underway in Asian finance to redound to inclusion, sustainability, and equity.
Shifting culture
For her part, Ma resolved that structural gender disparities wouldn’t hold her back. “I try to spend my energy and time thinking about what I can change, instead of fretting about what I am not,” she says.
That outlook has led to great career success and satisfaction. After three years working as a proprietary trader and junior portfolio manager at a local fund, she left to get her MBA at Haas. Upon graduation, she returned to Hong Kong and spent over two decades climbing the ranks at Goldman Sachs, first as a trader then becoming a partner and ultimately heading up Goldman’s greater China equities business. Since then, Ma has moved to HSBC, where she’s now the head of global banking, Asia-Pacific, overseeing a team of more than 500 bankers covering some of the largest corporate and institutional clients in the world.
As she’s traced this trajectory, Ma has strived to make finance more inclusive for both women and local talent. This has meant raising issues with her male colleagues they hadn’t come across before. When Ma was pregnant, for example, she had to work closely with her manager to develop her maternity leave plan—a first, since they had never had a senior trader go off on maternity leave.
“I hope that I have shown other women and men that you can succeed while being different from others and that the diversity of thought and style is valued and a good commercial decision.”
—Christina Ma, MBA 01
Fortunately, some key aspects of the culture around women at work have shifted since Ma was a young parent. The Chinese government has prioritized gender equality within its social development policies, and women there are moving closer to greater flexibility in their work hours, paid mental health leave, and longer maternity leaves.
Some economists argue that, across Asia more broadly, taking these types of steps to embrace women in the workforce will be crucial as the region’s population ages. A 2018 report from the McKinsey Global Institute estimates that improving women’s equality in the region could boost collective annual GDP by 12%.
Ma has been heartened by the finance industry’s increasing focus on diversity and inclusion initiatives, especially at the junior level, where incoming grad classes are often half women. But she acknowledges that diversity within finance’s senior leadership hasn’t evolved enough.
“I think there’s a realization that this is a much longer road,” Ma says.
Still, she believes that her journey and the efforts of others like her make an impact in important ways—one of them being the ripple effect of representation. “I hope that I have shown other women and men that you can succeed while being different from others and that the diversity of thought and style is valued and a good commercial decision,” Ma says.
Kin-Fun Lee, MFE 05, works at Julius Baer as head of strategy and business operations for the Markets & Wealth Management Solutions unit covering Asia.
Establishing the forefront
Kin-Fun Lee’s two-decade career in finance has afforded her a front-row seat to some of the most significant changes that have rippled through the industry in recent memory. In 2008, when the global financial crisis hastened a suite of regulatory changes across the region and world, Lee, MFE 05, was an executive director at J.P. Morgan in Hong Kong, overseeing business management and development for Asian equity derivatives and the prime brokerage businesses. During this time, she says, she was active in helping the firm weather a crisis unlike any seen in a generation. At the same time, she helped it contend with how new regulations—like the Dodd-Frank Act in the U.S. and what would become the Markets in Financial Instruments Directive (MiFID) in Europe—were changing the business.
As the dust settled, Lee felt pulled to help usher along some of the changes that these new regulations had seeded. “The main objective of the reforms post-crisis was to protect the end investor,” Lee says. “That got me started looking into a new area: I wondered how I could get closer to those end investors to see the real need and to provide solutions that really help them.”
“We’re seeing more sophisticated investors in some regions. They have a greater need for more complex, innovative, and bespoke products.”
—Kin-Fun Lee, MFE 05
She accepted an opportunity to do just that in 2013, decamping from her investment bank position for a job with the global wealth manager Julius Baer. As head of strategy and business operations for the Markets & Wealth Management Solutions unit covering Asia, Lee has been instrumental in developing and deploying new investment products. Her role involves assessing client demand, ensuring regulatory compliance, and aligning products with the bank’s infrastructure. For example, she and her team have been supporting the integration of new asset classes (e.g. digital assets) into traditional formats of financial instruments, like exchange-traded funds and structured products.
Anticipating what investors will need keeps Lee, her firm, and the industry on the cutting edge—an increasingly complex endeavor, she acknowledges, as some of the fast-developing Asian economies attract growing investor interest.
“We’re seeing more sophisticated investors in some regions,” Lee says. “They have a greater need for more complex, innovative, and bespoke products while at the same time fully complying with the regulators’ requirements.”
Lee predicts “continuous growth” in investor interest in Asia as a whole. As that interest continues to pour in, she sees another shift happening in terms of the investment products investors will need: “In the last generation, investors in Asia were more focused on wealth creation,” Lee says. “But now, it’s more to the stage of wealth preservation—and passing wealth along to the next generation.” Lee plans to play a central role in crafting the investment products they need to do just that.
Encouraging ESG
Anni Zhang, too, is out to update some of the ways the finance industry has done business in the past. Her focus, though, is on pushing the industry to factor in previously ignored environmental and social risks—and opportunities.
“I’ve been able to play a huge role by educating people. It can be uncomfortable for traditionally trained finance professionals to include ESG into their customary analytical framework.”
—Anni Zhang, BS 14
Zhang, BS 14, is an ESG associate for Asia-Pacific-focused private credit firm ADM Capital in Hong Kong—and, she explains, is “basically responsible for everything ESG-related day-to-day.”
Across the entire investment process—from deal sourcing to advising the investment team on the relevance of ESG factors to financial performance—Zhang is helping to ensure that environmental and social factors are taken into account. It also means creating ESG action plans for portfolio companies (which are all small- and medium-sized enterprises in Asia) and working those plans into their loan covenants. And it involves monitoring and reporting on borrowers’ ESG performance.
Anni Zhang, BS 14, is an ESG associate for Asia-Pacific-focused private credit firm ADM Capital.
ADM’s founders were pro-ESG at the outset, Zhang says, and in her two years with the firm (in addition to two years with its foundation arm) she’s pounced on the opportunity to push its ESG practices to the forefront of the industry.
“I’ve been able to play a huge role by educating people,” she says. “It can be uncomfortable for traditionally trained finance professionals to include ESG into their customary analytical framework. Over time, though, I’ve seen a change in mindset with our deal teams and with the broader industry. ESG is now a key competitive advantage of ADM.”
Zhang doubled-majored at Berkeley in business and conservation and resource studies, a dual focus that she says has been instrumental in helping her to reconcile the perspectives of both finance teams and sustainability experts. In Asia, bridging these perspectives will prove increasingly critical, she says. Not only are regulations and disclosure requirements pertaining to sustainability developing quickly—but the health of the region (not to mention the planet) may depend on it.
“I see a bigger opportunity for ESG here in Asia because there are so many underdeveloped cities and economies, so there’s a lot more opportunity to do good and contribute to their development in a way that’s sustainable,” Zhang says. “There’s also incredible nature and biodiversity here. So much is at stake.”
Advancing developing economies
In the most developed parts of Asia, many of the movers and shakers within the finance industry are rooted in—and most familiar with—the region’s major financial hubs, like Hong Kong, Tokyo, and Singapore. Not so for Tab Boonthaveepat, MFE 11, an executive director and trader at Goldman Sachs in Hong Kong covering Asian emerging markets—and she considers this distinction one of her great assets.
Boonthaveepat traces her roots to Bangkok, where she grew up and began her career (after earning her MFE at Haas) as a quantitative portfolio manager at hedge fund Phatra Securities.
