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This article is originally from 300Hours.com. You can read the full article here.

We talked about CFA vs. MBA previously, but this is more fundamental. It's one of those classic questions that always end up with "it depends". 

I do get why we arrive at that conclusion, as the question is so broad and cannot be generalised for each candidate's circumstances. Yet, it' still so anti-climatic and unsatisfactory. 

So, I'm just going to (wo)man-up, apply the 80/20 rule and take a more definitive stance on this controversial subject. My take? MBAs are becoming less worth it. Here's why.


Which MBA?
To assess this question, I focused on the top 30 MBA courses in the latest 2013 FT Global MBA Rankings. It's a common goal for candidates to aim for the top courses anyway. 

What's the current conditions for MBAs?
  • MBA employability continues to improve, with 92% of 2012's global business school graduates (business masters and MBAs) finding employment within 3 months, up from 86% last year. Employers are increasingly interested to hire MBAs in 2013 too.  
  • Post MBA salary boost has declined - On average, a Harvard Business School alum's salary 3 years after graduation (1999) represents a 209% increase from pre-school salary. Now in 2013, that number is 121%. Note that this includes the impact of current economic climate, but I'd argue that it applies to everyone in the market too, MBA or not.
  • Cost of top MBAs have been rising 7% per year for the past 15 years. MBA students who enrolled in 2012 paid 62 per cent more in fees – up 44 per cent in real terms – than those who began their programmes in 2005, even though the increases in post-MBA salaries remained in line with inflation.
  • There seems to be too many MBA graduates already.
  • On average, the total all-in costs (fees, modest living expenses, forgone salaries) of a 2 year top MBA program is around $275k to $325k

What do you aim to get out of an MBA? Are There Better Ways to Achieve These Goals?
Getting an MBA used to be a ticket to huge and sustainable salary boost. With that promise waning and the skyrocketing costs, is MBA still a worthwhile investment?

To tackle this question, a good starting point is to think about the objectives of getting an MBA and  evaluate if there are better alternatives:

#1. Credentials and credibility - with the abundance of MBAs and degree inflation, I'd argue that employers would value actual work experience more as a signal of quality. Because anyone can buy an MBA, no one can buy the work experience and knowledge from doing the job itself. This certainly applies to me when I hire a junior in my team.
  
#2. Improve skillset / knowledge - you learn best on the job. No amount of theory could prepare you for the practical skills needed. Plus it looks good on your CV too. Identify what skills or knowledge of a specific job you would like to obtain, then try to get a job in that area. Just like anything (even MBA applications), you need to be proactive to search and ask for the job you want experience in. At least you still get paid, practical work experiences and not end up with student debt.

#3. Change careers / career advancement - Why do an MBA, incur $300k for 2 years, only to change jobs? Why not do it now? Ask for the internship, work for free even for a short time to gain valuable experiences for your CV to diversify and land the job you want, now.

#4. Network - It's true that you have more time to meet new people, attend events and meet up for coffee when not working full time. But this shouldn't be your sole reason for taking up an MBA, as you can make time for this and start tapping and expanding your network now. Join societies, clubs or events post work or on weekends and off you go.

#5. Have a good time / find yourself - The desire of a guilt-free career break or search for new direction is a common reason (subconscious or not) for taking an MBA. Given the high cost and additional work involved in this demanding course, I'd say it's better to take at least 6 months off to travel the world, meet people or spend time with family. Not only it gives you the battery recharge you desperately need, I'm confident that you will learn more about your true likes and dislikes during that period of idleness, to give you a better sense of direction and purpose for your next phase.

Over to you
On first glance, the average payback period for an MBA of 3.5-4 years seems short, making the investment worthwhile. But does it account for the increase risk aversion in the graduates' job choice? Nope, they didn't.

With a huge student debt, it's likely that top MBA graduates would go for high-paying jobs immediately to service the debt for the next few years, and probably not get the career change they first aimed for (reason #2 above). 

I'm not against the usefulness of an MBA, I think there's a lot to learn there. But the opportunity costs seems too high to warrant such investment, and there are just too alternatives to achieve the same outcome. This is a chronicle of my decision making on MBA back in 2009 based on my career objectives, before I decided to take the CFA instead

What do you think? Did you do (or are in the midst of) an MBA? Share your thoughts and experiences with us below!

Comments (68)

  • CBSWannabe's picture

    it is worth it for people who did not go to a target school, or a school with a strong presence on wall street. My weak alumni network at my non target state school that i attempted to access leaves much to be desired. In my instance getting into CBS would add to my credibility and open up access to a valuable network. To me, even though i am already in IB and on MD track, I still feel that getting an MBA will give me the credibility and more importantly the CONFIDENCE to set my sights even higher. It is really a personal thing, it sounds like OP doesn't need these items which is okay.

  • CornTrader's picture

    This post reeks of bias. I know all of us are, in one way or another, but this post fails to address a number of major motivations for a high-end MBA. Where is your data on career switchers? I'd argue that an individual in engineering, the sciences, or law has little to no chance of breaking into IB, consulting, or corp dev without an MBA. What about an individual from a non-target who fought and clawed his way into Booth or Haas? The name brand on that resume will shift the way that individual is viewed professionally. I'd also argue that measuring the relative value of an MBA by analyzing the payback period is short sited and fails to account for the change in the "slope" of potential earnings.

    Do you really recommend quiting a current job to pursue an internship over going to an MBA? There are certainly small firms and little shops that will higher a 27 year old intern on the whim that they could turn into a full-time employee, but this is not a viable strategy for breaking into any sort of "corporate" position. If you are 24 and hate your job, ok. If you are in your mid-to-late 20's a potential gap on a resume can be devastating and I have trouble recomending that course of action to anyone serious about a career switch.

    I appreciate your insight and you seem to have done quite well for yourself. The MBA and CFA are two unrelated designations and should not be compared. They accomplish very different things. It is possible to be succesful with both, neither, or one or the other. I do not understand why people who have chosen one path over the other feel the need to discount the other path.

  • In reply to CBSWannabe
    jmoney2405's picture

    CBSWannabe wrote:
    it is worth it for people who did not go to a target school, or a school with a strong presence on wall street. My weak alumni network at my non target state school that i attempted to access leaves much to be desired. In my instance getting into CBS would add to my credibility and open up access to a valuable network.

