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      Academic research and independence go hand in hand

      Academic research and independence go hand in hand

      The Luxembourg School of Finance (LSF) is celebrating its 10th anniversary this month. Since its inception in 2003, more than 300 students of over 50 nationalities have completed the MSc in Banking and Finance programme. In an interview with Luxembourg for Finance, LSF Director Christian Wolff talks about his ambitious plans, a world-class professor and LSF’s independence.

      When we interviewed you back in August 2010, you said that your ambition was to rank the Luxembourg School of Finance amongst the best finance departments in Europe within the next eight to ten years. What is your analysis in 2013 about this ambitious plan?

      In those three years we have come a long way. When I look back I can see how things have changed and each recruitment round has led to ever more interesting colleagues. At the same time, I have to be realistic; three years is not enough time to see a real shift in development. These are things you build incrementally. Other schools, with which we hope to compare ourselves one day, like London Business School, have very good finance department. They have been at this game for almost 50 years. You need time to grow your reputation. You also need people to be with you – sponsors, donors, government representatives and university officials – but I really feel that we are on the right path.

      How did you convince a world-class professor like Rajnish Mehra to come to Luxembourg?

      He is a very big name. Thanks to him we can celebrate our 10th anniversary with a Nobel Prize winner he went to school with, Professor Finn Kydland. When you look for someone at the level of Professor Mehra, you really need to do your homework and know what he is interested in. We found that he is interested in Europe and would like to stay on this continent. Some of his relatives now live here and that all helps. That is an important starting point. If his plan had been to go back to India, for instance, we wouldn’t have stood a chance at all. From there on we have to make candidates feel as comfortable as possible.

      He was appointed on an American-style chair and that represents serious money. That meant for us that it would only be possible to hire him if there were a private sponsorship involved, which happily came with the Deutsche Bank chair. There were many factors coming together, including research money and the freedom. In all, we had been talking and negotiating for more than a year.

      What are the LSF’s advantages that are likely to attract foreign students to Luxembourg?

      Our Master of Science in Banking and Finance has been our flagship programme for ten years now. It is a very attractive programme and I would say that it is moderately priced when one considers what is on offer here. It is comparable with the best; it is fully market standard. It even includes a residential module in New York at the Stern School, which is included in the tuition. The tuition of 17,500 € is certainly not trivial, one could buy a car for it, but similar programmes are priced elsewhere at double or more.

      Another reason why people come here is that they hope to gain access to the financial centre to work. The LSF contributes to a ‘brain gain’ for Luxembourg. Also pleasant ‘accidents’ happen. A couple of years ago we had a young lady from Asia who had always wanted to go back and help her country and then she fell in love with a Luxembourgish gentleman. So she is now here, married and working.

      What other programmes do you offer?

      We are offering a new Master in Wealth Management but also an Executive Programme in Wealth Management, over 20 days, which is very high profile. We also offer shorter courses, like the one on Islamic finance. We are thinking about a couple of others but we want to be very selective. There is no particular reason for us to spend time on a course that one can do in Paris, London or Amsterdam. There is no value added to that. We are thinking of private equity, risk management and microfinance. We are considering these because they are of specific interest to Luxembourg.

      How close are the ties between the LSF and the financial centre?

      We have close relations with the financial centre in an almost neutral sense. We work together and we have a common interest, but we always guard our independence. The Master in Wealth Management is a good example of that. The Private Banking Group Luxembourg, within ABBL, came to talk with us; it was their idea to do something together. The fit was good because the programme is good for Luxembourg private bankers but also for the development of the Luxembourg School of Finance.

      I have never really had the feeling that our independence is at stake. It is not like we do a consulting project where we have to write a report for a client who may want to hear certain things. That is not how it works; in addition to teaching programmes, we conduct academic research. We collaborate with financial centre players and listen carefully to them, but they don’t direct the LSF.

      Is it your role to identify new market niches for the economy?

      No, we are not Luxembourg’s strategy unit. We are happy to contribute to debates and do research to help people go forward, but we are not the planners of the financial centre. That would also give a picture of a market economy that is unrealistic. Luxembourg is an economy that works on the basis of private market forces and not Soviet Union style central planning.

      A couple of months ago, Finance Minister Luc Frieden announced that Luxembourg would switch to the automatic exchange of information. What does this change in direction mean for the financial centre?

      Let me first of all say that the change that was announced was of course not an abrupt event. It is the culmination of what we have all seen coming for many years; in that sense there is almost no real surprise. When you see the general direction the country needs to take in the light of this, it is really running the financial centre even more on the basis of competitive edge and qualification than before. As LSF, that is exactly what we are trying to do; our mission is in part to stimulate, support and build human capital and knowledge in the financial centre.

      What does this change in direction mean for the programmes you are offering?

      Our programmes will not really change based on any of this, as our general development was already very much in this direction. The new Master inWealth Management programme is less technical than the Master in Banking and Finance and is much more driven by practice. It is interesting and useful for participants to know something about forming investment portfolios but that is not going to be day-to-day business for many of them.

      Areas like estate planning, taxation, and cross-cultural differences are very relevant and make it a broad programme that should hopefully deliver well-rounded individuals who can interact with wealthy clients really well. That is our goal. CW