Tab Boonthaveepat, MFE 11, is an executive director and trader at Goldman Sachs in Hong Kong covering Asian emerging markets.
The many economies across Asia represent a vast diversity in their stages of development, Boonthaveepat points out. Beyond the major financial hubs, other countries, like Vietnam and Indonesia, are emerging, and the rapidly growing Indian economy is somewhere in between. Thanks in part to her background and work experience in Thailand, Boonthaveepat is deeply invested in understanding (and explaining to others) how each of these markets presents investors with its own constraints—and opportunities.
“I always want to make sure that I’m helping these small markets have a chance in the global arena.”
—Tab Boonthaveepat, MFE 11
“Emerging markets in Asia are changing,” Boonthaveepat says. “And I think especially since the pandemic, we’re seeing more interest from global investors in India and also in some of the small Southeast Asian markets.”
She’s committed to connecting this growing interest from global investors to the markets that could benefit from their capital. “I always want to make sure that I’m helping these small markets have a chance in the global arena,” Boonthaveepat says. “That’s something I’m very proud of.”
Tracking what’s next
Aparna Chaganty, MBA 23, is also interested in bringing Asia’s investment opportunities to the world, and she’s working to do so within India’s burgeoning venture capital industry. “VC, as you see it today, was simply not prevalent in India 25–30 years ago,” says Chaganty, an investor based at the Bangalore office of global VC firm Bessemer Venture Partners. “There were not enough startups to create an ecosystem for multiple large VCs to come and play here.”
“It’s an incredibly dynamic market we’re in right now, and I want to leverage my Silicon Valley experience to help Indian startups compete and win on a global stage.”
—Aparna Chaganty, MBA 23
Chaganty’s work involves meeting founders who are launching India-born startups angling for a global audience. Thanks to the rate of Asia’s—and especially India’s—economic growth, she says the opportunities to be found in the region today are unique. Pair Asia’s growth with Chaganty’s industry focus on software—which is also evolving dramatically due to the development of AI—and you get “a very special point in time to be part of this industry,” Chaganty says.
Aparna Chaganty, MBA 23, works as an investor based at the Bangalore office of global VC firm Bessemer Venture Partners. Photo: Harshith Dambekodi.
“With the advent of AI, the market is on the precipice of a transformation,” she says. For one thing, small, lean startups are able to command more scale and revenue because of the power of their underlying software. At the same time, their business models face the challenge of having to find ways to continue driving value, even as the underlying software rapidly evolves. “It’s an incredibly dynamic market we’re in right now, and I want to leverage my Silicon Valley experience to help Indian startups compete and win on a global stage.”
Chaganty extends an invitation to her fellow Haas alumnae to join her on the exciting ride. Like many other parts of finance, the VC industry is still male-dominated, and Chaganty believes it could benefit from the perspectives of more women.
What’s more, she believes such a dynamic market is likely to beget a dynamic career. “Riding the wave of the special moment we’re in here can also mean a lot of learning and personal growth as well,” Chaganty says. “That’s the bet I made.”
Spring 2024|By Laura Counts, Amy Marcott, Kim Girard, Dylan Walsh, Mickey Butts | Illustrations: Brian Stauffer
Berkeley Haas’ commitment to educating future-oriented leaders demands a constant evolution of our teaching and research. Here, we highlight two new research centers whose work will keep Haas at the forefront of behavioral economics and drive positive healthcare innovations. As well, we feature a new climate solutions dual-degree program and a new fund-based class to prepare students to lead the transition to a more sustainable future.
Leading the Next Wave of Behavioral Economics
By Laura Counts & Mickey Butts
Ever since future Nobel laureates George Akerlof and Daniel Kahneman created a 1987 UC Berkeley course that broke the barrier between psychology and economics, the university has led the way in bringing these disciplines together into the field of behavioral economics.
In the ensuing years, psychology-based behavioral economics has explored the predictable foibles in our thinking, such as decision-making biases, fears of losing out, lack of self-control, and overconfidence. A classic example is Kahneman’s pioneering work with Amos Tversky on loss aversion, which showed that people are willing to take greater risks to avoid a loss than to secure a gain.
Now Haas is poised to lead the next wave, pushing the field beyond psychology and gleaning insights from disciplines as diverse as neuroscience, biology, and medicine with the launch last fall of the Robert G. and Sue Douthit O’Donnell Center for Behavioral Economics.
“Humans are living, breathing organisms affected by their unique life paths,” says Professor Ulrike Malmendier, the O’Donnell Center’s founding faculty director. “We have minds and bodies, and an economic science that describes human behavior needs to account for both.”
Thanks to a philanthropic investment of almost $17 million by Bob O’Donnell, BS 65, MBA 66, and his wife, Sue O’Donnell, the center will advance the next generation of research, extend learning opportunities to students, and position Haas as the preeminent hub for the field. Malmendier aims to bring in leading researchers from a wide range of disciplines for collaboration, conferences, and bootcamps—beyond what has been considered part of the field. The center will also provide fellowships to PhD students and postdoctoral scholars and will host the prestigious Behavioral Economics Annual Meeting (BEAM), co-founded by Malmendier, every three years.
Bob, BS 65, MBA 66, and Sue O’Donnell look forward to the interdisciplinary opportunities the new O’Donnell Center for Behavioral Economics will create for researchers and students alike. “UC Berkeley is dedicated to integrating business education with other disciplines on campus, which is essential in this area,” Bob says. “It should have a center devoted to continuing this work.”
Students will benefit from a curriculum enriched by the foremost thinkers in the field. In early April, for example, the O’Donnell Center co-sponsored a fireside chat with economist and Nobel Laureate Richard Thaler and New York Times writer David Leonhardt. Malmendier has also initiated a weekly reading group with faculty, PhD students, and post-docs to discuss the latest behavioral economics research. Such discussions will deepen the knowledge faculty bring to the classroom. And because of the interdisciplinary nature of the O’Donnell Center, the teaching of behavioral economics and finance will expand to students campuswide.
Breaking new ground
Malmendier’s goal is to open a new frontier in research that will help business leaders and policy makers. “We went from neoclassical economics that considered humans to be perfectly rational to behavioral economics that brought in social psychology,” explains Malmendier, the Cora Jane Flood Professor of Finance.
For example, after Nobelist Thaler and Cass Sunstein developed the concept of the “nudge”—interventions that spur people to act in their own self-interest, such as enrolling them in a retirement savings plan by default—hundreds of “nudge units” were established in governmental and private-sector organizations around the world. Just last spring, a report from the National Academies of Sciences, Engineering, and Medicine called for increased collaboration between behavioral economists and policymakers in part to encourage people to make better decisions.
“Now we want to move the needle further, bringing together the best minds for rigorous research on human behavior from the sciences more broadly, including neuroscience, cognitive science, biology, medicine, epidemiology, and genetics,” Malmendier says.
Pioneering collaborations
For her part, Malmendier will expand her groundbreaking work on “experience effects,” which earned her a Fischer Black Prize in 2013 for the top economist under the age of 40—the only woman to ever win the prize—and a Guggenheim Fellowship in 2017. She has studied how stressful experiences with recessions, layoffs, inflation, housing bubbles, and political repression make consumer and investor behavior more cautious and risk averse for years afterward. She’s also explored how stress can affect our health, careers, education, and other aspects of life in dramatic ways.