    That's why I'm considering it, I don't think I'll garner much extra knowledge or be much better at my job by earning a MBA but when you go to a non-target if networking fails, MBA to re-brand is sadly all that's left.

    Give me a kid whose smart, poor, and hungry...............

  • crackjack's picture

    I think what it ultimately comes down when deciding whether or not to get an MBA is the specific nature of your background and what the MBA can add to it.

    There's a couple of things that I think can impact a lot in valuing the worth of getting an MBA from a top school.

    #1: Your location. Not everyone who wants to get into finance lives in New York, or even a metropolis area with a good financial sector. If you're living in, say, North Dakota, you can't just hop on a plane to go have coffee with an associate and chat (and if you could, you probably already have pretty good connections that you don't need to do so). What one of these top MBA programs can offer you is the ability to network with hundreds of other students, and thousands of alumni in the financial sector, all in one place. In addition, you would be a lot closer to financial hubs that you currently are, making the ease of networking with current employees at firms much more convenient.

    #2: Your prior schooling. Not everyone who wants to get into finance knew they wanted to get into finance at 17. A lot of people (including myself) didn't even know what finance jobs were out there until their mid 20s. It's not as if we can go back in time, do 2-3 IB internships, and land a BB gig. We have to work forward from where we're at, which usually means dealing with one or more of the following: non-target undergrad, non-finance undergrad, and/or non-finance work experience. Though a top MBA from our prospective is hard to obtain, the reward of getting in and networking your butt off may mean making $200k when you graduate, versus keeping your $40k/year job in podunk Iowa. Hell, even if you made $100k coming out, including repayment of all your student loans, you'll still come out better in 25-30 years when you retire than you ever could in your old job.

    #3: Your network. Not everyone who wants to get into finance knows a bunch of people working on the Street, or has alumni who is working/has worked there. The comparison between my school (a state non-target) and even one of the lower top ten MBA programs (Kellogg) is astounding. If you do a quick search in LinkedIn (yes probably not the most accurate source, but still), you can see difference in placement of people at BBs. From Kellogg at least 42 at JP Morgan, 40 at Citi, 32 at Goldman, and probably a myriad at other smaller, boutique banks. From my school? Just 1 at Goldman (as an executive assistant). That hardly counts as a networking opportunity. And if you're dealing with issue #1, it makes it all the harder to properly network into the jobs that you want to get into.

    Is an MBA for everyone? Definitely not. Can it help improve on your situation if your situation is not idea? Absolutely. It all comes down to each individual's specific situation.

  • CompBanker's picture

    I made a post about a month ago that outlines why I think an MBA is indeed worth it (for me): http://www.wallstreetoasis.com/forums/to-anyone-co...

    Anti-MBA articles seem to be more and more common these days. Almost all of them argue that the ROI is not worth it; that the same objectives could be met by spending your time elsewhere. Personally, I think it is an incredibly short-sighted and flawed way to view the value of an MBA. Getting an MBA is not the equivalent of purchasing stock -- it is not a financial instrument designed solely to grow your assets. It is an experience designed to enhance your career while simultaneously offering an opportunity to grow as a person and have fun.

    I don't know anybody that lives their life in such a manner that everything they do is meant to maximize their ROI. Why even go to undergrad when you can work right out of high school? Why read books, play sports, or travel? Surely these events don't provide nearly the same ROI as grinding an extra couple of hours of work out each day! To evaluate obtaining an MBA on this basis is completely unreasonable.

    CompBanker

  • Scott Irish's picture

    Thanks OP and everyone who's responded, great discussion. Personally, I'm looking to do PT MBA at Booth or Kellogg to help advance at my current employer. I'm not on the finance track and the company will foot most of the bill, so I think it's worth it based on my expectations.

  • In reply to CBSWannabe
    CRE's picture

    CBSWannabe wrote:
    it is worth it for people who did not go to a target school, or a school with a strong presence on wall street. My weak alumni network at my non target state school that i attempted to access leaves much to be desired. In my instance getting into CBS would add to my credibility and open up access to a valuable network.

    This times 1,000,000

  • veljones69's picture

    This is, unfortunately, an obviously biased post. You try and wane from that position in the end, but that doesn't refute the paragraphs of argument against getting an MBA. Let me ask: Do you have an MBA? If no, then you see that people can make it without one. That is true and possible. But let me ask this: How many people in your area of expertise and level of seniority have MBAs. I'd dare say more so than not. We all know the "opportunity costs" of getting an MBA are used to scare people. The true dollar cost is what I look at. $150K is a fair, round estimate I'd use for argument's sake. To get to your $300K cost, that assumes a $75K salary. I doubt in two years I will be able to break a $100K base bypassing an MBA unless I'm already a star on the street and don't need it. Those are few and far between my good sir. So I take that $150K in debt and go get an MBA from a top 20 school to, again, be fair and modest for argument's sake. Now, I graduated with a $125K base. Very reasonable. I've made a 67% increase in my base in two years. That's not happening without an MBA. The 4-5 years it takes to pay this $150K in debt off is minuscule now because of the trajectory I've placed myself on compared to the trajectory I was on before the MBA. *Again, these are conservative numbers just for argument's sake, I know some will try and find fault in the numbers used.

    I just think an MBA is still the way to go to be as competitive as possible in a global industry. I doubt those Indian and Asian kids are saying this about the opportunity for an American MBA. As much as this site obsesses about "exit opps", an MBA provides the best. As well as a network once cut off because of circumstance is now open. You can go from a good career in finance to the possibility of a great one for many people.

  • Vagabond85's picture

    Good reasons to go: switching careers, wanting a salary bump, needing some name recognition on your CV. Bad reasons: thinking that getting it will "improve things," going for a vacation, etc. For what it's worth everyone I know with a concrete plan for why they needed it and what they hoped to get out of it has done quite well. It is definitely worth highlighting the previously made point that it's not purely a financial transaction: you meet interesting people (profs and students), stretch your mental capacity, and do enjoy yourself!

  • In reply to CompBanker
    STIBOR's picture

    CompBanker wrote:
    I made a post about a month ago that outlines why I think an MBA is indeed worth it (for me): http://www.wallstreetoasis.com/forums/to-anyone-co...

