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Why don't more bankers / PE guys do MBAs?
 

musto430's picture
(Baboon, 104
 
Points)
 on 12/28/12 at 4:02am
do mbas.jpg

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?!

Tags:
mountainvalley's picture

MBAs are generally for career

IB
 
Points)
 on 12/24/12 at 2:16pm

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.

A Fellow Linguist's picture

Considering that many firms

 
Points)
 on 12/24/12 at 2:18pm

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.

Pwn3r's picture

A Fellow

(Monkey, 47
 
Points)
 on 12/24/12 at 3:02pm
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?

abacab's picture

I met several Directors at

IB
 
Points)
 on 12/24/12 at 3:20pm

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

West Coast rainmaker's picture

A few reasons: (1) The cost.

ER
(Neanderthal, 2,092
 
Points)
 on 12/24/12 at 3:36pm

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.

dogboo's picture

Why would you if you dont

 
Points)
 on 12/24/12 at 4:13pm

Why would you if you dont need to?

A Fellow Linguist's picture

Pwn3r: A Fellow

 
Points)
 on 12/24/12 at 4:33pm
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.

officer farva's picture

if you ever want to move over

IB
(Monkey, 61
 
Points)
 on 12/24/12 at 5:57pm

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...

West Coast rainmaker's picture

officer farva: if you ever

ER
(Neanderthal, 2,092
 
Points)
 on 12/24/12 at 6:07pm
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.

atomic's picture

West Coast summed it up. If

(Baboon, 164
 
Points)
 on 12/24/12 at 6:27pm

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).

newfirstyear's picture

Everyone has an MBA nowadays,

ER
 
Points)
 on 12/25/12 at 10:25am

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.

Going Concern's picture

Doing a top MBA is good if

(King Kong, 1,713
 
Points)
 on 12/25/12 at 2:48pm

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.

In headaches and in worry
Vaguely life leaks away
And Time will have his fancy
Tomorrow or today.

mrb87's picture

Pwn3r: Correct me if I'm

PE
 
Points)
 on 12/25/12 at 2:49pm
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.

Sectord's picture

I love the comments about an

CO
(Monkey, 58
 
Points)
 on 12/25/12 at 3:28pm

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.

AnalystMonkey2769's picture

Sectord: I love the comments

IB
(Gorilla, 505
 
Points)
 on 12/25/12 at 4:43pm
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

Sectord's picture

AnalystMonkey2769: Sectord:

CO
(Monkey, 58
 
Points)
 on 12/25/12 at 5:09pm
Sectord's picture

To add, being here for 1 week

CO
(Monkey, 58
 
Points)
 on 12/25/12 at 5:12pm
mrb87's picture

If you are already in

PE
 
Points)
 on 12/25/12 at 6:57pm
AnalystMonkey2769's picture

Sectord: AnalystMonkey2769:

IB
(Gorilla, 505
 
Points)
 on 12/25/12 at 6:59pm

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

AnalystMonkey2769's picture

Sectord: To add, being here

IB
(Gorilla, 505
 
Points)
 on 12/25/12 at 7:01pm

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

DonVon's picture

Most of the senior bankers I

IB
(King Kong, 1,914
 
Points)
 on 12/26/12 at 1:16am

"An intellectual is a man who takes more words than necessary to tell more than he knows."
- Dwight D. Eisenhower

Check out my blog!

leveredarb's picture

Opportunity cost is huge (2

(King Kong, 1,237
 
Points)
 on 12/26/12 at 6:35am
AnalystMonkey2769's picture

leveredarb: Opportunity cost

IB
(Gorilla, 505
 
Points)
 on 12/26/12 at 9:27pm

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

CaliBankerSF's picture

I'm tired of the deluge of

PE
(Baboon, 162
 
Points)
 on 12/26/12 at 9:44pm
IvyGrad's picture

Does anyone here know how

 
Points)
 on 12/26/12 at 10:33pm
AndyLouis's picture

West Coast rainmaker: A few

 
Points)
 on 12/28/12 at 8:21am

WSO's COO (Chief Operating Orangutan) | My story | Connect with me on Linkedin.

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ZetaMale's picture

To throw a bit of a

(Chimp, 2
 
Points)
 on 12/28/12 at 2:22pm
WallStreetPlayboys's picture

I find it quite funny that

O
 
Points)
 on 12/28/12 at 8:43pm

WallStreetPlayboys.com

Twitter @WallStPlayboys

Get paid, Get Laid. Nothing else matters.

EvanM's picture

Really glad I saw this, lots

(Monkey, 53
 
Points)
 on 12/30/12 at 3:10pm

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

she_monkey's picture

why

 
Points)
 on 12/30/12 at 3:22pm

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