I'll keep it short. I have been working in asset management for the last 4 years and recently earned admittance to a top 15 MBA program with the hopes of transitioning into banking. I was recently approached with a potential opportunity to become an analyst with a solid MM firm in town.
I had been dead-set on b-school for the experience, network, and opportunity to transition to banking at the associate level--would it be silly to pass that up to start at ground zero as an analyst? Any insight into older analysts doing PE recruiting? Thanks in advance.
Depends, do you see yourself as a career banker or were you going to try and pursue PE in the (near) future?
Because of the MBA route, I was operating under the assumption of being a career banker. I know how difficult it is to move into PE post MBA so it wasn't part of the working plan, however I would definitely be interested in it if the opportunity came along.
I think you got cause and effect mixed up - the MBA should me a means to an end, which in your case is career banking, not *because of the MBA that you *need to do banking. Regardless, I probably would go with the bschool route because (i) associate roles are much better than analysts in virtually every aspect (nature of work, lifestyle, comp), minus the exit ops (specifically PE); and (ii) 27ish is a sweet spot for bschool, and I don't think a few more years as an analyst could get you into a better bschool. Another things to consider are the amount of debt (I assume) that you're gonna incur, and the economic cycle that we're in right now (recession might hit soon, which will impact recruiting)
Do you know if you'll have to do the typical 2 (or 3) year program to get promoted? If so, I'd elect for B-School.
Not certain, but it seemed like that was the case (starting from the ground floor of 2/3 year program). Since I'd be new I'd imagine there would be some struggle to catch up with the technical skills for a little while as well.
If you're at all interested in maximizing optionality, the way I would think about this is which path gives you the most decision points. If you go to B School now and recruit for banking as an associate, then that would likely be the best career path for you to continue down. If you go do the MM banking gig, you can stay on as an associate (if you love it), take a shot at PE recruiting (if interested), or alternatively go to B School with what, I would assume, is a more desirable profile for AdComs than what got you into the top 15 program. Also, if the MM firm is solid, there's no reason you couldn't lateral to another firm, in the case that you wanted to continue a career in banking but with a different firm.
Looking at the profiles of my peers in B School, all evidence points to it being SIGNIFICANTLY harder to get into a top business school out of a MM IB, rather than AM. I don't think I could name a single person that came directly out of MM IB (unless this is Jefferies / Houlihan caliber). There are just too many people with BB/EB IB experience applying.
In addition, if you're starting over as an analyst, it's an entry level role. I'd imagine you're seen as someone with limited leadership experience and you're suddenly being compared to a pool of people much younger with less experience.
That being said, if you're not doing an MBA program, my comments are irrelevant.
This is really good insight, thanks. Another thing to consider is if I waited and tried to re-apply after more than 2-3 years, I would have to re-take the GMAT as it expires. Those #s keep climbing and I suppose it's no guarantee that my profile would look any better with 2 years of MM IB analyst under my belt. Might end up recruiting for the same MBA associate jobs I would have access to now.
EDIT: I wrote all this stuff below before realizing blueshine144 gave a more succinct version already. But I’ll just leave it cause I already wrote it...
I feel like US PE monkeys will be more qualified to speak to this but... I think it’s possible to jump into PE (say LMM / MM) if you joined as say an Analyst 1/2 (depending on what you did in AM), and jump after a year in IB. However, it may require more effort (a lot of networking) on your part vs. for kids directly from IB from the get go because recruiters like going for tried and true. Also... such positions may be pre-MBA PE, so even if you get it, that may mean you need to go do your mba anyway (unless you can lateral to another similar sized shop that doesn’t care about MBA).
So if you do that it’s 27 today + 1-2yr IB + 2yrs PE = 30-31 by time of applying for MBA. And then upon matriculation thats 32-33. MBAs are trending lower in avg age of matriculation and avg years of exp in applying these days, so applying at 30-31 is a bit older. But not by too much I think... with pre-MBA PE exp, it’s easier to stay in PE (but still difficult because there are fewer post-MBA PE seats vs. pre). In this case scenario, you’d probably have to again network and aim for similar LMM / MM size firms. Or go into banking (as an Associate 0/1 at age 32-33). Landing post-MBA PE will depend on timing, market, luck, hustle.
If you go into MBA today... depending on the program (I don’t know what T15 is... is that below a Darden / Duke fuqua/ Cornell / Ross / UCLA? [I need someone else more familiar with rankings beyond MBA business schools">M7 to comment here]), you can get into IB Associate 0/1 directly. So at 27, you’ll join IB at 29 (or 30, depending on birthday and when you’re applying to MBA). So that can potentially save you some time vs the above case scenario. But it may potentially impact your chances at PE. Post-mba PE is possible for post-MBA IB associates... just quite uncommon. I’ve seen LinkedIn examples and have one or two friend-of-friend examples... but I suspect a lot of luck and personal hustle took place.