Now, she aims to further that work by collaborating with neuroscientists, neuropsychiatrists, biologists, medical researchers, and epidemiologists who have studied stress and trauma—insights that could more precisely demonstrate how past experiences shape our actions, such as completing an education, choosing an occupation, and deciding to have a family, today and across generations.
“As we walk through life, our outlook on the world changes, especially if we suffer trauma,” she says. “Neuroscience says our brain gets rewired. There may be a long-term impact of stress on our longevity, on our aging, and on our health.”
In addition to Malmendier, the center will include a host of affiliated researchers from Haas and Berkeley Economics and elsewhere across the university. They include center co-founder Stefano DellaVigna, professor of economics and business; Haas professors Ricardo Perez-Truglia, Ned Augenblick, Don Moore, and Gautam Rao, PhD 14 (who recently joined Haas from Harvard University); as well as Dmitry Taubinsky of Berkeley Economics, and others.
“We want to move the needle further, bringing together the best minds for rigorous research on human behavior from the sciences more broadly, including neuroscience, cognitive science, biology, medicine, epidemiology, and genetics.”
—Prof. Ulrike Malmendier
Shaping transformative leaders
Founding donor Bob O’Donnell says he was inspired by the interdisciplinary promise of behavioral economics at Haas. “UC Berkeley is dedicated to integrating business education with other disciplines on campus, which is essential in this area,” he says. “It should have a center devoted to continuing this work.”
O’Donnell, a retired portfolio manager for a large mutual fund group, often applied insights from behavioral economics during his career. “When combined with existing financial theory, I believe that its insights enhanced results for my clients,” he says.
Yet, during the 17 years O’Donnell taught an investment class in the Berkeley Haas MBA program, he says he sometimes encountered skepticism when introducing ideas from the field. “Indeed, one student asked, ‘Isn’t all this kind of woo-woo?’” he says. “Several years later, that student told me how perspectives from behavioral economics had helped her career in finance.”
O’Donnell envisions his endowed gift as one that will not only define the future of behavioral economics but shape truly transformative leaders. Founding the center, he says, is a start but more investment is needed to enhance curricular offerings and expand the groundbreaking research that will be the hallmark of the O’Donnell Center.
Malmendier is passionate about the potential of behavioral economics to help leaders create better solutions to the most complex and urgent problems of our time, like battling inflation. “If leaders keep in mind people’s emotions, their personal histories, and their psychologies,” Malmendier says, “they can engineer ways to make things more predictable and give people more control over events to help them live better lives. That is our ultimate goal.”
Harnessing AI to Transform Healthcare Outcomes
By Amy Marcott and Laura Counts
The U.S. spends almost 20% of its gross domestic product on healthcare—more than any other high-income country. Yet we see a low return on that investment: Americans have poor outcomes across numerous dimensions, including life expectancy.
A big factor in these poor outcomes is a healthcare system that resists easy remedies, says Haas Professor Jonathan Kolstad. Promising innovations and technologies are often dead on arrival due to lack of understanding of the incentives at play.
“There’s a big gap between the kinds of AI and machine learning tools that are being built for healthcare and the realities of the healthcare delivery system, including the complex incentives, how the system functions, who would buy the product, and who would use it,” he says. “Conversely, the healthcare system is behind in terms of the technology, the systems, and the adoption of new AI tools. Right now, there’s a unique opportunity to play massive catch-up.”
The new Center for Healthcare Marketplace Innovation (CHMI), a joint endeavor between Haas and Berkeley’s new College of Computing, Data Science, and Society, aims to bridge that gap with solutions that join AI and data science with behavioral economics and an understanding of the realities of the healthcare system and the vagaries of human behavior.
Launched this spring with a gift from an anonymous donor, the CHMI combines technology development and academic research, giving researchers and partners access to a massive database of healthcare data. In fact, CHMI is believed to be the first applied research center of its kind to merge data, behavioral economics, and artificial intelligence with a focus on technology incubation.
Applied behavioral economics
Previous approaches to healthcare innovation are often too simplistic, Kolstad says, while other technologies have simply aimed to replace doctors. “These are some of the smartest and most highly trained humans making lots of different decisions under complex situations—which machines simply cannot do,” he says. “It’s the interaction of technology and human decision-making where AI is going to meet the market in healthcare.”
Take, for example, helping a radiologist better identify cancer. To do so successfully, Kolstad says, requires understanding the realities of how radiologists work, what they try to do, when cancer is spotted, who’s being screened, what data are available with the right pictures, and even how they’re paid. “All of those layers are critical,” he says.
Kolstad is building a database that he hopes will be one of the largest multimodal healthcare data platforms in the world. This rich data will include health insurance claims as well as medical records, images, electrocardiogram waveforms, and other granular information all linked to longitudinal health outcomes. The platform will be available for both research and R&D. “We want to structure it so that you can use the data to learn and create new insights but also create new solutions that really meet patients where they are,” Kolstad says.
“It’s the interaction of technology and human decision-making where AI is going to meet the market in healthcare.”
—Prof. Jonathan Kolstad
In addition to this novel data platform, CHMI will also offer academic and industry partnerships to facilitate the development of new AI and technology solutions grounded in real-world problems; the incubation of new companies; and academic research on AI, behavioral economics, and economic incentives. The interdisciplinary center will work with researchers throughout UC Berkeley and at UCSF.
The importance of incentives
What’s key to success, Kolstad says, is working within the constraints of a complex, market-driven healthcare system bolstered by governmental incentives. “At the end of the day, you have to understand the incentives in order to create solutions that are going to get to scale and change things,” he says. “We’re facilitating what we think will make that system more effective, more productive, and more efficient, which will lead to better health at a lower cost.” Kolstad himself has done this with the launch of a new company, Healthpilot, to help improve Medicare (see sidebar, “Haas Research Fuels Company Benefiting Medicare Patients”).
“My strong hope for CHMI is that there will be novel technologies that will be positioned to create new startups, nonprofits, or open-source solutions,” says Kolstad, the Henry J. Kaiser Chair. He’s forming relationships with venture funds, big insurers, and government agencies keen to see CHMI innovations—executives who can collapse the time it typically takes to run a pilot and scale. “We’re here to actually change things,” Kolstad says.
Doubling Down on Sustainability
By Kim Girard and Laura Counts
Since Dean Ann Harrison assumed leadership of Haas five years ago, she has made sustainability a strategic priority for the school, working to ensure that students are trained to view leadership challenges with a sustainability lens. Undergrads can now minor in sustainability, MBA core courses are being revamped to incorporate thinking about climate change and other sustainability challenges, and Haas launched the Michaels Graduate Certificate in Sustainable Business, to name just a few offerings.
Now, MBA students wishing to deepen their training in the field have two new opportunities available to them: a dual-degree option and a pioneering Climate Solutions Fund class.
Master’s degree in business and climate solutions
Haas and Berkeley’s Rausser College of Natural Resources recently launched the concurrent MBA/Master of Climate Solutions to prepare the next generation of sustainability and climate leaders. The new program, enrolling for fall 2024, will allow students to earn a master’s degree in both business and climate solutions in five semesters, one more than is typically required for the full-time MBA.
Dean Harrison says the degree will teach critical skills and knowledge in climate data science, carbon accounting, and lifecycle analysis as well as technological and nature-based solutions. “Future business leaders will require a depth of training in both business and climate change to work across disciplines and execute competitive strategies,” she says. “This new program will provide a breadth of skill sets, equipping our grads to lead in building a sustainable, low-carbon future.”
