12/28/12

Surprisingly few of my peers (BB IDB) seem to be considering MBA opportunities.. considering the apparent increase in salary, why is that?

Not being able to afford the fees upfront? Not being able to get in?

Confused.. Why WOULDN'T you do an MBA?!

Comments (30)

12/24/12

MBAs are generally for career changers. Say BB IBD to MBB. No need to do an MBA really if you're group likes you enough, you like ibanking, and you can get the direct promote from Analyst 3 all the way through VP. On the other hand, a lot of PEs require MBA to go from Associate to VP. Personally, I'm not too interested in an MBA and view it as an enormous opportunity cost.

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12/24/12

Considering that many firms promote analysts directly to associate (for example, Moelis even has a 2-year early promote program), what is the point of taking time off to study for an MBA? Not only do you have to pay a wad of money you could be spending elsewhere, but that's also time that you're not working and making even more money (opportunity cost).

An MBA is not required to move up the ladder in investment banking. However, if you're doing something other than IBD after undergrad, a top-tier MBA is a good way to break in as an associate.

12/24/12

A Fellow Linguist:
Considering that many firms promote analysts directly to associate (for example, Moelis even has a 2-year early promote program), what is the point of taking time off to study for an MBA? Not only do you have to pay a wad of money you could be spending elsewhere, but that's also time that you're not working and making even more money (opportunity cost).

An MBA is not required to move up the ladder in investment banking. However, if you're doing something other than IBD after undergrad, a top-tier MBA is a good way to break in as an associate.

Correct me if I'm wrong, but don't you have to have an MBA to get from associate to VP?

12/24/12

Pwn3r:
A Fellow Linguist:
Considering that many firms promote analysts directly to associate (for example, Moelis even has a 2-year early promote program), what is the point of taking time off to study for an MBA? Not only do you have to pay a wad of money you could be spending elsewhere, but that's also time that you're not working and making even more money (opportunity cost).

An MBA is not required to move up the ladder in investment banking. However, if you're doing something other than IBD after undergrad, a top-tier MBA is a good way to break in as an associate.

Correct me if I'm wrong, but don't you have to have an MBA to get from associate to VP?


No. I've spoken with many MDs/VPs who moved up the ladder from the analyst level.
12/25/12

Pwn3r:

Correct me if I'm wrong, but don't you have to have an MBA to get from associate to VP?

Yes, you're wrong. Generally, you need an MBA to go from analyst to associate but that is becoming less and less of a requirement the past couple years.

12/24/12

I met several Directors at BBs who were direct promote from Analyst.

Best Response
12/24/12

A few reasons:

(1) The cost. Opportunity cost + tuition will easily break 500k if you are leaving a relatively well paying job.

(2) Lack of actual skills. Very little in a MBA curriculum directly applies to high finance. Even targeted programs (Columbia's Heilbrunn, for instance) are largely inferior to top tier work experience. I would take a job at Baupost (or just a reputable value firm) over a MBA any day.

(3) People already in finance likely already have the requisite brand. The Ivy ugrad with a BB job does not really benefit from the prestige associated with a M7 MBA - he already has ticked the "smart enough" box.

(4) No guarantee of a job on graduation. Wall Street is shrinking. If you already have a stable job in finance, you should really think hard before leaving it. Remember the joy of undergrad recruiting? Now you get to that again!

(5) Doesn't really help career progression. While a few PE firms require MBAs for partner track, many do not. And I do not know of any banks that require it to be promoted to associate.

12/28/12

West Coast rainmaker:
A few reasons:

(1) The cost. Opportunity cost + tuition will easily break 500k if you are leaving a relatively well paying job.

(2) Lack of actual skills. Very little in a MBA curriculum directly applies to high finance. Even targeted programs (Columbia's Heilbrunn, for instance) are largely inferior to top tier work experience. I would take a job at Baupost (or just a reputable value firm) over a MBA any day.

(3) People already in finance likely already have the requisite brand. The Ivy ugrad with a BB job does not really benefit from the prestige associated with a M7 MBA - he already has ticked the "smart enough" box.

(4) No guarantee of a job on graduation. Wall Street is shrinking. If you already have a stable job in finance, you should really think hard before leaving it. Remember the joy of undergrad recruiting? Now you get to that again!