    Anti-MBA articles seem to be more and more common these days. Almost all of them argue that the ROI is not worth it; that the same objectives could be met by spending your time elsewhere. Personally, I think it is an incredibly short-sighted and flawed way to view the value of an MBA. Getting an MBA is not the equivalent of purchasing stock -- it is not a financial instrument designed solely to grow your assets. It is an experience designed to enhance your career while simultaneously offering an opportunity to grow as a person and have fun.

    I don't know anybody that lives their life in such a manner that everything they do is meant to maximize their ROI. Why even go to undergrad when you can work right out of high school? Why read books, play sports, or travel? Surely these events don't provide nearly the same ROI as grinding an extra couple of hours of work out each day! To evaluate obtaining an MBA on this basis is completely unreasonable.

    I generally agree with this so I'm not gonna argue too heavily here, but a couple of quick points:

    1. Lots of people are trying to maximize ROI. It's an important goal, especially for kids who don't have rich parents. Money is critically important and affects basically everything you do (or don't do).
    2. I think undergrad indisputably offers a really attractive ROI, so the answer to your question regarding attending undergrad might be: because it offers a really attractive ROI!
    3. Books sports and travel don't have high ROIs, but it's of a totally different magnitude than going to B-school. For some, B-school could cost $0.5 million or more (including opportunity cost obviously). This is a massive investment to make so early in the career. So if I were focused on ROI, I wouldn't worry about the little stuff like reading a book every once in a while or taking a vacation - I'd be thinking about the big-ticket items, which B-school absolutely is.

  • In reply to veljones69
    STIBOR's picture

    veljones69 wrote:
    This is, unfortunately, an obviously biased post. You try and wane from that position in the end, but that doesn't refute the paragraphs of argument against getting an MBA. Let me ask: Do you have an MBA? If no, then you see that people can make it without one. That is true and possible. But let me ask this: How many people in your area of expertise and level of seniority have MBAs. I'd dare say more so than not. We all know the "opportunity costs" of getting an MBA are used to scare people. The true dollar cost is what I look at. $150K is a fair, round estimate I'd use for argument's sake. To get to your $300K cost, that assumes a $75K salary. I doubt in two years I will be able to break a $100K base bypassing an MBA unless I'm already a star on the street and don't need it. Those are few and far between my good sir. So I take that $150K in debt and go get an MBA from a top 20 school to, again, be fair and modest for argument's sake. Now, I graduated with a $125K base. Very reasonable. I've made a 67% increase in my base in two years. That's not happening without an MBA. The 4-5 years it takes to pay this $150K in debt off is minuscule now because of the trajectory I've placed myself on compared to the trajectory I was on before the MBA. *Again, these are conservative numbers just for argument's sake, I know some will try and find fault in the numbers used.

    I just think an MBA is still the way to go to be as competitive as possible in a global industry. I doubt those Indian and Asian kids are saying this about the opportunity for an American MBA. As much as this site obsesses about "exit opps", an MBA provides the best. As well as a network once cut off because of circumstance is now open. You can go from a good career in finance to the possibility of a great one for many people.

    Yeah I think if you can double your comp right outta school it's basically a no-brainer. Even if you're making $100k - just get the frickin' MBA. The tougher question is for people like me who earn 2-3x what the average fresh-faced Harvard MBA grad will earn this year. That becomes very tough to justify.

  • CMatthews's picture

    Good post, but your cost estimates involve some double counting. A large portion of foregone salary would've gone towards living expenses. It doesn't make sense to include both the entire foregone salary and MBA living expenses. A more reasonable estimate would be direct costs of attendance plus foregone savings, which decreases your number by ~75k.

  • In reply to CMatthews
    STIBOR's picture

    CMatthews wrote:
    Good post, but your cost estimates involve some double counting. A large portion of foregone salary would've gone towards living expenses. It doesn't make sense to include both the entire foregone salary and MBA living expenses. A more reasonable estimate would be direct costs of attendance plus foregone savings, which decreases your number by ~75k.

    I don't follow this 100% but I think it is incorrect.

  • In reply to STIBOR
    veljones69's picture

    STIBOR wrote:

    Yeah I think if you can double your comp right outta school it's basically a no-brainer. Even if you're making $100k - just get the frickin' MBA. The tougher question is for people like me who earn 2-3x what the average fresh-faced Harvard MBA grad will earn this year. That becomes very tough to justify.

    This is where I fully agree. But taking a circumstance, such as yours, and trying to force it on others is where this post goes wrong. You see little gain in an MBA because of your current situation. That's not my situation. To get to your situation, I may feel an MBA is the best route. It's like telling people, when you're at the top of the hill, that you can climb the hill a certain way compared to the normal way. Yes, you got there doing it that way, but that doesn't mean everybody will.

  • In reply to veljones69
    STIBOR's picture

    veljones69 wrote:
    STIBOR wrote:

    Yeah I think if you can double your comp right outta school it's basically a no-brainer. Even if you're making $100k - just get the frickin' MBA. The tougher question is for people like me who earn 2-3x what the average fresh-faced Harvard MBA grad will earn this year. That becomes very tough to justify.

    This is where I fully agree. But taking a circumstance, such as yours, and trying to force it on others is where this post goes wrong. You see little gain in an MBA because of your current situation. That's not my situation. To get to your situation, I may feel an MBA is the best route. It's like telling people, when you're at the top of the hill, that you can climb the hill a certain way compared to the normal way. Yes, you got there doing it that way, but that doesn't mean everybody will.

    Yeah I'm not throwing stones here. I think personal context is hugely important. And just because I said it's tough to justify doesn't mean I'm not trying to justify it, because I really want to go!