Students in the MBA/MCS cohort will spend the first year at Haas completing MBA core coursework—which includes courses in leadership, marketing, management, finance, data analysis, ethics, and macroeconomics, along with sustainability courses—before moving to classes at Rausser. The MCS core curriculum includes climate and environmental sciences; climate economics and policies; technological, business, and nature-based solutions; training in analytical and quantitative skills; and applied exercises and engagements that emphasize adaptive thinking and problem-solving. MCS courses will translate the fundamental science and groundbreaking discoveries of UC Berkeley experts, enabling professionals to learn how to evaluate technologies, develop just climate strategies, and remove barriers to implementing practical climate solutions.
“Future business leaders will require a depth of training in both business and climate change to work across disciplines and execute competitive strategies.”
—Haas Dean Ann Harrison
Michele de Nevers, executive director of Haas’ Office of Sustainability and Climate Change, says the dual-degree’s focus on early-career professionals promises quick dividends. “These professional students are clearly positioned to make an immediate impact and will serve a critical role as translators of academic insights and enacting these insights in the world,” she says.
All MBA/MCS students will participate in a semester-long capstone program that gives them the opportunity to partner with organizations operating across the business, government, and nonprofit sectors. A unique leadership course on organizational, political, and societal change for climate solutions will prepare students to be change agents anywhere they work. Students will also complete two summer internships, which will allow for deep immersion in different disciplines and more time to build relationships.
James Sallee, a professor in the Department of Agricultural and Resource Economics and faculty director of the MCS program, says that while new research on climate solutions is still critical, many of the things needed to address the climate challenge are already known. “What we really need are people spread throughout society and the economy who are in a position to take action on climate and who are equipped with the tools to make the right choices. Educating those students is the vision of the MCS program,” he says.
New Climate Solutions Fund
Financing the climate transition requires a diverse and technical tool kit: An estimated $4 trillion to $5 trillion per year will be needed to reshape global energy, transportation, food, and waste infrastructure and to help companies reinvent supply chains and integrate new technologies, says Professor Adair Morse.
To equip future leaders with the financial know-how to accelerate the transition to a low-carbon economy, Haas is launching the student-led Climate Solutions Fund in fall 2024—the first such course at a major business school.
MBA students in the course will serve as investment managers for the $2.37 million fund, learning how to structure financing in complex private markets by investing in real-world deals focused on solutions to climate change.
It was conceived of by Morse, co-founder of the Sustainable and Impact Finance Center (SAIF). “As the world moves toward a goal of net-zero carbon emissions by 2050, we need financial leaders with the skills to navigate the economic revolution we are facing,” she says. “This economic revolution will be staggeringly disruptive yet will also be a source of more business opportunities across all parts of the country than we’ve seen in 250 years.”
The Climate Solutions Fund curriculum will teach students new designs and uses of finance not traditionally taught in mainstream finance courses, including public-private partnerships with federal and state programs, identifying the underlying technologies to fuel the low-carbon transition, and envisioning new financial products. Morse saw the need for this financial expertise while serving as deputy assistant secretary of capital access in the U.S. Department of the Treasury from 2021 to 2023.
“As the world moves toward a goal of net-zero carbon emissions by 2050, we need financial leaders with the skills to navigate the economic revolution we are facing.”
—Prof. Adair Morse
“This level of reinvestment [in the climate transition] will require every finance tool available, including designing financial structures to mobilize government programs and work with community and industry partners,” she says. “Our goal is to expand how we teach students to provide the leadership and expertise that corporations, financial entities, startups, governments, and philanthropies will need to navigate this transition.”
Students in the course will assess investment opportunities in U.S.–based for-profit companies, working with outside investment partners to structure deals. Following a pitch competition, student managers will select one finalist to co-invest $100,000 to $300,000 annually. The fund is intended to generate positive returns over time so that future students can build off the capital.
The Climate Solutions Fund was made possible by a lead gift from Allan Holt, MBA 76, along with generous founding donations from Larry Johnson, BS 72; Charlie Michaels, BS 78, and his wife, Doris; Scott Pinkus; and Professor Laura D. Tyson, former Haas dean and co-founder of SAIF.
Spring 2024|By Carol Ghiglieri| Photos by Michaela Vatcheva
Financial literacy class taught by Stephen Etter, BS 83, MBA 89, prepares Cal athletes for the big business of pro sports.
Layshia Clarendon, BA 13 (American studies), took Stephen Etter’s independent study and was prepared for the financial realities of turning pro before being drafted into the WNBA. They now play for the Los Angeles Sparks. Credit: Bruce Bennett/Getty Images
Shortly before Layshia Clarendon, BA 13 (American studies), was drafted into the Women’s National Basketball Association (WNBA), the Cal senior attended a pre-draft orientation. Clarendon raised a hand and inquired about matching 401(k)s. The people fielding questions were floored. They weren’t used to college students knowing what a 401(k) was, let alone being savvy enough to ask about matching contributions.
“I remember going to that meeting and thinking, ‘Oh, wow, I already know some of this,’” Clarendon recalls. When it came to financial literacy, Clarendon was miles ahead of most of their peers—all thanks to an independent study course they’d taken with Haas professional faculty member Stephen Etter, BS 83, MBA 89, called Financial & Business Literacy for the Professional Athlete.
For more than 20 years, Etter has helped scores of UC Berkeley athletes prepare for the financial realities of turning pro. Everyone from football great Marshawn Lynch and quarterback Jared Goff to Olympic swimmer Missy Franklin and golf phenom Collin Morikawa, BS 19, have learned about navigating contracts, choosing advisors, investing, and more for their post-Berkeley lives.
Now, all of these issues are relevant for students too. In 2019, legislation was passed—first in California then later throughout the National Collegiate Athletic Association (NCAA)—allowing college athletes to earn compensation for the use of their name, image, and likeness (NIL) via sponsorships. No longer are questions about agents, contracts, budgeting, and taxes part of a hypothetical future; student-athletes are facing them today, intensifying the need for Etter’s class.
“I’m working with students who are putting a half to three-quarters of a million dollars in their pocket today,” Etter says. Trouble was, his independent study only reached a small number of students. This coming fall, with the help of a grant from Robinhood Money Drills, Etter is expanding his course and bringing it to many more UC Berkeley student-athletes.
It’s how much you keep
The idea for an independent study for athletes first occurred to Etter when one of his students, Nnamdi Asomugha, BA 06 (interdisciplinary studies), approached him for some advice. Asomugha was preparing to turn pro (he was ultimately a first-round draft pick by the Oakland Raiders) and was suddenly facing major decisions that would affect his economic future. Etter, one of the founding partners of Greyrock Capital Group, had been teaching corporate finance at Haas for nearly a decade by then. He favored experiential learning with real-world applications, and helping athletes navigate the complex waters of a professional career more than fit the bill.
Athletes turning pro find themselves in an unusual position, entering highly lucrative careers while having no financial training. The eye-popping mega-salaries that generate headlines are not the norm in pro sports, but starting salaries for many athletes are nevertheless substantial. Still, as former National Football League (NFL) player Justin Forsett, BA 14 (interdisciplinary studies), put it, “It’s not how much you make, it’s how much you keep.”
Forsett, who played pro football for nine years and is now an entrepreneur and motivational speaker, says taking Etter’s course gave him a real advantage. “There weren’t a lot of courses on financial literacy when I was a kid, in high school or even in college,” he says. After gaining a solid foundation with Etter, he entered the NFL with what he calls “a conservative approach.” He explains, “I wasn’t going out getting fancy new cars. I knew it was about how much I could actually keep and save and invest in the right things.”