(5) Doesn't really help career progression. While a few PE firms require MBAs for partner track, many do not. And I do not know of any banks that require it to be promoted to associate.

good points, senhorfinance wrote a response to your points in this post fyi: http://www.wallstreetoasis.com/blog/is-an-mba-rele...

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12/24/12

Why would you if you dont need to?

12/24/12

if you ever want to move over to industry it seems like an MBA is still a good idea. seems like most CEOs of the largest companies still have MBAs. i agree though that in our generation there is less emphasis on MBA in finance. excpetion being venture capital, still see mostly exclsuively HBS or GSB partners, i think this is likely to change though as the number of successful web 2.0 entrepreneurs moves over to the venture partner side...

12/24/12

officer farva:
if you ever want to move over to industry it seems like an MBA is still a good idea. seems like most CEOs of the largest companies still have MBAs. i agree though that in our generation there is less emphasis on MBA in finance. excpetion being venture capital, still see mostly exclsuively HBS or GSB partners, i think this is likely to change though as the number of successful web 2.0 entrepreneurs moves over to the venture partner side...

I think this may be a holdover from better days. At one point, it was not uncommon for F500 to pay for MBAs.

But I agree: I think a MBA is more applicable to F500 work than finance. Management, marketing, and those "soft skills" have more application in a F500 environment.

12/24/12

West Coast summed it up. If you're progressing well in finance AND you know it's where you'd like to spend your career, then the opportunity cost associated with a full-time MBA will probably outweigh any potential benefit. Moreover, most MBA programs don't have the most rigorous curriculum (Nice for partying with your class; bad for those wishing to learn).

That said, I assume your 'peers' are Analysts. Give them a few more months in banking and a year or two in PE. I guarantee more than a few will head to an MBA program to get out of finance (or to avoid becoming burnt out -- sometimes, it's really just a two-year break that looks good on a resume).

12/25/12

Everyone has an MBA nowadays, it's fast just becoming another Bachelor type degrees thats been diluted.

Besides, an MBA is not necessary if you have the right contacts.

12/25/12

Doing a top MBA is good if you didn't go to a target school and want a better school brand on your profile, or if you're aiming for a role that requires it for progression. Its other main benefits are a second opportunity to do on campus recruiting and a new network you didn't already have. That's pretty much it. Occasionally it can give you some good specialized knowledge that would be difficult to obtain elsewhere, either from classes or peers. One such example is going to wharton/stanford and learning more about tech entrepreneurship. I think the reason people don't do it is 1) cost, 2) time, 3) not really needing any of the benefits just mentioned.

Let's burn the pages, we'll start anew
12/25/12

I love the comments about an opportunity cost being 500k... how so?
If you make 150k -200k and leaving in the city, partying at Lavo and wearing custom made suits, I doubt you can save more than 10-20k a year. So these 10-20k is your real opportunity cost, because whether you are studying or working you will spend about the same. So, in a grand scheme of things, those who don't go for MBA are either pussies and too scared to leave their job or people on a REAL good trek.

12/25/12

Sectord:
I love the comments about an opportunity cost being 500k... how so?
If you make 150k -200k and leaving in the city, partying at Lavo and wearing custom made suits, I doubt you can save more than 10-20k a year. So these 10-20k is your real opportunity cost, because whether you are studying or working you will spend about the same. So, in a grand scheme of things, those who don't go for MBA are either pussies and too scared to leave their job or people on a REAL good trek.

3rd year analyst pay for a respectable firm= ~ $175-185k --> $180k
1st year associate pay for a respectable firm= ~ $190-210k--> $200k

2 years of business school (just tuition, not including increase in discretionary spending and meals since you'd be out of the office now and have much more free time/social events)= $110-$120K

180 + 220 + 105 = over 500K

and this is assuming you dont even go to PE...this is a more conservative scenario assuming you're stuck in sell side

buy side assumption is probably= 220 + 250 + 105= ~$575K (changes based on PE placement)

so stfu and stop trying to make urself feel better for A getting that MBA, B accepting recently to go to MBA or C thinking that an MBA will really make THAT much of a difference for you...especially if you were undergrad Business- if you werent then this is a completely different argument and prob MBA would help. if not its the same thing, i had SA associates that did the same work in their valuation courses that i did at my undergrad valuation course. literally same thing.