  • sylvester's picture

    I am going to go out here and agree with the original poster. Here are my reasons:

    1.Employers don’t care about where you go to school but where you worked before your MBA. This means that if you worked in banking you can get a banking job, if you worked in PE you may get another PE job.
    2.For the most part you can only transition into investment banking, consulting and corporate finance if you don’t have experience in these particular industries from before.
    3.A decent size of people with PE jobs from before will not get PE jobs after MBA. Getting a buy-side job without previous buy-side job experience is nearly impossible (5 people out of 1000 max).
    4.Your new network may actually disappoint you – yes they will not yield much but chatting with you as a courtesy for once having gone to your program. You can networking with random people with the same success.
    5.Your post-MBA-salary will really not be much of a bump except if you come from non-profit, TFA, emerging economy, military etc.
    6.You are drowning in debt and debt payments and you are very likely to be unemployed for up to 6 months after graduation and finally just take some shitty job you never wanted to do.
    7.If you are a foreign student – you are not getting a decent job in the USA after graduation (forget about buy-side) even if you have stellar experience from outside the USA.
    8.You are now more expensive, drowning in loans and you just wasted two years of your life and have nothing to show for but a line on your resume that no one really cares about. Your undergraduate institution stays with you but after you have been employed for X number of years not many people care about that either.
    9.Fun factor – seriously just take out a 100K loan and go travel the world, drink until you pass out, do whatever; why do you need an MBA for that? If you are socially inept an MBA is not a cure for that also it will not make you more attractive.

    I would be happy to hear what other people with top MBAs and years of financial service experience have to say.

  • meabric's picture

    Good MBAs are an expensive way to buy human capital upside. Like M&A deals at a premium multiple, you do it because barriers to entry in your desired market are too high to overcome otherwise (career/geography switchers), because you can massively out-synergy everyone else (megafund guys), think there will be a halo effect (non-targets) or are overly optimistic (most other people).

  • In reply to sylvester
    duffmt6's picture

    sylvester wrote:
    I am going to go out here and agree with the original poster. Here are my reasons:

    1.Employers don’t care about where you go to school but where you worked before your MBA. This means that if you worked in banking you can get a banking job, if you worked in PE you may get another PE job.
    2.For the most part you can only transition into investment banking, consulting and corporate finance if you don’t have experience in these particular industries from before.
    3.A decent size of people with PE jobs from before will not get PE jobs after MBA. Getting a buy-side job without previous buy-side job experience is nearly impossible (5 people out of 1000 max).
    4.Your new network may actually disappoint you – yes they will not yield much but chatting with you as a courtesy for once having gone to your program. You can networking with random people with the same success.
    5.Your post-MBA-salary will really not be much of a bump except if you come from non-profit, TFA, emerging economy, military etc.
    6.You are drowning in debt and debt payments and you are very likely to be unemployed for up to 6 months after graduation and finally just take some shitty job you never wanted to do.
    7.If you are a foreign student – you are not getting a decent job in the USA after graduation (forget about buy-side) even if you have stellar experience from outside the USA.
    8.You are now more expensive, drowning in loans and you just wasted two years of your life and have nothing to show for but a line on your resume that no one really cares about. Your undergraduate institution stays with you but after you have been employed for X number of years not many people care about that either.
    9.Fun factor – seriously just take out a 100K loan and go travel the world, drink until you pass out, do whatever; why do you need an MBA for that? If you are socially inept an MBA is not a cure for that also it will not make you more attractive.

    I would be happy to hear what other people with top MBAs and years of financial service experience have to say.

    While I think there are valid arguments against getting an MBA, this is without a doubt some of the worst logic I have ever seen on this site. 6 months of unemployment? Just curious, how do you get a $100K loan to finance your travel/partying habit? 5 out of 1000? #2 doesn't even make sense.

    "For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

  • In reply to sylvester
    STIBOR's picture

    sylvester wrote:
    I am going to go out here and agree with the original poster. Here are my reasons:

    1.Employers don’t care about where you go to school but where you worked before your MBA. This means that if you worked in banking you can get a banking job, if you worked in PE you may get another PE job.
    2.For the most part you can only transition into investment banking, consulting and corporate finance if you don’t have experience in these particular industries from before.
    3.A decent size of people with PE jobs from before will not get PE jobs after MBA. Getting a buy-side job without previous buy-side job experience is nearly impossible (5 people out of 1000 max).
    4.Your new network may actually disappoint you – yes they will not yield much but chatting with you as a courtesy for once having gone to your program. You can networking with random people with the same success.
    5.Your post-MBA-salary will really not be much of a bump except if you come from non-profit, TFA, emerging economy, military etc.
    6.You are drowning in debt and debt payments and you are very likely to be unemployed for up to 6 months after graduation and finally just take some shitty job you never wanted to do.
    7.If you are a foreign student – you are not getting a decent job in the USA after graduation (forget about buy-side) even if you have stellar experience from outside the USA.
    8.You are now more expensive, drowning in loans and you just wasted two years of your life and have nothing to show for but a line on your resume that no one really cares about. Your undergraduate institution stays with you but after you have been employed for X number of years not many people care about that either.
    9.Fun factor – seriously just take out a 100K loan and go travel the world, drink until you pass out, do whatever; why do you need an MBA for that? If you are socially inept an MBA is not a cure for that also it will not make you more attractive.

    I would be happy to hear what other people with top MBAs and years of financial service experience have to say.

    Ughh, I don't agree with this at all. For most people earning an MBA from a top 5-10 school would be a massive game-changer.

    Software developer at Boeing earning $90k per year? Make that $180k per year at McKinsey in two years! Private equity Associate earning $250k? Make that Private equity VP earning $350k per year! Non-profit person making $50k per year? Make that VP of Marketing for Amazon making $150k per year!

    In most situations the economics are very attractive. Also, guess what, people actually do care where you went to school! So you can diminish it by calling it a line on a resume - but it's an important line. It also gives you confidence, authority, allows you to be credible when raising VC money,e tc.

    You mentioned MBA grads are "more expensive". I think that's an effort to make "earn lots of money" sound like a bad thing. Being more expensive / making a lot of money isn't something I'd mark as a strike against an MBA. Most people are going to MBA exclusively to BECOME "more expensive"!

  • In reply to meabric
    STIBOR's picture

    meabric wrote:
    Good MBAs are an expensive way to buy human capital upside. Like M&A deals at a premium multiple, you do it because barriers to entry in your desired market are too high to overcome otherwise (career/geography switchers), because you can massively out-synergy everyone else (megafund guys), think there will be a halo effect (non-targets) or are overly optimistic (most other people).

    I don't understand this post at all.

