Trading: Why so Few MBAs?
Retail brokerage monkey checking in here after waking up in a cold sweat realizing I need to run far away from too many years in this position. I've thrown myself into an MBA program at a semi-target school.
I've been searching posts and a common theme I see in trading is that it is rare for an MBA grad to go into this field. Past posts on WSO have indicated MBA's in this area are unusual due to the opportunity costs and a lack of trading specific training within the programs.
1) Is the apparently low number of MBAs in the field a result of self selection (the MBAs want to go into something else)?
2) Aside from the concerns mentioned above, are there any other recurring reasons so few MBAs are in the trading field?
3) Are MBAs actively screened out of the recruiting field?
because no trader is that much of a SAP to go into debt for "networking"
traders are the entrepreneurs and wise guys of finance, no faggots here, bro
the dudes who trade who have masters/phd type degrees are quants, engineering, physics, CS..mba's are a joke!!
Harsh, but true. You'll find a couple of MBAs in sales though, and who will usually bitch at the fact that they are still associates at the age of 30. In rare instance you have someone from trading (very rare instance), who decided to go and do an MBA for fun, that usually doesn't hinder their career when they come back, on the contrary
When it comes to non UG recruiting, I think MBAs have been replaced by MFEs and PhDs and other nerds on the trading side, but some MBAs are still recruited for sales roles.
mbavsms, our resident everything expert, holds your answers.
Agree with the above. Very few MBAs in S&T.
At the end of the day, you prob will not learn much that will help you in S&T, and if you plan on being a full time student, the opportunity cost of the lost work experience is tremendous. 2 years when you are starting in sales and trading is an eternity when you are starting out, because you are building your business, learning the trade and constantly developing relationships. Spend 2 years as a sales or trading assistant/ Jr. Sales/Trader, fuck the MBA.
My boss just canned some Ivy League MBA-er a few weeks ago, and said he will never hire another MBA (unless they are some massive producer) because they think their shit don't stink. It's all about sales credit/P&L and building relationships with your customers (or the street/broker's brokers if you are a trader)
Trading desks are hiring very few MBAs since 2008, and they're usually in sales, not trading.
Not that many traders get into top b-schools in the first place since adcom feels that they don't bring transferable skills to the table.
You're not going to learn that much in b-school that will help with trading. Ultimately, an MBA is a general management degree.
Rarely see any traders with MBA's these days. I have worked with salesguys/gals with MBA's, but it is rarely applicable to the job at hand. Acumen for the markets & social skills matter more for generating revenue & maintaining important relationships.
MBA's don't teach anything even remotely relevant to trading, but if you are hire them it has to be as associates. So you are basically hiring someone who needs to be taught from scratch, like an analyst, but paying him a lot more. Considering that there are thousands of qualified candidates wanting to be analysts you see why most banks don't recruit MBA's.
First of all "trading" is a much larger universe than the sort of WSO consensus likes to pretend it is. Not all "traders" are market makers at a B/D.
That's important because the MBA becomes more valuable or less valuable depending on what exactly you are trading an how you're trading it. If you're trading big slugs of equity in high profile deals, MBA has at least some value because you will develop some contact to take you through various elements of the trade and you'll develop the ability to look at companies holistically. But if you're trading some freaky-deeky structured shit, MBA is worthless because they just don't teach you how to look at that.
That being said, most traders don't get MBAs because it just doesn't make sense from an economics/career progression perspective.
I'm only speaking from my personal experience, so take this with a grain of salt, but as a trader a huge part of your job is to stay up to date with your product and the associated market standard pricing assumptions. If you go to B-school, the world keeps turning without you. You give up two years of relevant experience in your market to get fed a bunch of useless crap, and you pay a significant amount of money for the privilege.
Plus if you're in a good front office role and do a decent job, by the time you're old enough for b-school you should be getting paid the same as B-school grads, so why would you leave just to pay $100k or whatever so that you can scrap over the same job you had two years ago.
People don't go to b-school because its a shitty trade. You'll learn a lot more just by doing your job over that period plus you'll get paid.
Another factor is that most of the jr trader job is grunt work (booking trades, flashing PnL, etc). Sell-side doesn't typically want to invest in higher-cost MBAs who can more easily leave after 6-months of getting barked at. Typical UG doesn't have as many lateral options 6 months in.
That said, exceptions to every rule and several of my mba class are traders and we just hired an mba associate on our floor (vs `8 UG over last two years).
In my view, if you're an UG debating between trading and IBD, always go trading right out of school. You always have the MBA trade later that will get you into IBD, but the MBA trade into trading is much, much tougher road for all the reasons noted in the posts above.
I think MBAs are for folks with people skills or marketing ability or management skill.
None of that is required in trading.
What's required for trading?
-Math -More Math -Stats -Some Killer instinct -Maybe some behavioral finance. -Coding ability (for HFT and systematic strategies)
We do have people in sales with MBAs.
We do have the occasional trader with an MBA. They either got their MBA back in the 80s or 90s when portfolio theory was still considered cutting edge, or they regret the MBA.