Prepare your future self
Each year, Etter begins the class by sharing a series of sobering statistics: 78% of retired NFL players suffer financial hardship. Nearly 16% of NFL players have filed for bankruptcy. And 60% of former National Basketball Association (NBA) players are broke. These brief, cautionary tales drive home a crucial point that’s easily overlooked by young student-athletes: While the pros earn big salaries during their careers, those careers are often short and can be wildly unpredictable.
Stephen Etter, BS 83, MBA 89, teaching his financial literacy class to student-athletes. He’s even helped some, like Elijah Hicks, BA 20 (American studies), start nonprofits. Hicks’ Intercept Poverty Foundation provided emergency grants to low-income UC Berkeley students during the pandemic.
“Steve tells us the reality,” says Cam Bynum, BA 20 (American studies), who studied with Etter and just finished his third season as a safety with the Minnesota Vikings. “The average lifespan in the NFL is three years,” he says. “If you’re blessed, you’ll make it to 10 years, maybe 12. So that means you’re retiring at 32 years old, maybe 35. That’s just half your life. So then what are you going to do?” Without Etter to prompt them, many student-athletes might never give that question much thought.
Elijah Hicks, BA 20 (American studies), a safety for the Chicago Bears, says that one of the most valuable aspects of the course was that it forced him to think ahead. “I got to put myself in my future self’s shoes,” he says. “The class puts you in scenarios before you’re actually there, so now I’m more prepared and I’m not surprised by anything that pops up, like taxes.” High-earning athletes, for instance, not only have to pay taxes in their home state but in nearly every state they play in, a fact that shocked many of Hicks’s first-year teammates—but not Hicks.
“If you’re blessed, you’ll make it to 10 years, maybe 12. So that means you’re retiring at 32 years old, maybe 35. That’s just half your life. So then what are you going to do?” —Cam Bynum
Ask the right questions
Since the course’s inception, athletes from a range of sports have studied with Etter, players heading to the NFL, NBA, WNBA, and Major League Baseball along with swimmers, golfers, and water polo players. News of the class has tended to spread by word of mouth among teammates, but coaches, too, have steered students to him. “The Cal coaches have had the insight and caring attitude to make sure they prepared their athletes for the financial aspects of their careers,” Etter says.
Not all professional careers are the same, however. Swimmer and six-time Olympic medalist Ryan Murphy, BS 17, knew he wanted to swim professionally after his success at the 2016 Rio Olympics, but he didn’t know what that entailed. In Etter’s class, Murphy’s fellow students that semester were heading for the NFL, but as a swimmer, Murphy’s professional path was less straightforward. “Our earning power is completely based on marketing,” he says. So Etter tailored the learning, helping him focus on finding a marketing agent.
“He connected me with people on campus and had me sit down for meetings with them,” Murphy recalls. Etter also encouraged him to talk to older swimmers who’d turned professional. “He was kind of a master connector for me.”
Getting out and talking to people is a big part of what Etter teaches. Whether it’s picking an agent, a financial advisor, or an insurance broker, knowing the kinds of questions to ask to make decisions that are in their own best interest is a fundamental skill he wants these athletes to learn. Sometimes, those questions come back to Etter himself. He continues to serve as a mentor to his student-athletes—they all have his number and aren’t shy about texting or calling for advice.
“This is a huge opportunity for students to start building wealth at an earlier age, especially athletes who might be first-generation college students.”
—Christian Trigg, MBA 23
Changing the playing field
Similar to professionals, NIL allows college athletes to engage in sponsorships and receive cash payments and gifts. For example, student-athletes may enter contracts to appear for autograph signings, endorse products via social media, conduct camps and clinics, post personalized video greetings, and more. However, the policy precludes students from entering pay-for-play contracts with colleges and universities.
Christian Trigg, MBA 23. Photo: Thomas Mosely.
Some Cal athletes secure deals on their own or through agents, while others are paid through the California Legends Collective, a newly formed organization (not affiliated with UC Berkeley) that’s funded by donors who together create income opportunities like those mentioned above for Cal student-athletes. Advisory Board members include Lynch, Clarendon, and Murphy.
Christian Trigg, MBA 23, director of brand development for the Cal women’s basketball program, says the new NIL rules benefit players and the team as a whole. “This is a huge opportunity for students to start building wealth at an earlier age,” he says, “especially athletes who might be first-generation college students.” In his newly created position, Trigg helps team members build their brands and secure NIL sponsorships, which in turn will help attract talented recruits to Cal. As women’s basketball coach Charmin Smith notes, “Having a strong NIL presence is critical in today’s college athletics environment.”
Junior football player Jaydn Ott is benefiting from Etter’s class while still at Cal. Ott, a running back with a likely future in the NFL, has begun earning money through NIL contracts, and he’s clear-eyed about the importance of financial literacy. “I want to understand what’s going on with my money when I speak to my financial advisors, so I’m not just giving somebody my money and saying, ‘Here, do whatever,’” he says. “I’m able to sit down and talk with them and understand what’s going on.”
Just like pros, college athletes need to understand the taxes they owe, and Etter makes sure his students do. “A lot of NCAA athletes don’t understand the difference in income and taxes between being a W-2 employee and a 1099 contractor,” he says. NIL compensation is entirely 1099, which means there is no tax withholding; players must pay estimated taxes. Etter suspects that more than a few student-athletes across the country will inadvertently fail to pay sufficient taxes. But Jaydn Ott won’t be one of them. “After Jaydn got his first paycheck,” Etter says, “he put half away for taxes. And then he was worried, so he put half of the other half away for taxes, too.”
Junior football player Jaydn Ott, who has a likely future in the NFL, has benefited from Etter’s class while still at Cal—like making sure to put enough of his earnings aside for taxes.
Spreading the wealth
Etter has long wanted to empower more students with the skills he teaches. Now, thanks to the grant from Robinhood, he’s going to. Starting this fall, the course will be reclassified as a full-fledged class rather than an independent study, which will allow more student-athletes to take it. The structure of the course is being retrofitted to accommodate up to 250 students, while maintaining the active learning style that’s a hallmark of the class. Etter will be assisted by MBA graduate student instructors who are reflective of the diverse student-athlete population.
Mary Elizabeth Taylor, vice president of international government and external affairs for Robinhood Markets, Inc., says that one of the company’s top priorities is providing the next generation with access to financial education. “Through the Robinhood Money Drills program, we are proud to give college students and student-athletes a strong foundation to responsibly manage their finances for the future,” she says. UC Berkeley is one of eight schools nationwide benefiting from the initiative.
The money is helping Etter fulfill a long-held goal. “My dream,” he says, “was to get this grant and to educate all 1,000 student-athletes at Cal.” From there, he says he’d like to bring the class to all NCAA athletes and ultimately to all 45,000 students at Berkeley.
Viviana Alvarez Sanchez, former head of sustainability for Unilever North America, moderates the opening panel at the CFRM conference.
With the Securities and Exchange Commission’s long-awaited climate-disclosure rules blocked by litigation, public companies will continue to operate with a patchwork of laws and standards on sustainability reporting for the near future.