  • Dubya's picture

    I'd just like to point out that I wouldn't have become POTUS without my degree from HBS.

    -- Dubya

    ''You can fool some of the people all of the time, and those are the ones you need to concentrate on.'' — President George W. Bush
    0.5 bb

  • gregt14's picture

    I look at my particular situation. I wanted to break into Banking (albiet I-Banking - ended up in Commercial Banking). I hated the industry I was in and wanted to make more $ (I was making $58K in SF).

    I ended up going to a small, private non-target for my MBA and landed at a Regional Commercial Bank making $45K as a trainee with about $65K in student debt.

    Screwed up right? Not really.....

    Only 3 years into the job, I have gone through a series of promotions and now make $125-$150K a year. I would of not been in my situation if I didnt get my MBA.

    I also look at some friends of mine who went to top 20 MBA programs (Cornell and Texas to be exact), they make less $ than I do and have a higher cost of living being in SF.

    So while I wouldnt be where I am at now without my MBA, i look at other people and think it didnt make sense for them to do it.

    So i would say..................IT DEPENDS!

  • labanker's picture

    You can really boil this down to a very simple decision tree:

    (A) Do you want to work in PE, investment banking, or consulting the rest of your career, or become a corporate executive? If yes, proceed to (B). If no, DON'T GO TO BSCHOOL.

    (B) Are you currently a VP equivalent or above at a PE, investment banking, consulting, or F500 firm? If no, then proceed to (C). If yes, then DON'T GO TO BSCHOOL.

    (C) Did you get into Harvard, Stanford, or Wharton? If yes, then GO TO BSCHOOL. If no, proceed to (D).

    (D) Are you ok working as a mid-level manager at Quizno's corporate the rest of your career? If yes, then GO TO BSCHOOL. If no, then DON'T GO TO BSCHOOL.

    So to recap, if you want to work in PE, consulting, investment banking or as a corporate executive the rest of your career, and you get into H/S/W, then go to bschool. If not, then don't go.

  • mbavsmfin's picture

    And yet another anti-mba post written by a very biased person with an agenda who doesn't quite understand what an mba is all about. I want to address his points one by one.

    1. Yes, actual experience and abilities matter more than a degree, but this is way too simplistic. For better or for worse, employers use the mba as a signal, and the better the school, the more powerful the signal becomes. And in certain industries, it's virtually impossible to move up the ranks without one. You also say that anyone can buy an MBA, as if our discussion is limited to an online MBA from the university of phoenix. I'm talking about reasonably selective business schools, where one has to go through a fairly rigorous admissions process to get in. The fact that someone has an MBA from say Wharton or HBS screams to a potential employer that the person possesses desirable qualities that will be an asset to their firm.

    2. This is one of your stronger points. I admit that you don't learn that much in business school, although getting exposure to a general management education and being around pretty sharp accomplished people is very valuable.

    3. This is extremely naive. Career transitions aren't as easy as you say it is. How will an engineer transition into MBB consulting? How will an accountant transition into investment banking? For certain industries, they recruit from the MBA pipeline, and you need it to make that transition. That's the game, hence why so many people badly want to get an MBA from a top school.

    4. Although one should always be proactive in expanding one's network, clubs, professional groups, events, etc., are not as powerful as the network you form in b-school. The 2-year mba experience is a very intense one, and people form strong bonds as a result. For 2 years, you are pretty much around your classmates 24/7, whether it's classes, group projects, networking events, parties, travels, clubs, etc. This is something that you simply cannot replicate by just going to some random networking event and handing out business cards. I think you grossly underestimate the strength of the mba network.

    5. God, this is stupid. Yeah bro, let's just take 6 months off work and travel the world alone! Are you fucking kidding me? This is not practical for most people. Traveling alone is also not that fun and is not the same as traveling with a group of your b-school friends and enjoying what life has to offer. I agree that a vacation should not be the main reason you go to b-school. But these types of experiences are important because after b-school you won't have the opportunity to not care about work and just unwind. When I talk to friends and alums at various schools, they all mention how much fun they had and how those moments are something that money cannot buy. You have to realize that not everything in life can be quantified and subject to cost-benefit analysis.

    OP, go back and put more thought into this before writing an ostensibly "objective" post assessing the pros and cons of an MBA.

  • Tommy Too-toned's picture

    Went to some M7 events and the candidates were pathetic, except for the ones at Stanford and Harv. The people didn't seem fun at all, they just talked about dumb stuff like "adding value", aka bullshit. Don't waste your money to be around these tools. If you want to get laid, do some intensive language courses in Paris or Tokyo, or go to a culinary school for a few months, or do a volunteer trip. The b-school bitties were terribleee

  • In reply to CompBanker
    RE Capital Markets's picture

    CompBanker wrote:
    I made a post about a month ago that outlines why I think an MBA is indeed worth it (for me): http://www.wallstreetoasis.com/forums/to-anyone-co...

    Anti-MBA articles seem to be more and more common these days. Almost all of them argue that the ROI is not worth it; that the same objectives could be met by spending your time elsewhere. Personally, I think it is an incredibly short-sighted and flawed way to view the value of an MBA. Getting an MBA is not the equivalent of purchasing stock -- it is not a financial instrument designed solely to grow your assets. It is an experience designed to enhance your career while simultaneously offering an opportunity to grow as a person and have fun.

    I don't know anybody that lives their life in such a manner that everything they do is meant to maximize their ROI. Why even go to undergrad when you can work right out of high school? Why read books, play sports, or travel? Surely these events don't provide nearly the same ROI as grinding an extra couple of hours of work out each day! To evaluate obtaining an MBA on this basis is completely unreasonable.

    If I had to boil down what the MBA means to me it would this - it is purchasing the higher probability of higher income in the future. That's it.

    ^^Of course that would vary depending on who you talk to.

    So, if I were to make a $100/200/300K/whatever financial decision, then you better expect that I will treat that decision with the same way I look at potential investment - through an analytically rigorous perspective of risk v. reward.

    With that being said, an MBA needs to provide me with a near 100% probability of getting a higher income in the future. If not, FUCK THAT SHIT.

    Growing as a person, experience, having fun, the network, prestige etc. are all intangible concepts that I can't put a value on. But I do know this - under no circumstances are those things worth $100/200/300K/whatever.

