The Culture of Doing a 2 Year IBD Stint and Then MBA

Why is this largely prevalent in USA? The idea of doing a 2 year stint in Banking and then going to MBA School? Is it because most people fail to get promoted to associate position? I went to UK and people there dont seem to do this as people in USA do it. Just wondering why its so prevelent? Is it because people WANT to switch to different fields after 2 years? Rather than stay and continue and get promoted?

 

It is not very common to go from a 2 year analyst stint to a Top MBA Program (Top 5) here in the U.S. There are exceptions to this rule and if you did a 2 year stint at Goldman TMT, Morgan Stanley M&A, UBS LA, etc... you could likely get into HBS, Wharton, Stanford etc.... The reason why this is not common is because Ibanking Analysts don't have enough work experience for the Top MBA program considering at the Top Bschools the average length of work experience is 4.5 - 5 years and Ibanking analysts only have 2 years.

People generally do 2 year of Ibanking and then switch to a different industry based upon the resumes I have seen from Darden and Tuck at University of Virginia and Dartmouth respectively.

 
JambaMan:
It is not very common to go from a 2 year analyst stint to a Top MBA Program (Top 5) here in the U.S. There are exceptions to this rule and if you did a 2 year stint at Goldman TMT, Morgan Stanley M&A, UBS LA, etc... you could likely get into HBS, Wharton, Stanford etc.... The reason why this is not common is because Ibanking Analysts don't have enough work experience for the Top MBA program considering at the Top Bschools the average length of work experience is 4.5 - 5 years and Ibanking analysts only have 2 years.

People generally do 2 year of Ibanking and then switch to a different industry based upon the resumes I have seen from Darden and Tuck at University of Virginia and Dartmouth respectively.

Totally incorrect. I have known many other analysts to go straight to business school after 2 years of banking. In fact, it is one of the reasons many people do banking - the exit opp of going to b school.

 
Best Response

Most people at least look at MBA programs after IB because it is a chance to move up to a cushier job, while getting 2 years off from work and going back to school. Unfortunately, like Jamba said, it's not real easy to get into a top b-school with only 2 years of experience. The average is 5 but I think 4 is probably what most kids go for (the average is skewed by some people going 10, 15 years after undergrad). So the vast majority of people in IB, if they are not given a promotion to associate, move on to buy-side, as an associate at a PE/HF, or go into some kind of role like that to expand their resume for MBA apps.

Can't say I know anything about Euro/UK pathways, but most kids in finance coming out look to do: banking-PE-MBA-models and bottles (well, not quite, but that's the hope).

 

Generally speaking, what I've been told from peers, business school counselors and the like, 2 years in banking is somewhat equivalent to 4 years of actual work experience. Of course, depending on the state of the market, it will be a bit more difficult to get into business school. For the most part, in bad markets where deals just aren't getting done, you'll see lots of analysts go back to business school, hide and weather the storm.

You can quote me on this one though: MANY analysts go to business school after a 2 year stint as an investment banking analyst.

 

balooga, can you tell me a bit more about the analysts that managed to get into b-school straight from their 2 year stint? What did they do differently from their peers or how did their backgroud differ?

 

Yes, there are a good chunk of kids who go to do MBAs after two years. However, a lot more go and find work for 2 more years, for a variety of reasons. One, because they need more money to save before b-school. Two, to gain more experience and get a better shot at a top MBA program. Three, because they haven't studied at all for GMATs because banking takes up 80-100 hours, and a PE or corporate development job will be slightly less than that.

Kids going 2 years-MBA-associate IB/PE is a well-followed path, but it is by no means the only one. I personally would like to get some PE experience before my MBA so after I get out I can decide if I like buyside or sellside more.

 

First, I don't know too many Analysts who go directly from their 2-year programs into business school; it's hard to find the time to study and apply while you're doing banking, and it is easier to get in with more work experience.

Not to start a debate or continue the existing one, so to be perfectly clear, you can get in after only 2 years. But I do think it is easier and has a higher probability of success with more experience.

In recent years, most of my friends in banking decided to move onto PE/HFs rather than go back to business school because they were getting paid A LOT and because the market was so good. With the economy in a recession, this will probably change.

I'd say in general people who do banking for 2 years and then go to business school do so for 2 reasons:

1) Economy is bad and it seems better to go to school rather than looking for jobs that don't exist.

2) They want a 2 year break from corporate America and want to have fun for awhile before going back to work.

In my view, neither of these reasons is particularly good. In case #1, I would argue you're still better off going to work and getting the experience, even if there are fewer deals, and in case #2, I would say you might want to consider other fields rather than going back into finance.

In my opinion the BEST reason to go to business school is if you did non-business-related work for several years, e.g. non-profit work, engineering, education, and now want to move into finance or management.

For those who have done IBD, you are already effectively in the "business world," so there isn't much upside for you vs. someone who worked at NGOs in 3rd world countries for the past 5 years.

That said, there are some firms that will not promote you unless you go back to business school. This is more true with banks and private equity firms rather than hedge funds. This could also be a good reason to go back - if it's your only option for promotion.

Hope this answers your questions, and PM me if you have any more.