But the consensus among the investors, corporate sustainability officers, accountants, CFOs, and standard setters who gathered at Haas in March was that markets have already moved, with thousands of companies already disclosing information about their carbon emissions and climate risk exposures. In fact, many public and private companies are subject to new reporting regulations in California and the European Union, and investor pressure for increased transparency on climate risk disclosures and other sustainability issues will only continue.
“We’re in a time of regulatory and macroeconomic uncertainty, but that does not mean corporate sustainability reporting is not marching forward,” said Professor Panos N. Patatoukas in his opening remarks at the CFRM 27th Conference on Financial Reporting. “What we measure is what we treasure. My hope is that improved measurement will lead to more efficient allocation of capital in society, which could, hopefully, accelerate the transition to a more sustainable economy.”
Professor Panos N. Patatoukas, faculty director of the Center of Financial Reporting Management (CFRM) and co-faculty director of the Sustainable and Impact Finance Initiative at Berkeley Haas.
Former Haas dean and Professor Laura Tyson, former chair of the Council of Economic Advisers and a senior advisor to SAIF, gave opening remarks that stressed the importance of consistency for both companies and investors.
“This is incredibly important and it’s all happening right now,” Tyson said.
Laura D. Tyson, professor of the graduate school and former Berkeley Haas dean
Tyson noted that in the United States, the discussion tends to be about actions that companies take that may have a financial consequence for investors—known as financial materiality. While materiality is the focus of the SEC’s proposed rules, it’s just one part of the discussion, she noted: The second part is non material items that may be important to society or shareholders.
“We have had for a very long time, organizing our financial markets, a set of acceptable standards for traditional financial measures,” Tyson said. “Every firm has to apply them. Every accounting firm has to make sure firms apply them. We need something like that in the standards for sustainability. I think we’ll get there, but Europe may get there before us.”
The company perspective
The first panel of the day focused on companies’ perspective, featuring Joe Allanson of Salesforce, Claire Boland of Joby Aviation, R. Paul Herman, CEO of impact investing firm HIP Investor, Sydney Lindquest, ESG director for energy services company SLB, and Douglas Sabo, former chief sustainability officer for Visa.
“Concerns by society quickly turn into shareholder concerns,” Allanson, Salesforce’s EVP of Finance ESG, noted.
One effect of the increased focus on sustainability disclosure is that accountants have had to move outside their traditional silos, communicating across companies more widely. He joked that the array of new rules from the SEC, California, and the EU amounts to a “full employment act for accountants.”
Assurance and verification
A panel on assurance included (from left to right) Anita Chan of KPMG, Marie Hache, ESG Partner at PwC, Deloitte Partner Laura McCracken, Mallory Thomas of Baker Tilly, and (not pictured) Trip Borstel of EY. They emphasized the importance of building trust through reporting that is relevant, reliable, and verifiable.
The panelists emphasized the need to restore trust with a global baseline of corporate sustainability reporting that uses standardized measurements and definitions.
“We’ve been on a journey, and the next five-to-eight years are going to be really interesting in terms of what happens with the SEC rules and the legal issues,” McCracken said.
Chan echoed Patatoukas’ remarks: “You can’t manage what you can’t measure.”
The panel discussion also highlighted the need for corporations to develop processes, incentives, and governance mechanisms that integrate traditional financial reporting with sustainability reporting.
Andy Behar, CEO of As You Sow (above left), served as moderator. “Hope is not a strategy. We are starting to get action,” he said.
Setting standards
Berkeley Law Professor Stavros Gadinis moderated a discussion on standard setting that included Verity Chegar of the International Sustainability Standards Board (ISSB), former U.S. Department of Energy advisor Kate Gordon, and Katie Schmitz Eulitt, of the International Financial Reporting Standards (IFRS) Foundation.
Despite the fear that we’ll end up with separate sustainability reporting standards—imposed by the SEC, the EU, and California—the panelists agreed that convergence on reporting standards is in everyone’s interest.
“This is a global issue that doesn’t happen within boundaries,” said Gordon, who served as senior advisor to both U.S. Energy Secretary Jennifer Granholm and California Gov. Gavin Newsom. “There does need to be consistency for companies since they can’t parse the different rules.
Asked why climate risks should be singled out in audit reports above other risks—such as cyber threats or policy changes—Gordon emphasized that “climate risk is different because the risks are known, and they are predictable. They are already in the atmosphere from things we did 50 years ago or more.”
Even the election outcome won’t likely turn back the movement toward more disclosure, Schmitz Eulitt said. “Let’s just inhabit a world where the climate rule gets thrown out. My instinct is that if it’s a material issue, you have to disclose it. Investors are asking for it,” she said.
Gordon (center), with Chegar (left) and Schmitz Eulitt (right)
Investors’ perspective
The last panel of the day focused on the investors’ perspective and included Nuveen Senior Director Anthony Mark Garcia, Jonathan Hudacko, MBA 01, personal investing principal at Vanguard, Jamie Nulph, MSCI’s executive director of climate and sustainability, Anne Simpson, Franklin Templeton’s global head of ESG, and State Street’s Karen Wong, global head of ESG investing. Patatoukas served as moderator.
Patatoukas emphasized that “climate risk, which includes both physical risks from environmental changes and transition risks related to moving towards a lower-carbon economy, is increasingly acknowledged as a significant investment risk.”
Wong said reporting standards are critical as more investors ask to incorporate sustainability metrics explicitly into their portfolios. “We have some investors who really care about climate change risk,” she said. “I think it’s important to provide a choice for investors. It’s their money, not ours.”
Asked about the strategy of divestment versus engagement, Simpson, who also teaches MBA, MFE and undergraduate classes at Haas, encouraged students who want change to embrace the complexity of the moment. “If you want to feel pure, roll up your sleeves and walk away,” she said. “If you want real change, you have to roll your sleeves up and get involved.”
Meredith Albion, FTMBA24 (right), worked for a credit ratings firm before attending Haas. She has focused much of her time at Haas on sustainable investing. She is currently a student principal of the Haas Sustainable Investment Fund and is a member of the SAIF Student Advisory Board.
The FTMBA program moved up four slots to tie for #7 with the Yale School of Management and NYU’s Stern School of Business. Except for 2021 and 2023, the FTMBA has ranked #7 since 2019.
Meanwhile, the Evening & Weekend Berkeley MBA Program ranked #2 this year among part-time MBA programs. The Berkeley Haas MBA for Executives Program placed #7 among EMBA programs and is now the top executive MBA program at a public university in the nation. This ranking is based solely on ratings by business school deans and directors.
The 2024 FTMBA ranking, released today, reflects positive changes that U.S. News made to its rankings methodology, said Haas Dean Ann Harrison.
The ranking reflects all of the work Haas is doing to strengthen its programs and reputation, she said. “There are many different ways of evaluating a school, and rankings go up and down for all of us,” she said. “The change in the U.S. News methodology, with less emphasis on starting salary upon graduation, is a positive step.”
A few details on the rankings methodology used this year:
Employment rates at graduation – 7% weighted (previously 10%)
Employment rates three months after graduation – 13% (previously 20%)
Mean starting salary and bonus – 20%
Ranking salaries by profession – 10%
Peer assessment score – 12.5%
Haas ranked #5 in salaries, which were ranked this year by profession (tied with Chicago Booth). Harrison noted that alumni accept jobs in a variety of industries, which logically means a variety of pay scales.