    In contrast, working for two years (instead of B-School) has a concrete measure of value (salary) and provides me a 100% probility of income growth. All I have to do is forgo some lame B-School parties - fuck it, I can always go to Vegas to "find myself".

    While the same can be said for undergrad, I think it depends on what you studied as an undergrad. A liberal arts or engineering major would definitely benefit from learing basic business concepts, but it makes little to no sense for me to learn managerial accounting and marketing all over again, especially since I aced both in undergrad.

    Why read books, play sports, travel etc etc? Because these things are fun AND cheap - I don't have to sacrifice two years of work exp/salary and pay a shit-ton of money to do any of those things. I find reading a good book (or going to Vegas) far more appealing than going to a B-School costume party with some of the douchiest cracker-jacks who delude themselves into thinking they think that 2 years of B-School is going to be what makes them who they are.

    On the flip side, I do think it makes sense for certain careers - investment banking, consulting and corporations with structured manager-track type roles in their internal organizations. But those are the only careers that really take the MBA seriously.

    Final note - you need an MD to practice medicine, you need a JD to practice law, but you sure as shit do not need an MBA to be successful. You don't even need undergrad to be successful.

    Man made money, money never made the man

  • In reply to sylvester
    cphbravo96's picture

    sylvester wrote:
    I am going to go out here and agree with the original poster. Here are my reasons:

    1.Employers don’t care about where you go to school but where you worked before your MBA. This means that if you worked in banking you can get a banking job, if you worked in PE you may get another PE job.

    If they don't care about the school you go to and only your previous work experience, why do employers even recruit on campus? And how is it someone coming out of marketing can get a banking job when their previous job had nothing to do with finance?

    sylvester wrote:
    2.For the most part you can only transition into investment banking, consulting and corporate finance if you don’t have experience in these particular industries from before.

    There are a vast array of jobs outside of the big three...to think otherwise is naive.

    sylvester wrote:
    3.A decent size of people with PE jobs from before will not get PE jobs after MBA. Getting a buy-side job without previous buy-side job experience is nearly impossible (5 people out of 1000 max).

    We forget that some people don't have any other choice. They may be in a position that allows them 2 years at the firm and then gives them to boot. So it's not as though they are volunteering to leave PE just to gamble on getting back in...they may not have another choice, thus an MBA might represent their best chance at getting back in.

    sylvester wrote:
    4.Your new network may actually disappoint you – yes they will not yield much but chatting with you as a courtesy for once having gone to your program. You can networking with random people with the same success.

    I disagree. Maybe your experience with your MBA program is different, but I've personally seen people lean on their MBA network very heavily during my stint in PE...often with people they didn't know or didn't know well. Plus they can also network with random people as well.

    sylvester wrote:
    5.Your post-MBA-salary will really not be much of a bump except if you come from non-profit, TFA, emerging economy, military etc.

    Getting an MBA has less to do with 'bump' and more with future earning potential. Have you ever decided to not take a promotion because the salary increase wasn't much? Probably not. Even if the pay increase was minimal, the thought is that you want to get to the job after the next job, which would require you to take the promotion.

    sylvester wrote:
    6.You are drowning in debt and debt payments and you are very likely to be unemployed for up to 6 months after graduation and finally just take some shitty job you never wanted to do.

    Any proof of that? I suppose not.

    sylvester wrote:
    7.If you are a foreign student – you are not getting a decent job in the USA after graduation (forget about buy-side) even if you have stellar experience from outside the USA.

    Again, any proof?

    sylvester wrote:
    8.You are now more expensive, drowning in loans and you just wasted two years of your life and have nothing to show for but a line on your resume that no one really cares about. Your undergraduate institution stays with you but after you have been employed for X number of years not many people care about that either.

    This hasn't been what I've witnessed during my time on the buyside.

    sylvester wrote:
    9.Fun factor – seriously just take out a 100K loan and go travel the world, drink until you pass out, do whatever; why do you need an MBA for that? If you are socially inept an MBA is not a cure for that also it will not make you more attractive.

    Where are you getting a $100k loan to travel? You must have a great bank. Also, it's almost ironic you made this point despite point #6, lol. "You are drowning in debt and debt payments and you are very likely to be unemployed for up to 6 months after graduation and finally just take some shitty job you never wanted to do"

    Good luck not "drowning" in your loan payments after returning unemployed from your year long vacation. I also hope you don't get stuck with some "shitty job you never wanted to do."

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • In reply to Tommy Too-toned
    mbavsmfin's picture

    Tommy Too-toned wrote:
    Went to some M7 events and the candidates were pathetic, except for the ones at Stanford and Harv. The people didn't seem fun at all, they just talked about dumb stuff like "adding value", aka bullshit. Don't waste your money to be around these tools. If you want to get laid, do some intensive language courses in Paris or Tokyo, or go to a culinary school for a few months, or do a volunteer trip. The b-school bitties were terribleee

    You sound bitter and jealous, bro.

  • In reply to sylvester
    cphbravo96's picture

    sylvester wrote:
    What is so hard to comprehend - less than 1% of people at a top MBA without previous buy-side experience will manage to land a buy-side job afterwards. The $100K loan for drinking was just a hyperbole because for some reason people on this site think that the MBA is one big party scene.

    What is so hard to comprehend about other people not being interested in doing what YOU want to do?

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • In reply to gregt14
    cphbravo96's picture

    gregt14 wrote:
    I look at my particular situation. I wanted to break into Banking (albiet I-Banking - ended up in Commercial Banking). I hated the industry I was in and wanted to make more $ (I was making $58K in SF).

    I ended up going to a small, private non-target for my MBA and landed at a Regional Commercial Bank making $45K as a trainee with about $65K in student debt.

    Screwed up right? Not really.....

    Only 3 years into the job, I have gone through a series of promotions and now make $125-$150K a year. I would of not been in my situation if I didnt get my MBA.

    I also look at some friends of mine who went to top 20 MBA programs (Cornell and Texas to be exact), they make less $ than I do and have a higher cost of living being in SF.

    So while I wouldnt be where I am at now without my MBA, i look at other people and think it didnt make sense for them to do it.

    So i would say..................IT DEPENDS!