I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought- GG

12/25/12

AnalystMonkey2769:
Sectord:
I love the comments about an opportunity cost being 500k... how so?
If you make 150k -200k and leaving in the city, partying at Lavo and wearing custom made suits, I doubt you can save more than 10-20k a year. So these 10-20k is your real opportunity cost, because whether you are studying or working you will spend about the same. So, in a grand scheme of things, those who don't go for MBA are either pussies and too scared to leave their job or people on a REAL good trek.

3rd year analyst pay for a respectable firm= ~ $175-185k --> $180k
1st year associate pay for a respectable firm= ~ $190-210k--> $200k

2 years of business school (just tuition, not including increase in discretionary spending and meals since you'd be out of the office now and have much more free time/social events)= $110-$120K

180 + 220 + 105 = over 500K

and this is assuming you dont even go to PE...this is a more conservative scenario assuming you're stuck in sell side

buy side assumption is probably= 220 + 250 + 105= ~$575K (changes based on PE placement)

so stfu and stop trying to make urself feel better for A getting that MBA, B accepting recently to go to MBA or C thinking that an MBA will really make THAT much of a difference for you...especially if you were undergrad Business- if you werent then this is a completely different argument and prob MBA would help. if not its the same thing, i had SA associates that did the same work in their valuation courses that i did at my undergrad valuation course. literally same thing.

I am not sure which world you live in but a 1st yr associate makes 120k base tops. Bonuses vary, but unfortunately 2007 is long gone and very few make 100% bonuses. That being said, AGAIN, read my post carefully and think (economically) about two scenarios:
1. You continue working. Make 175k a year (350k over 2 years or about 220k after taxes). Save - MAX 50k. Total net worth after 2 years as a result 50k.
2. you get your MBA. you borrow 110k for tuition and another 45k a year for living expenses and trips. So total 200k debt. Then you make 20k during your internship and 30-50k signing bonus as an associate, so let's say 50k cash after taxes. So your net worth is -150k.
Net = your real quantifiable cost is 200k, AND you also get a brand, an access to network, best 2 years of your life, option to change a job, higher potential earnings in the future.

Any other arguments, sir?

12/25/12

Sectord:
AnalystMonkey2769:
Sectord:
I love the comments about an opportunity cost being 500k... how so?
If you make 150k -200k and leaving in the city, partying at Lavo and wearing custom made suits, I doubt you can save more than 10-20k a year. So these 10-20k is your real opportunity cost, because whether you are studying or working you will spend about the same. So, in a grand scheme of things, those who don't go for MBA are either pussies and too scared to leave their job or people on a REAL good trek.

3rd year analyst pay for a respectable firm= ~ $175-185k --> $180k
1st year associate pay for a respectable firm= ~ $190-210k--> $200k

2 years of business school (just tuition, not including increase in discretionary spending and meals since you'd be out of the office now and have much more free time/social events)= $110-$120K

180 + 220 + 105 = over 500K

and this is assuming you dont even go to PE...this is a more conservative scenario assuming you're stuck in sell side

buy side assumption is probably= 220 + 250 + 105= ~$575K (changes based on PE placement)

I am not sure which world you live in but a 1st yr associate makes 120k base tops. Bonuses vary, but unfortunately 2007 is long gone and very few make 100% bonuses. That being said, AGAIN, read my post carefully and think (economically) about two scenarios:
1. You continue working. Make 175k a year (350k over 2 years or about 220k after taxes). Save - MAX 50k. Total net worth after 2 years as a result 50k.
2. you get your MBA. you borrow 110k for tuition and another 45k a year for living expenses and trips. So total 200k debt. Then you make 20k during your internship and 30-50k signing bonus as an associate, so let's say 50k cash after taxes. So your net worth is -150k.
Net = your real quantifiable cost is 200k, AND you also get a brand, an access to network, best 2 years of your life, option to change a job, higher potential earnings in the future.

Any other arguments, sir?

Lol not gna argue anymore. its a debate that wont end, both sides have their points. merry christmas :)

I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought- GG

12/25/12

To add, being here for 1 week and 4 days, you are a tad too aggressive, no?:)

12/25/12

Sectord:
To add, being here for 1 week and 4 days, you are a tad too aggressive, no?:)

made a new account recently thats why lol but good due diligence

I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought- GG

12/25/12

If you are already in banking/PE and on track to make associate without an MBA, there is no point in getting one unless you want it.