Some traders have been leaving for MBAs. Flow trading in general has been a pretty sucky business to be in for the past few years. Seeing what GS has been doing with bonuses, I'm not sure the situation is going to get better this year.
Lot of traders at banks and even some prop have been leaving for b-school because they see the writing on the wall and want to switch over to investment management or even something outside of finance.
If you're tired of trading because of its lack of transferable skills, a top b-school is a great deal.
fixed that.
lol im only half serious though. I think the T10 MBA route for traders would b a good deal if you want to start a hedge fund for example and want access to a solid network.
I dont see why that person would b considered a "faggot" in that case watersign.
then again, if ur a good trader, then you should be satisfied with what you're making since the skies the limit.
B-school is a joke unless you go to an ivy or top 10 target or whatever..you'd be better off joining the right "rape club" in undergrad and networking, granted you live in the right area and go to the right school
MBA to trading (Originally Posted: 03/18/2012)
From what I've gleaned from this site, MBAs are largely useless for futures in trading.
However, looking at INSEAD's employment statistics page (http://mba.insead.edu/documents/MBA_EMPLOYMENT_STATISTICS.pdf), I see a few names that I guess I would not expect.
I understand that BBs are recruiting there for IBD, but what are firms like Cargill and Glencore doing there?
Thank you.
It happens. I know a lot of MBA's at BBs that go into trading.
Were you referring to trading shops alone or also trading at BBs. At BBs, its common.
With regard to Cargill and Glencore specifically: Might they not be recruiting MBAs for general management positions, instead of for trading? I mean, someone's got to be running their operations, right...
right???
RIGHT!?!?!?
I had been under the impression that working in ops/traffic at a firm like Glencore/Cargill was largely a task for people lower on the totem pole and simply to gain experience for trading.
I just saw another reference (in the thread about Goldman's most prestigious desk) to MBAs being hired for trading...is that a common phenomenon?
yes. the classes are smaller, but it definitely happens quite a bit. not unheard of at all to go MBA-trading, but it is less likely than the more conventional MBA-IB
If one is already in trading at a prop shop, would a part-time MBA in econometrics and statistics help at all or be a waste of time? Is it easy to lateral with only a undergrad degree?
Do you think it would help?(Are you already trading?)
Haven't started yet. I will be FT after graduation in a few months.
Conversation about traders and b-schools (Originally Posted: 04/04/2010)
I met up with a friend this weekend who trades exotic derivatives for a BB. He used to work at Citadel before. I was asking him about his thoughts on b-schools, and he said that if you're a trader, going to business school is simply not worth the cost. I made the argument that the S&T desks at BBs recruit MBA students for their associate class and that going to a top business school will make it a lot easier to get in. In a nutshell he said that spending that kind of money and giving up 2 years of income just for campus recruiting is stupid. According to him, traders without MBA's can get the same jobs as MBA associates.
He did however strongly recommend that I do a part-time program at uchicago booth while working (i live in chicago) and take the CFA. he said that his bank's Asset Management division considers a CFA on the same level as an MBA from a top school.
I found it interesting because his points directly contradict what other people have said, including some really reputable posters on WSO, like skins1.
Getting an MBA for trading is similar to going to a target undergrad school for IB.
You pay a lot of money in the hope that your chances of getting a good job will increase. However, scrappy state school kids can get the same jobs without paying hefty Ivy League tuition, it just isn't as simple.
In the trading world, the "scrappy state schoolers" are the ones who skip b-school and maybe get a CFA to stand out. The "target undergrad" crowd is the group that pays a premium for the recruiters to come to them, rather than having to seek recruiters out.
If you got into a trading analyst programme straight out of undergrad, you can easily get promoted through the ranks without ever going back to b-school. If you have no trading experience whatsoever, it's hard to break into trading, so going to b-school can give you a chance to join a top bank at the associate level. That said, with no trading experience, an MBA doesn't assure you a spot on a BB trading desk.
And you should recognize that without the 2 years of analyst training, you're going to come in senior to guys who are more experienced than you (a 2nd year analyst always adds more value than a 1st year associate MBA with no trading experience).
All of this is said, though, if you are looking to stay on the sell side. If you are looking to move to the buy side, then the CFA and an MBA are big helps. If you want to be a PM, you need to be as 'qualified' as possible. But if you want to sit on the sell side, you're sacrificing 2 years of earnings at the associate level (let's say 200K-500k all-in comp depending on how good you are per annum). Let's assume earnings are skewed, and that an average earner makes $300k per year as an associate. That means you're paying $150k USD for schooling, and losing out on $600k in earnings. And you're losing out on 2 years of work experience. A trader with 4 years of experience is a VP, whereas a trader with 2 years of experience and an MBA is an associate. As such, you're probably losing out on another $100k per annum for 2-3 years until you catch up with where you would have been if you'd never gone back to school.
In total, you're looking at over $1M in lost earnings early in your career. In the long-run, will your MBA make up for it? Not if you turn out to be a bad trader. If you don't become a legit PM, you're taking a sizeable career risk in returning to get your MBA. And an MBA isn't absolutely necessary for becoming a PM. And it's certainly not needed for being a trader. That's a lot of money to give up just to spend 2 years dicking around in b-school.
i think you make really good points. i agree generally that if you're already a successful trader making good money, it doesn't make sense to go to business school. my situation is that i work for a small fund, don't really have connections, and want to get into a trading desk at a BB. i think for someone like me, going to a top MBA program will give me a really good shot at getting into the associate program. if i'm not mistaken, associates in S&T are either hired internally from the bank or from the MBA program.