“This is true for Haas, as well, where graduates prioritize where they can make the biggest impact, whether that is in consulting, product management, fintech, or by founding a new company,” she said. “I applaud U.S. News for taking into account the reality of the wealth of opportunities for a b-school graduate and comparing apples to apples across all the schools it surveys.”
Assessment by the school’s FTMBA peers was strong this year, at #7 (tied with Columbia) and the school ranked #9 for its recruiter assessment. Haas also had the highest GMAT score, tied at #1 with Stanford, Harvard, Wharton, Kellogg, and Columbia.
In specialty rankings, based solely on peer assessments, U.S. News ranked the full-time MBA program:
With the help of a grant from Robinhood, Professional Faculty Member Steve Etter’s Financial & Business Literacy for the Professional Athlete course will be reclassified as a full-fledged class rather than an independent study, which will allow more student-athletes to take it. Photo: Michaela Vatcheva
Shortly before Layshia Clarendon, BA 13 (American studies), was drafted into the Women’s National Basketball Association (WNBA), the Cal senior attended a pre-draft orientation. Clarendon raised a hand and inquired about matching 401(k)s. The people fielding questions were floored. They weren’t used to college students knowing what a 401(k) was, let alone being savvy enough to ask about matching contributions.
“I remember going to that meeting and thinking, ‘Oh, wow, I already know some of this,’” Clarendon recalls. When it came to financial literacy, Clarendon was miles ahead of most of their peers—all thanks to an independent study course they’d taken with Haas professional faculty member Stephen Etter, BS 83, MBA 89, called Financial & Business Literacy for the Professional Athlete.
For more than 20 years, Etter has helped scores of UC Berkeley athletes prepare for the financial realities of turning pro. Everyone from football great Marshawn Lynch and quarterback Jared Goff to Olympic swimmer Missy Franklin and golf phenom Collin Morikawa, BS 19, have learned about navigating contracts, choosing advisors, budgeting, investing, and more for their lives post-graduation.
Collin Morikawa, BS 19, after winning the PGA Championship golf tournament in 2020 in San Francisco. (AP Photo/Jeff Chiu)
Now, all of these issues are relevant for students too. In 2019, legislation was passed—first in California, then later throughout the National Collegiate Athletic Association (NCAA)—allowing college athletes to earn compensation for the use of their name, image, and likeness (NIL) via sponsorships. No longer are questions about agents, contracts, and taxes part of a hypothetical future; student-athletes are facing them today, intensifying the need for Etter’s class.
“I’m working with students who are putting a half to three-quarters of a million dollars in their pocket today,” Etter says. The trouble was that his independent study only reached a small number of students. This coming fall, with the help of a grant from Robinhood Money Drills, Etter is expanding his course and bringing it to many more UC Berkeley student-athletes.
Mary Elizabeth Taylor, vice president of international government and external affairs for Robinhood Markets, Inc., says one of the company’s top priorities is providing the next generation with access to financial education. “Through the Robinhood Money Drills program, we are proud to give college students and student-athletes a strong foundation to responsibly manage their finances for the future,” she says. UC Berkeley is one of eight schools nationwide benefitting from the initiative.
It’s how much you keep
The idea for an independent study for athletes first occurred to Etter when one of his students, Nnamdi Asomugha, BA 06 (interdisciplinary studies), approached him for some advice. Asomugha was preparing for the draft (ultimately a first-round draft pick by the Oakland Raiders) and was suddenly facing major decisions that would affect his economic future. Etter, one of the founding partners of Greyrock Capital Group, had been teaching corporate finance at Haas for nearly a decade by then. He favored experiential learning with real-world application, and helping athletes navigate the complex waters of a professional career more than fit the bill.
Athletes turning pro find themselves in an unusual position, entering highly lucrative careers while having no financial training. The eye-popping mega-salaries that generate headlines are not the norm in pro sports, but starting salaries for many athletes are nevertheless substantial. Still, as former National Football League (NFL) player Justin Forsett, BA 14 (interdisciplinary studies), put it, “It’s not how much you make, it’s how much you keep.”
Forsett, who played pro football for nine years and is now an entrepreneur and motivational speaker, says taking Etter’s course gave him a real advantage. “There weren’t a lot of courses on financial literacy when I was a kid, in high school, or even in college,” he says. After gaining a solid foundation with Etter, he entered the NFL with what he calls “a conservative approach.” He explains, “I wasn’t going out getting fancy new cars. I knew it was about how much I could actually keep and save and invest in the right things.”
Keeping your future self in mind
Each year, Etter begins the class by sharing a series of sobering statistics: 78% of retired NFL players suffer financial hardship. Nearly 16% of NFL players have filed for bankruptcy. And 60% of former National Basketball Association (NBA) players are broke. These brief, cautionary tales drive home a crucial point that’s easily overlooked by young student-athletes: While the pros earn big salaries during their careers, those careers are often short and can be wildly unpredictable.
“Steve tells us the reality,” says Cam Bynum, BA 20 (American studies), who studied with Etter and just finished his third season as a safety with the Minnesota Vikings. “The average lifespan in the NFL is three years,” he says. “If you’re blessed, you’ll make it to 10 years, maybe 12. So that means you’re retiring at 32 years old, maybe 35. That’s just half your life. So then, what are you going to do?” Without Etter to prompt them, many student-athletes might never give that question much thought.
Elijah Hicks, BA 20 (American studies), a safety for the Chicago Bears, says that one of the most valuable aspects of the course was that it forced him to think ahead. “I got to put myself in my future self’s shoes,” he says. “The class puts you in scenarios before you’re actually there, so now, I’m more prepared and I’m not surprised by anything that pops up, like taxes.” High-earning athletes, for instance, not only have to pay taxes in their home state but in nearly every state they play in, a fact that shocked many of Hicks’ first-year teammates—but not him. Etter also helped Hicks start a nonprofit, Intercept Poverty Foundation, to provide emergency grants to low-income UC Berkeley students during the pandemic.
Learning to ask the right questions
Since the course’s inception, athletes from a range of sports have studied with Etter, players heading to the NFL, NBA, WNBA, and Major League Baseball (MLB), along with swimmers, golfers, and water polo players. News of the class has tended to spread by word of mouth among teammates and friends, but Etter says coaches, too, have been instrumental in steering students to his door. “The Cal coaches have had the insight and caring attitude to make sure they prepared their athletes for the financial aspects of their careers,” he says.
(L-R) Destin Lasco and Tyler Kopp of Cal Men’s Swimming & Diving and Katja Wiersholm of Cal Women’s Tennis attending Steve Etter’s Financial & Business Literacy for the Professional Athlete independent study. Photo: Michaela Vatcheva
Not all professional careers are the same, however. Swimmer and six-time Olympic medalist Ryan Murphy, BS 17, knew he wanted to swim professionally after his success at the 2016 Rio de Janeiro Olympics, but he didn’t know what that entailed. In Etter’s class, Murphy’s fellow students that semester were heading for the NFL, but as a swimmer, Murphy’s professional path was less straightforward. “Our earning power is completely based on marketing,” he says. So Etter tailored the learning, helping him focus on finding a marketing agent.
“He connected me with people on campus and had me sit down for meetings with them,” Murphy recalls. Etter also encouraged him to talk to older swimmers who’d turned professional. “He was kind of a master connector for me.”
Getting out and talking to people is a big part of what Etter teaches. Whether it’s picking an agent, a financial advisor, or an insurance broker, knowing the kinds of questions to ask to make decisions that are in their own best interest is a fundamental skill he wants these athletes to learn. Sometimes, those questions come back to Etter himself. He continues to serve as a mentor to his student-athletes—they all have his number and aren’t shy about texting or calling for advice.
