Making matters worse is the declining number of opportunities off of Wall Street. Hiring at private-equity firms has slowed, since the credit crunch has made it harder to do new deals. This is particularly true at the senior levels, since those employees tend to be the ones who bring in business, says Adam Zoia, managing director at Glocap Search in New York. But salaries for junior talent are going down as well, as the pool of available candidates grows. Starting compensation (base plus bonus) for someone with a couple of years' experience used to be around $400,000. Today it's closer to $300,000.

"I think for awhile it got inflated," Zoia says. "There was such a huge increase in the demand for talent. Now it's a little more realistic."

Hedge funds have also grown more conservative as they may soon be facing their own problems. Hiring has stalled at small funds, where redemptions are threatening survival. Although some funds posted record profits and will pay their people accordingly, average compensation at hedge funds is down almost 20 percent this year, according to a recent Glocap survey—the first decrease in seven years.

So where will all the bankers go? Certainly some will go into business for themselves. Former Bear Stearns vice chairman Donald Tang recently left J.P. Morgan Chase in Hong Kong to start his own private-equity fund. But not everyone has a résumé or the appetite for risk—particularly in this market. Stuart Kruse, a former portfolio manager with Lehman Brothers who went out on his own last year, says he's been inundated with calls from friends in the industry seeking career advice. He expects a small number to try opening their own shops, while others trade high pay for security and go into commercial banking or to smaller firms. "Right now they're trying to decide their options and they're really shaken up," he says.

Adjusting to this new reality may be more difficult for some than others. One former senior banker confessed that he initially balked at the lower salaries he was offered by smaller boutique firms, but he has since taken an optimistic view on some of the opportunities. "There's a little bit of a sense that someone could be more creative or have more of an impact in one of these places," he says. "And over time the money gets better." There is likely to be a lot of glass-half-full talk from those lucky enough to land new gigs.

And what of the future would-be bankers? At Harvard Business School, it's still too early to tell whether some students will abandon banking for jobs in industry or consulting.  

"I think what we're seeing is students stepping back and looking at their risk tolerance," say Jana Kierstead, who heads career services at H.B.S. "They're wondering if it (banking) is still a fit."

Meanwhile, some small shops like Gregg Fisher's, which manages $1 billion, may benefit from the lower expectations.

"Before, I think it would have been difficult to attract and afford these people," he says. "Now I think they're realizing they may have to start lower and build up over time—that those kids who were making $1 million a year, two years out of school, that's not going to happen anymore."