    Congrats man. Hope you are enjoying your new gig.

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • In reply to RE Capital Markets
    mbavsmfin's picture

    RE Capital Markets wrote:
    CompBanker wrote:
    I made a post about a month ago that outlines why I think an MBA is indeed worth it (for me): http://www.wallstreetoasis.com/forums/to-anyone-co...

    Anti-MBA articles seem to be more and more common these days. Almost all of them argue that the ROI is not worth it; that the same objectives could be met by spending your time elsewhere. Personally, I think it is an incredibly short-sighted and flawed way to view the value of an MBA. Getting an MBA is not the equivalent of purchasing stock -- it is not a financial instrument designed solely to grow your assets. It is an experience designed to enhance your career while simultaneously offering an opportunity to grow as a person and have fun.

    I don't know anybody that lives their life in such a manner that everything they do is meant to maximize their ROI. Why even go to undergrad when you can work right out of high school? Why read books, play sports, or travel? Surely these events don't provide nearly the same ROI as grinding an extra couple of hours of work out each day! To evaluate obtaining an MBA on this basis is completely unreasonable.

    If I had to boil down what the MBA means to me it would this - it is purchasing the higher probability of higher income in the future. That's it.

    ^^Of course that would vary depending on who you talk to.

    So, if I were to make a $100/200/300K/whatever financial decision, then you better expect that I will treat that decision with the same way I look at potential investment - through an analytically rigorous perspective of risk v. reward.

    With that being said, an MBA needs to provide me with a near 100% probability of getting a higher income in the future. If not, FUCK THAT SHIT.

    Growing as a person, experience, having fun, the network, prestige etc. are all intangible concepts that I can't put a value on. But I do know this - under no circumstances are those things worth $100/200/300K/whatever.

    In contrast, working for two years (instead of B-School) has a concrete measure of value (salary) and provides me a 100% probility of income growth. All I have to do is forgo some lame B-School parties - fuck it, I can always go to Vegas to "find myself".

    While the same can be said for undergrad, I think it depends on what you studied as an undergrad. A liberal arts or engineering major would definitely benefit from learing basic business concepts, but it makes little to no sense for me to learn managerial accounting and marketing all over again, especially since I aced both in undergrad.

    Why read books, play sports, travel etc etc? Because these things are fun AND cheap - I don't have to sacrifice two years of work exp/salary and pay a shit-ton of money to do any of those things. I find reading a good book (or going to Vegas) far more appealing than going to a B-School costume party with some of the douchiest cracker-jacks who delude themselves into thinking they think that 2 years of B-School is going to be what makes them who they are.

    On the flip side, I do think it makes sense for certain careers - investment banking, consulting and corporations with structured manager-track type roles in their internal organizations. But those are the only careers that really take the MBA seriously.

    Final note - you need an MD to practice medicine, you need a JD to practice law, but you sure as shit do not need an MBA to be successful. You don't even need undergrad to be successful.

    I guess it depends on the person, but how are those intangibles not worth $200K or whatever? At the end of the day, there's more to life than money, and i believe that personal growth, strong friendships, and crazy fun experiences are stuff that cannot be quantified; they're essentially priceless.

    No one here is saying that you cannot do fun stuff if you're not in b-school. I feel like you're attacking a strawman here. The point is that b-school offers BOTH professional and personal enrichment and that the type of experiences you have and the people you're around, is a unique one that cannot be replicated elsewhere. This is particularly true of the very best schools, which in my opinion are filled by some of the most accomplished and well-rounded people you'll ever meet.

    Again, this is my opinion, and this is coming from someone who was initially quite skeptical about the mba but will be attending a M7 program this fall at a huge opportunity cost.

  • In reply to mbavsmfin
    FrankD'anconia's picture

    mbavsmfin wrote:

    I guess it depends on the person, but how are those intangibles not worth $200K or whatever? At the end of the day, there's more to life than money, and i believe that personal growth, strong friendships, and crazy fun experiences are stuff that cannot be quantified; they're essentially priceless.

    No one here is saying that you cannot do fun stuff if you're not in b-school. I feel like you're attacking a strawman here. The point is that b-school offers BOTH professional and personal enrichment and that the type of experiences you have and the people you're around, is a unique one that cannot be replicated elsewhere. This is particularly true of the very best schools, which in my opinion are filled by some of the most accomplished and well-rounded people you'll ever meet.

    Just a heads up, you're doing a really bad job of hiding that you're Brady... proceed

  • In reply to TNA
    JimmyDnFFX's picture

    TNA wrote:
    The problem with all of these posts is the author is always projecting their situation onto someone else. You will never know another persons utility function. An MBA might be ideal for them.

    Who cares. This topic has been beat to shit. Same with the drug test question. Let it dieeeeeee.

    ^^^^ This for sure. Too many assumptions. Not everyone is going into IBD, PE, VC etc. Not everyone is in their 20s and can just take time off to do a FT or PT MBA and still work to PAY FOR IT. Not everyone has $0 in student loans and can justify the costs vs how long it will take to overcome those costs once they finish.

    "Now go get your f'n shinebox!"

  • In reply to Brady4hbs
    JimmyDnFFX's picture

    Brady4hbs wrote:
    YES A MBA IS WORTH IT IT'S THE ONLY DEGREE THAT HBS OFFERS YOU BAFOON

    How are you getting into HBS when you can't even spell 'buffoon' brah?

    "Now go get your f'n shinebox!"

  • In reply to mbavsmfin
    cphbravo96's picture

    mbavsmfin wrote:
    ...2. This is one of your stronger points. I admit that you don't learn that much in business school, although getting exposure to a general management education and being around pretty sharp accomplished people is very valuable...

    I agree with all of your points with the exception of #2. I think the folks on WSO get tunnel vision when it comes to the academic aspects of an MBA program. I believe this is primarily a function of the anticipated exits. Lots of people coming out of finance-based careers and looking to get right back into a finance-based careers (valuation/audit to IB or IB to PE). In those cases, the skills you built prior to b-school directly translate to your post-MBA aspirations...so the material you cover while in school seems less important.

    Of course, the vast majority of b-school candidates are career switchers of some sort and the academic aspects of the program is far more relevant.