Changing the playing field for college athletes
Similar to professionals, NIL allows college athletes to engage in sponsorships and receive cash payments and gifts. For example, student-athletes may enter contracts to appear for autograph signings, endorse products via social media, conduct camps and clinics, post personalized video greetings, and more. However, the policy precludes students from entering pay-for-play contracts with colleges and universities.
Professional Faculty Member Steve Etter with UC Berkeley Junior Jaydn Ott, a California Golden Bears running back with a likely future in the NFL. Photo: Michaela Vatcheva.
Some Cal athletes secure deals on their own or through agents, while others are paid through the California Legends Collective, a newly formed organization (not affiliated with UC Berkeley) funded by donors who, together, create income opportunities like those mentioned above for Cal student-athletes. Advisory Board members include Lynch, Clarendon, and Murphy.
Christian Trigg, MBA 23, director of brand development for the Cal women’s basketball program, says the new NIL rules benefit players and the team as a whole. “This is a huge opportunity for students to start building wealth at an earlier age,” he says. “Especially athletes who might be first-generation college students.” In his newly created position, Trigg will help members of the team build their brands and secure NIL sponsorships, which in turn will help attract talented recruits to Cal. As women’s basketball coach Charmin Smith notes, “Having a strong NIL presence is critical in today’s college athletics environment.”
Cal football player Jaydn Ott is one of the students who’s benefited from Etter’s class while still at Cal. Ott, a running back with a likely future in the NFL, has begun earning money through NIL contracts, and he’s clear-eyed about the importance of financial literacy. “I want to understand what’s going on with my money when I speak to my financial advisors, so I’m not just giving somebody my money and saying, ‘Here, do whatever,’” he says. “I’m able to sit down and talk with them and understand what’s actually going on.”
“I want to understand what’s going on with my money when I speak to my financial advisors, so I’m not just giving somebody my money and saying, ‘Here, do whatever.’ ” – Jaydn Ott, Cal running back.
Just like pros, college athletes need to understand the taxes they owe, and Etter makes sure his students do. “A lot of NCAA athletes don’t understand the difference in income and taxes between being a W-2 employee and a 1099 contractor,” he says. NIL compensation is entirely 1099, which means there is no tax withholding; players must pay estimated taxes. Etter suspects that more than a few student-athletes across the country will inadvertently fail to pay sufficient taxes. But Ott won’t be one of them. “After Jaydn got his first paycheck,” Etter says, “he put half away for taxes. And then he was worried, so he put half of the other half away for taxes, too.”
Spreading the wealth
Etter, who has three times won the school’s prestigious Earl F. Cheit Award for Teaching Excellence from his undergraduate students (once as a graduate student instructor), has long wanted to empower more students with the skills he teaches. Now, thanks to the grant from Robinhood, he’s going to. Starting this fall, the course will be reclassified as a full-fledged class rather than an independent study, which will allow more student-athletes to take it. The structure of the course is being retrofitted to accommodate up to 250 students while maintaining the active learning style that’s a hallmark of the class. Etter will be assisted by MBA graduate student instructors who are reflective of the diverse student-athlete population.
The money is helping Etter fulfill a long-held goal. “My dream,” he says, “was to get this grant and to educate all 1,000 student-athletes at Cal.” From there, he says he’d like to bring the class to all NCAA athletes and ultimately to all 55,000 students on the Berkeley campus.
Lizzie Hoerauf, MBA 24, is part of the inaugural Impact CFO cohort.
When Lizzie Hoerauf, MBA 24, joined Berkeley Haas, she had a vision of what she wanted to do post-graduation.
“My goal was to bring the finance and operations business acumen I gained from an MBA program back to organizations with missions I care deeply about,” said Hoerauf, who has a background in nonprofit management, including working for Yosemite National Park.
At Haas, Hoerauf found her calling in the Impact CFO program, an innovative initiative designed to create a new generation of CFOs equipped to lead foundations, nonprofits, and other social enterprises.
She’s not alone in this journey; Hoerauf is part of the inaugural cohort of 14 MBA students united by a goal to develop strong finance and analytical skills while having an impact on society.
(Hear about Impact CFO from a few students in video below.)
Workshops, speaker series, and networking events complement hands-on projects and industry mentorship, ensuring a comprehensive learning experience. Another key program feature is an internship that bridges impact and finance, helping students gain insights into the evolving role of a CFO in the social sector.
Raising the financial leadership bar
Silver emphasized the program’s unique approach: “Today’s social sector organizations need more than just accountants who can close the books; they need strategic thinkers with an MBA-level understanding.” This sentiment echoes throughout the program, raising the bar for financial leadership in the social impact realm, she said.
“Today’s social sector organizations need more than just accountants who can close the books; they need strategic thinkers with an MBA-level understanding.” — Nora Silver.
Even-Tov highlighted the diverse backgrounds of the program’s candidates: from seasoned finance professionals seeking meaningful impact to experienced nonprofit professionals aiming to amplify their fiscal expertise. “The program challenges its participants to balance the mission of the organization with financial stability,” he said. “Without wise business decisions, these organizations will not be able to achieve their social missions.”
CFOs in demand
Demand for such specialized financial talent is high, especially in California, a hub for the social impact sector, Silver said. “Of the 86,203 U.S.-based foundations, 22,347, or 26%, are located in California and hold assets of more than $722 billion,” she said. The base salary range for a senior finance manager or director in the sector is $120,000-$140,000.
Victor Ringeard, MBA 24, plans to intern at LifeLong Medical Care.
Mentorship is a cornerstone of the Impact CFO program—and mentors in the Impact CFO program hail from industries including education, health care, impact investing, government, humanitarian aid, housing, art & culture, and philanthropy.
Hoerauf’s mentor, David Samuels, MBA 86 and CFO of REDF, exemplifies this. Interning at REDF, Hoerauf uses her MBA skills in a real-world setting, applying her learnings from courses like Strategic Management of Nonprofit Organizations and Social Sector Solutions.
Victor Ringeard, MBA 24, who is transitioning from a healthcare consulting background, anticipates a transformative experience at LifeLong Medical Care under CFO Brent Copen. Ringeard aims to grasp the nuances of nonprofit finance in healthcare and learn how to influence stakeholders who may not have a financial background, all the while making healthcare more accessible in the Bay Area.
A deeper understanding of the role
Yvonne Mondragón, BS 16, MBA 25, is blending her investment banking career with her nonprofit commitments. “Understanding the CFO role deeper will enrich my contributions to both sectors,” Mondragón, who serves on the board of the East LA Community Corporation, said.
Delphine Sherman, CFO of BRIDGE Housing, is mentoring Alex Weinberg MBA 24, who is interested in low-income housing, a field where BRIDGE Housing is a major player.
Sherman, the former CFO of Haas, said she believes that the Impact CFO program is not only shaping future leaders, but “molding a new financial paradigm in the social sector.”
“Impact CFO will fill a huge need for strategic, forward thinking, systematic, efficiency-driven, change agent CFOs in the social sector,” she said.
Looking ahead, Even-Tov and Silver envision building one of the largest networks of finance professionals in the social sector within a decade.
“We want the Impact CFO program to stand as a beacon, illuminating the path for future CFOs committed to making a difference,” Even-Tov said..
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