12/26/12

Most of the senior bankers I know who _started_ off in banking were Analyst promotes. Most of the senior bankers I know who moved from consulting and accounting have MBAs.

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12/26/12

Opportunity cost is huge (2 years foregone income + tuition)
Curriculum is somewhere between completely useless and an intellectual insult (unless you come from outside finance looking to break in)
Not required at a lot of firms to move up, some firms even see having an mba as a negative (although this tends to be limited to a few hfs and more so in Europe)

That said for banking it makes some sense since your entire value proposition is having a network. Another reason why so many analysts dont do an MBA is because hardly anybody stays in banking given that banking is inferior to the buyside in nearly every way.

12/26/12

leveredarb:
Opportunity cost is huge (2 years foregone income + tuition)
Curriculum is somewhere between completely useless and an intellectual insult (unless you come from outside finance looking to break in)
Not required at a lot of firms to move up, some firms even see having an mba as a negative (although this tends to be limited to a few hfs and more so in Europe)

That said for banking it makes some sense since your entire value proposition is having a network. Another reason why so many analysts dont do an MBA is because hardly anybody stays in banking given that banking is inferior to the buyside in nearly every way.

Great points here

I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought- GG

12/26/12

I'm tired of the deluge of ignorant comments on this board from people who clearly don't have the experience to offer informed input.

The MBA is simply a tool and how effective it is on your career really depends on how smart you are in planning. If you are 100% sure that you want to stay on the sellside forever and have a direct promote to associate, the MBA likely will not add much to your progression. Likewise if you obtain a coveted partner-track role as an associate in a PE firm (although it looks like that scenario is high unlikely in today's market).

However, there are certain situations where it fits. As someone at a top MBA program, one thing that I have seen to be true is that doors to reputable firms open a lot more easily than without that pedigree. In addition, there are many PE firms that pretty much require an MBA in order to become a senior associate / vice president. That is also where that helps.

The actual utility of the degree depends on the person. If you're a complacent person who expects that top b-school to provide a magic formula for your career without a lot of hustle and hard work from your end, then expect a $150K vacation as the sole benefit. However, if you are someone who actually takes the time to learn the "why" behind what you are doing and work smart and work hard in addition to playing hard, then you'll likely see broader benefit than the $150K vacation.

So, if you're considering b-school, be smart about it. If you've elected not to attend and have enjoyed direct promotions without it, good for you. But seriously, this forum can do without the poorly supported arguments from select posters talking out of their asses. Hopefully WSO will do a better job of monitoring this.

12/26/12

Does anyone here know how difficult/ competitive it is to land a banking associate offer out of a top 10 MBA? Currently work at a non-MBB consulting firm and evaluating if it's worth the risk and opportunity costs involved to attend an MBA program, in an attempt to switch into IBD.

12/28/12

To throw a bit of a counterpoint.... If you get in top 10 program, then it's worth a consideration (regardless of background). Otherwise, why spend time/money/opportunity on a school that is not going to move the needle with any self-respecting firm? If you're looking to make more $, you'd be better off signing an OBA (outside bussines activity) with your B/D and trading for your own account with the $ you would have spent from B-School.

And it has been said. If you have a good position and solid undergrad, then what's the point? I know plenty of sell-side Analyst-1s that are now Associate-2s with no MBA. On the buy-side, know people that just got CFA with no grad work and are PMs. Times have changed. Though if you want to be a quant, grad degrees and doctorates are prob necessary.

12/28/12

I find it quite funny that this is even a debatable topic, if you work in IB/Research/S&T/HedgeFund/PE... Don't get an MBA its not worth your time.

Anyway with that said even if its the "best 2 years of your life"... you've still got quite the catching up to do... as if $200K can be sluffed off. Using the Rule of 72 and simply investing that over 14 years... assuming 10% returns... you get ... $800K... Ouch.

Second, if you have the relevant experience and are constantly being moved up... why would you stop the ball from rolling forward? Life is about momentum in this industry, if you're well liked got the A to A... well there is nothing but downside by stopping the ball.

To all the guys who actually work in finance and have been through the hiring process, assuming you do need an associate:

1. Mc Kinsey + Harvard, or 3 years bulge + Harvard
2. Associate A-A promote, Bulge.

Who are you going to hire?... The guys who work in the industry know the answer.

12/30/12

"When you stop striving for perfection, you might as well be dead."

12/30/12
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