    I know for me, the knowledge is actually one of the determining factors for me to pursue an MBA. There is just a ton of stuff I would like to know that I will (a) be able to apply to a portfolio company, to 'add value' and (b) use to run my own portfolio of businesses one day. Just the few class/campus visits I've participated in taught me potentially valuable skills, and in all those cases, it was just a single class that I wasn't prepped for. Ethics covered negotiation skills which could impact salary and contract negotiations, Operations covered line queuing and resource pooling and the other Operations class talked about capacity utilization, variability and incentives in regard to analyzing and managing performance problems at an insurance company.

    Outside of that, most of the b-school students, past and present, said they learned a lot, that they were significantly more confident in their abilities and more prepared to take on projects and leadership roles. Again, the last point is less relevant to PE and IB because you aren't managing a bunch of people like you would in a F500 scenario, but the point still stands. Anecdotally, there was a second year student I spoke with last week who actually worked during her 2 years in school. This person said her boss remarked about a 'night and day' change in her skills and abilities as a result of the MBA program...she felt the same way. This has been my experience with other b-school students and alumni, though most weren't in IB or PE pre-MBA.

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • In reply to cphbravo96
    sylvester's picture

    This was an answer to a previous post of someone else. In general, I do agree that an MBA is a good proposition for some and not so good for other people and yes even a top MBA. To your other questions:
    1. Yes, there are people that don't get a job before graduation, or take jobs they don't want before graduation. There are people that will be 6 months or even 1 year unemployed from M7 schools and no these people don't have horrible work history or poor communication skills, or whatever. Most didn't want to take just any job.
    2. Yes, foreign students have a very hard time landing good US opportunities even if they are over-qualified - I know that from my own class + many alums. This doesn't mean they cannot land any job in the US.
    3. I mentioned the network because people on this site make it out to be a magic box - where you pick up the phone and you get a job. It works just like any other network and even though people are very nice they will not bail you out just because you went to the same school.

    My post was not to say - never do an MBA - it was to point out that this is not a magic pill. There are downsides that no one ever mentions - even the fact that you may end up without a job or in a worse job than you had before b-school. I know the value is supposed to be in the long-run but in the short run there are also many considerations. Also I still haven't heard from many people that have actually been through the MBA experience and can chime in about the long-run.

  • In reply to CornTrader
    Bullet-Tooth Tony's picture

    CornTrader wrote:
    This post reeks of bias. I know all of us are, in one way or another, but this post fails to address a number of major motivations for a high-end MBA. Where is your data on career switchers? I'd argue that an individual in engineering, the sciences, or law has little to no chance of breaking into IB, consulting, or corp dev without an MBA. What about an individual from a non-target who fought and clawed his way into Booth or Haas? The name brand on that resume will shift the way that individual is viewed professionally. I'd also argue that measuring the relative value of an MBA by analyzing the payback period is short sited and fails to account for the change in the "slope" of potential earnings.

    Do you really recommend quiting a current job to pursue an internship over going to an MBA? There are certainly small firms and little shops that will higher a 27 year old intern on the whim that they could turn into a full-time employee, but this is not a viable strategy for breaking into any sort of "corporate" position. If you are 24 and hate your job, ok. If you are in your mid-to-late 20's a potential gap on a resume can be devastating and I have trouble recomending that course of action to anyone serious about a career switch.

    I appreciate your insight and you seem to have done quite well for yourself. The MBA and CFA are two unrelated designations and should not be compared. They accomplish very different things. It is possible to be succesful with both, neither, or one or the other. I do not understand why people who have chosen one path over the other feel the need to discount the other path.

    Someone gets it. Too many on this site continuously shit on the value of the MBA degree. It can certainly be argued that a BB IBD Associate may not reap any benefits above his/her cost, but there are plenty of people that choose to switch careers.

    I was stuck in Supply Chain & Logistics consulting and used my MBA (non-M7) to break into investment banking, and finance in general. Out of undergrad, I was a marketing & mgmt major and didn't take nearly enough finance or accounting classes to move right into a financial analyst (corporate, IB, or otherwise) from my current position. More importantly, I rarely used accounting and core financial principles, so what I had learned was probably forgotten or "out of practice".

    Now, should I have pushed for a higher ranked school? Yes (got into all five schools I applied to and didn't have any reaches IMO, which is an error on my part b/c I personally undervalued my profile). Did I come out with $50-60K of debt? Yep.

    Do I regret it? Absolutely not.

    I learned more in the past two years than my undergrad and four years of work experience combined. I got lucky, worked my ass off, networked like crazy and broke into a very competitive field. I don't care that I'm in the MM and not the BB. The work is still just as interesting and I take pride in the fact that we actually deliver more value to shareholders at this level (proficiency w/M&A, finance and capital markets is significantly lower amongst some shareholders and execs).

    The OP thinks I would have been better off to quit my consulting job for an unpaid internship and hope I made it? Talk about a bigger risk. I would have nothing to fall back on if I wasn't able to translate the internship into a FT position. The MBA may not have as much weight as it did in the past, but it shows that you are committed to business and have a good broad understanding of how things work. It's much more versatile than MS degrees.

    Either way, I'm happy where I am, particularly intellectually. And I can thank the MBA for that.

  • In reply to mbavsmfin
    Tommy Too-toned's picture

    Not really, bro. I got in to top schools, just felt like the people at these things were really lame. They were throwing around so many catch phrases that i couldn't even understand what they were talking about..it seemed like they were confusing themselves actually. There were obviously some good candidates, but a lot of the ones on "the track" were just...i don't know.

  • In reply to mbavsmfin
    SirTradesaLot's picture

    mbavsmfin wrote:
    i believe that personal growth, strong friendships, and crazy fun experiences are stuff that cannot be quantified; they're essentially priceless.
    are you 100% positive you're not Brady4MVP?

    adapt or die wrote:
    What would P.T. Barnum say about you?

    MY BLOG

  • In reply to SirTradesaLot
    mbavsmfin's picture

    SirTradesaLot wrote:
    mbavsmfin wrote:
    i believe that personal growth, strong friendships, and crazy fun experiences are stuff that cannot be quantified; they're essentially priceless.
    are you 100% positive you're not Brady4MVP?

    I am not brady. People can think whatever they want.

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