Consulting or Banking after MBA?

These seem to be the two most common careers people want to pursue after b-school, so for those of you planning on going into banking or consulting, I was wondering where you guys stand. do you plan on pursuing banking or consulting after getting your MBA and why? Maybe provide a brief overview of your background to provide some context. and people who have completed their MBA's can feel free to chime in with their experience as well.

I'm still not sure which way I will go but I've got about a year to go before I apply to b-school so I've got some time to figure it out.

Career Paths for MBA Graduates

Getting an MBA can a great step towards building a successful career. While banking and consulting are popular career options, there are also people who attend b-school to get into tech or to get the knowledge to run their own business. It’s all about individual goals. What you put into the program is what you get out of it. WSO user @MBAApply" provides his insight on the differences in students who pursue banking vs. consulting:

  • BANKING: those who see themselves staying in financial services as a career, even if they don't know exactly what it will be longer-term. Banking is just an entry point into that, whether they end up staying there, or moving into PE, HF, asset mgmt, insurance, etc.
  • CONSULTING: attracts folks who don't know what they want to do, but know they don't want to limit themselves to one thing (i.e. finance). It's a "I'll do it for a little bit, and then figure it out from there."

Both industries offer prestige, competitive pay and attractive learning opportunities.

Investment Banking Compensation

Consulting Compensation

Recommended Reading

 

It just depends on what you want to do in the future. Do you want to make a career in high-finance, or in industry or consulting? If you want to be in high-finance, go with IBD or similar. If you want to have a long career in consulting, or eventually transition to industry, go with consulting. There are those that go to PE and such after consulting, but generally if you want high-finance you should just go directly into it.

Do you like to travel? Yes - consulting, No- IBD or other

I'm personally planning to go the consulting route after MBA in a few years.

 
Best Response

It's not that most people want to do consulting or banking -- they tend to be the default choice for practical reasons. In other words, they're not necessarily dream jobs, but jobs that many people take simply because there's always tons of jobs available relative to other industries and for the most part these firms come to you and make it easy to go through the recruiting process - submit a resume, follow their recruiting schedule and you have a job offer.

Also, the way consulting firms and banks recruit top MBAs makes it hard to go after other jobs.

They recruit early, and send out summer offers earlier than anyone else - usually by Feb in your first year. Most "normal" companies don't know their hiring needs that far in advance, because it tends to be more ad hoc - i.e. what specific projects they may have on hand.

They offer exploding offers. In other words, they offer you the job, and give you a deadline to say yes or no. And oftentimes these deadlines are so early that it doesn't give you a chance to look at other industries/firms. For full-time offers, they will give the offers to their summer interns at the end of the summer, and expect you to say yes/no before your 1st semester ends in your 2nd year (i.e. by Christmas).

Again, most "normal" industries operate on the "can you start next week?" mentality. They can't plan 8-12 months in advance for a job because their orgs aren't set up that way. Keep in mind that banks and consulting firms operate on a "churn and burn" model -- statistically, they know that 80-90% of the MBAs leave or get fired within the first 18-24 months of joining, so they have a more predictable model: they are constantly replacing junior staff with fresh MBAs.

So if you want to do PE, HF, VC, or work in tech, or even F500 -- these firms often have a hard time knowing that far in advance what their headcount needs are, if any.

Finally comes the money. Not the starting salary per se, but the signing bonus. Banks and consulting firms tend to give the largest signing bonus - and this is by design, which is to ensure that you sign with them and not go elsewhere. For many 2nd year MBAs, this signing bonus can be a godsend - running out of cash, or you need the money for first and last month's rent + deposit post-MBA. Furthermore, at most of these banks/consulting firms, they offer you the chance to start in Aug/Sept rather than right after you graduate in May. So that extra cash can come in handy for a vacation before you start work.

Again, it's not that MBAs yearn to join these firms, but that the system is set up in a way that these are the low hanging fruit, the easiest jobs to get with the least effort. And so if you're looking for something outside of banking/consulting, you have to take that risk of forgoing this altogether -- for summer internships outside of banking/consulting, you're doing all this networking throughout the year, and hoping for a job offer say in April or May (or even June at the last minute). For full-time, it's the same thing: all this legwork throughout the year, and you may get a job offer early, or it may not happen until the last minute right at graduation or even after graduation. And this can be a scary prospect for MBAs who by their 2nd year are broke and/or heavily in debt -- and on top of that more risk averse than the general population.

Alex Chu www.mbaapply.com
 

+1. This is the best analysis I've read on this topic. Spot on in all respects. I would also just add that these two industries are among the most amenable to career-switchers.

 
ponzi:

+1. This is the best analysis I've read on this topic. Spot on in all respects. I would also just add that these two industries are among the most amenable to career-switchers.

And another thing I forgot to add: immigration.

Most US-based employers these days are not keen on sponsoring internationals (the visa process is a bit of a clusterfuck to say the least - most importantly, it can be unpredictable).