Brotherbear is 100% correct. People only go to top MBAs to get into trading if they did not get a trading job right out of undergrad.
Here's my counter to all of that. You don't go to B-School and don't get into Trading and you don't make potentially a lot of money in trading, so essentially you don't do anything.
Go to B-School, network, get good grades, do well in interviews and become a trader.
.....
I'm curious to read what some people have to say about another point jjc brought up - doing a part-time MBA from a reputed place (Booth (Chicago) or NYU (NYC)).
yes, i'm curious to hear people's thoughts on this as well. the part time program at uchicago costs about $100K ($5K per class, 20 classes required for degree), which is the same as the full time program. but since you'll be working, the opportunity cost is obviously less. but the students there don't have access to on-campus recruiting, which is a huge negative for me.
my friend's advice was to do the part time program, ace the finance classes (easier said than done at a place like uchicago), and pass the CFA. he said if i do those things, i will have no problem getting the jobs i want, and it will be a lot less expensive.
i'm still not even sure if the CFA is worth it. i have not yet heard any convincing stories that getting a CFA without an MBA will allow one to get jobs they otherwise can't get.
jjc,
I feel the same way. I am on the fence as far as the CFA is concerned. I am already employed, and I feel that in most stories it has only helped those gain a job at a lower level. I have yet to see a majority come out and say yes for the time and effort I have put in, the CFA helped me achieve XXX.
i've talked to multiple people about the CFA, and when i ask them, "how did the CFA allow you to get the job you want?" they didn't have any specific answers. most of them just stayed at their current company. one friend said passing level I helped him get an interview with goldman sachs quantitative strategies group, but in general, i'm not yet convinced that the benefits clearly outweigh the enormous time commitment.
This is how I feel about it. No one is going out looking for people based on the fact that they have the CFA. Sure it may help with interviews but so many people are getting the designation I feel it isn't valued the way it probably used to be.
jjc, i've seen a few of your posts and i think we're in the same boat. the problem is that the people you are talking to are already doing s&t at a BB or have a big name on their resume. I have no big names on my resume in the finance industry that I am currently on the buyside looking to move to a bigger name place to "brand" myself. having a real hard time with that even though I work at a midsize hedge fund. I'm not sure how having a cfa would help me because I still won't get the interviews but on-campus recruiting seems like it would help me a lot.
brotherbear + gekko = good advice,
but specifically for your situation jjc: i think the usefulness of the CFA is mostly a buy side phenomenon. for a lot of these portfolio management job posts the requirement or preference is a CFA but, for a S&T associate BB job, i will tell you right now, its useless - we never hired anyone because they had a CFA. im a former BB trader, who passed L1 the june after graduation and the only reason i even bothered to pass L2 is b/c of my need to finish things, and even that wasnt strong enough after a while - i still havent sat L3.
we did straight hire out of FT MBA however, particularly from wharton and chicago, and to qualify what your friend said youd ONLY be a fool to leave BB TRADING for an MBA if you come right back to it because if youre in already, its a completely unnecessary degree (of course some of us think more broadly long term so it happens...).
i really cant speak to a PT program upgrading you to a BB because ive never heard of it, but i imagine you would broaden your network and polish off your resume which would probably help you get that done easier. i think you have to take your friends advice with a little bit of salt, because obviously hes done very well for himself. sometimes you forget how difficult these things are.
MBA in Trading (Originally Posted: 03/20/2007)
Hi guys,
I know that an MBA seems to be important in IBD if you want to make it to MD. Is this also true for S&T?
Thanks.
no, but it's more common than it once was
In your honest opinion don't you think having an MBA might be somewhat superflous in the trading arena? I figure a lot of what you learn or will learn is through practical application. If you have a specialized masters in mathematics or something more quantitative focused isn't that more valuable/appropriate? As an incoming MBA, what advantages (if any at all) would you have over someone who may have been a trader for let's say 2.5 years?
yeah it is superfluous in general...but that being said running a desk is not like trading. and many guys who run desks seem to have mbas. in general mbas on the floor did something else before bschool and then switched to s&T.
in terms of practical skills yeah a masters in something quantitative is better.
Agree with Jimbo here. A master (or PhD, for that matter) in math, finance, etc. is more directly applicable. The MBA is great in terms of networking and making a career change. Almost everyone I knew in b-school that went into sales/structuring/trading was a career switcher. Very few exceptions.
what's the difference between a finance PhD and an MBA?
what in terms of points of IQ? :)
mba and phd have their own curriculum. the schools that offer their mba, offer it as a program and while their curriculum may very by school, it is going to be business (masters in business administration). meanwhile, youre phd can be in any area. it is primarily used i think for people wanting to teach, however people with phds in physics and math have been hired for trading traditionally because of their grasp of the material and research experience.
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