 

Dosk - say you wanted to take a break from work or whatever, is this still not a good reason to go to b-school? I would think b-school would be the best way to take a break, while still learning and being competitive in the job market. i'm still an undergrad, but i would think this would be an appropriate reason for b-school

 

It's just I think there are better reasons to go to business school, e.g. career changers who want to go into finance/management.

And sure, if you want to take a break and then go right back into finance, it's better to do business school vs. traveling for 2 years or starting a non-profit.

I guess my point is this: if you don't like the banking lifestyle, it seems illogical to take a break and then go right back into it. It would make more sense to either go to a hedge fund with fewer hours or go to a corporate job instead.

I've seen people complain about how much they work, then go to business school and come right back into finance (see: Monkey Business). That does not make much sense to me if you didn't like it originally.

 

to reinforce previous posts, b-school applications are very cyclical. they experience significant pop when a recession is about to hit (or has hit) and significant drops when the economy is doing too well.

all this says is that people stay on their jobs to earn more money and jump to b-school when they wouldn't get paid much anyway (or increased likelihood they get cut, stuck in a position...)

 

Doing an MBA is like a sort of career insurance -- expands your network, gives you contacts in industries outside of banking (may be helpful for getting future clients or info on them), and a good school on your resume can help you start a dialogue you otherwise might not be able to do, should you wind up job-hunting during a recession. In those times, the quick-glance differentiators on your resume (like having gone to a good school) are valuable when there's a flood of resumes everywhere.

Here's a really long (but really good) forum discussion on MBA vs. no-MBA-plus-CFA http://news.efinancialcareers.com/NEWS_ITEM/newsItemId-9981. Covers just about all the bases on the subject that you can think of.

 

Being able to do a 2-year banking stint and head straight to get your MBA is getting tougher by the year as the average work experience of applicants is getting higher. Also, in terms of differentiating yourself, it becomes difficult since the top b-schools get a ton of applications from people out of investment banking.

All that aside, b-school admissions are still a crap shoot. What's important to remember is that an MBA is a means to an end. If you're already in the industry you want to be in with a company you enjoy working at (i.e. there's really no justification for you leaving the workforce), why spend $100K+ and miss out on hundreds of thousands more in earnings?

Just my 2 cents.

 

UK: Almost all first year analysts come in with a Masters degree. (Ok, ok, all the LSE undergrads get in right after their BA, but remember that in the UK people come from ALL over Europe where masters are almost obligatory to get a job) US: Almost all first year analysts come in with a Bachelors degree.


Remember, you will always be a salesman, no matter how fancy your title is. - My ex girlfriend

 

It is true that for the past 15 years or so the average number of years of work experience at the top MBA programs has been 4-6 years. But there seems to be a change in the works.

Harvard recently announced a program that encourages undergraduate seniors to apply for a slot in their MBA program. If accepted they must go work for 2 years at the end of which they have a guaranteed spot at HBS.

On MIT's Sloan web site they "encourage" applications from undergraduates.

Carnegie Mellon states they also encourage applications from undergraduates.

While the most recent stats on work experience of sitting classes don't reflect any change from the 4-6 years of WE, that may be coming.

An article in The New York Times recently pointed out that the really sucessful people have no need to get an MBA. It may be MBA programs are realizing that the requirement for so much work experience is shutting out the best people, or at least making the MBA irrelevant.

And an aside about the GMAT...If someone is really qualified for the top programs studying for the GMAT 80-100 hours shouldn't be necessary.

I'd advise taking the GMAT senior year or soon there after while any math is still fresh and one isn't locked into a job with long hours yet. The scores are good for 5 years. And if you don't do well it gives you plenty of time to regroup.

 

by mlamb93 (Baboon, 101 Points) on 3/25/08 at 9:17am Being able to do a 2-year banking stint and head straight to get your MBA is getting tougher by the year as the average work experience of applicants is getting higher.

mlamb,

This is false...average work experience is actually decreasing at top programs like H & S as these schools seek to grab top talent before they succumb to things like law school, med school, entrepreneurship, etc. Schools such as Wharton still value significant work experience and are more focused on seasoned professionals.

Good points by Mimsey...

 

If you work in consulting (not MBB) and want to go to banking like me then MBA is kind of the only way. I intend doing 3 or 4 years here, then an MBA and trying to get an associate job. It's pretty much my only chance of getting into IB and there's loads like me for which this route is ideal.

Only downside is going in a little later when all the other folk that have been there as an analyst who are raking it in at a hedge fund or something :(

 

Generally, there's no reimbursement from what I know. You are getting paid enough money that you can afford to pay for B-School yourself. Consulting firms often reimburse for MBAs.. and a handful of Fortune 500s. Almost no investment banks or private equity firms will do it unless it's a special/negotiated arrangement for a top performer.

 

If you can convince a strong MBA program that you have a good reason to go for the MBA (since it is possible to make the direct move from analyst to associate without an MBA), then you'll have a good shot for sure. If, however, you attend a non-target MBA program, you would probably be better off saving your money and trying to make a move without the MBA.

In short, nothing is a guarantee, but with a strong MBA program and previous IB experience, you'll have a good shot.

 

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