The only exceptions are investment banking, mgmt consulting, and to a lesser degree hi tech. These three industries have HR depts that have a lot of experience in hiring/sponsoring non-US workers, so it's rarely if ever an issue for internationals.

So coming out of b-school, it's also often the only option for internationals who are looking to work in the US post-MBA: do you take the easy offer with a firm that will sponsor you for a visa, or wait it out for that PE/HF/VC and/or industry job where you have no idea whether they will or can sponsor you?

Alex Chu www.mbaapply.com
 
MBAApply:

statistically, they know that 80-90% of the MBAs leave or get fired within the first 18-24 months of joining, so they have a more predictable model: they are constantly replacing junior staff with fresh MBAs.

Is this true? Can you elaborate on this a bit more? I had no idea this was the case. What would you estimate the breakdown is between leaving and being fired? I didn't know people actually got fired except in rare occasions.

 
MFFL:
MBAApply:

statistically, they know that 80-90% of the MBAs leave or get fired within the first 18-24 months of joining, so they have a more predictable model: they are constantly replacing junior staff with fresh MBAs.

Is this true? Can you elaborate on this a bit more? I had no idea this was the case. What would you estimate the breakdown is between leaving and being fired? I didn't know people actually got fired except in rare occasions.

Banking: the "firing" part is usually in bad times (mass layoffs). In good times, it rarely happens, but so many associates leave anyways because of the burnout factor - there's usually more reasons to leave post-MBA simply because of age/stage of life, since unlike pre-MBA analysts, most associate level folks are at a stage in life where they are getting married, having kids, etc.

Consulting: firms usually call it "counseled out" (or some bullshit like that). Basically, they replace you with cheaper, hungrier fresh grads after a few years. And, like banking, there's also plenty of people who leave anyhow because of the lifestyle - working hours aren't as brutal as banking, but you also spend a lot more time traveling/in transit, which is time away from family.

Most b-school students know this - they know what they're getting themselves into. In fact, even the firms themselves will openly admit this - because it's not exactly a secret or specific to one firm. The mentality usually is "I know it's just a short-term thing, but at least I know I'll have a job post-MBA for 1-2 years, and then I'll figure it out from there." And in the end it does work out for most people - those who really want to stay will stay beyond the 2 years, and those who want to leave (or get fired/laid off) in hindsight are glad they left.

Alex Chu www.mbaapply.com
 

thanks for the reply MBAApply, but i think you may have misunderstood what i was getting at. i understand ppl dont necessarily yearn to be bankers or consultants and its just a more practical job to take than other options, but i was wondering people's rationale for choosing banking over consulting and vice versa. people always give the generic 'oh if you like to travel then go with consulting, if money is all you care abt then go for banking', but i was hoping to hear why ppl chose one over the other or are planning to choose one over the other.

 
i hate audit:

thanks for the reply MBAApply, but i think you may have misunderstood what i was getting at. i understand ppl dont necessarily yearn to be bankers or consultants and its just a more practical job to take than other options, but i was wondering people's rationale for choosing banking over consulting and vice versa. people always give the generic 'oh if you like to travel then go with consulting, if money is all you care abt then go for banking', but i was hoping to hear why ppl chose one over the other or are planning to choose one over the other.

It's really self-selecting, attracting people who have completely different goals and sensibilities:

BANKING: those who see themselves staying in financial services as a career, even if they don't know exactly what it will be longer-term. Banking is just an entry point into that, whether they end up staying there, or moving into PE, HF, asset mgmt, insurance, etc.

CONSULTING: attracts folks who don't know what they want to do, but know they don't want to limit themselves to one thing (i.e. finance). It's a "I'll do it for a little bit, and then figure it out from there."

Basically, it's not common for people to recruit for both. Most people even before b-school tend to know which path suits them more.

Alex Chu www.mbaapply.com
 

I recruited for IB for an internship, and that was because I came from a finance background. Consulting is more of a catch all and competition (imo) was far more fierce. However, the upside is that they recruit more people. I also sucked at case interviews (practiced them for about a week) and fared way better with the technical finance/accounting related questions. For me, it could be a little bit of my background, interviewing, and willingness to really want to do consulting over IB.

 

Porro dolor aut minima sunt in. Soluta qui corrupti impedit maiores aut perferendis. Quia ipsa non ut culpa in voluptatem non.

At ducimus odit quia accusamus totam. Quam et qui officia. Soluta officiis repellat incidunt animi necessitatibus blanditiis et quia. Amet sunt minus et ullam eum aperiam cupiditate.

Quia aut praesentium omnis facilis rerum. Culpa ut dignissimos harum soluta. Debitis tempora aliquam voluptatem inventore sunt aperiam tempore. Magni voluptates voluptate quasi architecto necessitatibus.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
DrApeman's picture
DrApeman
98.9
7
dosk17's picture
dosk17
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”