I think as one other poster asked - it depends on what you want to do long-term. But I would advise you make sure you get into an MBA program that feeds into good IBs. Don’t just go and get any old MBA where IB is a stretch.
Another option is just skip MBA altogether and continue with IB if your interest is to be a career banker. Assuming you do well (and the team is supportive), you can get promoted directly from analyst. And you can also lateral to bigger banks.
Appreciate the response. Sorry, for some clarity, the MBA is (Ross/Fuqua/Darden) so IB should be a target, and I do have a fairly significant scholarship. Under current timing, I enter at 27, leave at 29 as an associate, essentially bypassing the 2-3 year analyst route I would be starting at now if I skipped. I think PE is likely a stretch either way, and it seems like there is a strong chance I'd have to go back for an MBA anyway and that might put me back at IB associate level 4-5 years down the road.
It sounds like PE is just a nice option, but not a priority like IB. If you have some money saved away (and it looks like MBA has been something you’ve considered some time), if I were in your position I would just do my MBA at Ross/Fuqua/Darden and go in as an associate directly. You mentioned you’re coming from AM background, so you’re not a newbie to finance. I think AM + those abovementioned schools position you well for the BBs / EBs / large MMs.
If you take an analyst role now, they’d likely make you an Analyst 2 (and they’ll probably say if we made you an Analyst 3, we’d have less than a year to gauge you for promotion As justification). Assuming you are able to get up the learning curve vs. the younger kids (many likely came into IB from internships, so they have a leg up) and get promoted, you’d still be 29 with A2A promotion. You’d be battle trained and you’ll have more money in the bank (on top of having saved the $200k+ you’d otherwise have to blow on bschool). But there is the question of whether you can be a good Analyst vs be a good Associate. There’s a joke about the uselessness of a clueless, newbie MBA Associate. So much so that the bar is lower because they anticipate the learning curve. But an Analyst 2/3 is not afforded the same luxury. Also... instead of potentially landing at a BB/EB directly through formal recruiting cycles, you’ll have to lateral on your own efforts.
The middle-of-the-road approach (do a year in IB now, apply to MBA again to Target better schools) is possible, and gives you some money. For this - I would suggest connecting with MBA application consultants to see if they think it’d materially impact your profile (I.e. make you become attractive for MBA business schools">M7 or T10 vs T15), and whether it’s worth it given IB as a goal. I think this could be a good way for you to test the waters with IB, but know that you’ll need to plan and carve out time for applications while working IB hours.
Sounds like you wanted to be a career banker.
If that's still your goal - I'd skip an MBA for now. If you got in this year, with IB under your belt, you'll have a solid story and can get in for an admit next year + you'll have a year of IB to speak about (and a nice bonus in your bank) which will help you land a better post MBA banking gig if that's where you end up.
If you enjoy the role, and making money instead of spending it, good chance you don't even spend 2 years of lost salary + $200k to get an MBA.
Do you think there would be pressure to get an MBA even if I went analyst-associate and wanted to stick around? State school (decent but not great) undergrad so the MBA was a nice chance to re-brand as well.
No. No one will give a crack about what degree you have from undergrad once you're in the job.
MBA recruiters? Yeah, they may care.
More reason to go with the role and see what comes of it. Do MBA a year later, land better IB gig. Do it now, struggle to land Jefferies or UBS.
I personally would be an analyst at 27 (seen a lot of older analysts around that age - you're not 30), then have optionality to either lateral to an EB or BB jump to PE. Worst comes to worst, can always get an MBA later. Otherwise there's only one shot on goal by going the MBA route.
But I dunno, I guess I'm just super biased against post-MBA banking and don't understand why people will shell out tens of thousands (if not hundreds of thousands) + opportunity cost of two years of working, to be at a position that 100% does not require an MBA, when they have the option of avoiding having to do so.
How else would you suggest people without relevant finance backgrounds break into Investment Banking?
I'm legitimately curious (not trying to be snarky), as I'm trying to do the whole b-school --> IB Assoc. path myself.
Sorry, probably should've made the point on "when they have the option of avoiding having to do so" more clear - by this I meant for somebody with previous finance-related (or maybe even consulting experience) such as OP, not for pure career switchers.
Personally I think the only time it makes sense to get an MBA with the intention of going into IB later is if somebody has no relevant prior experience.
Devil's advocate (and I agree that if you can get in w/o an MBA, you should)
If you're not in the pipeline you are looking usually at a pretty boutique opportunity or you are fortunate. A lot of people at my T15 MBA doing banking had legit backgrounds and were targeting exclusively BB/EB. With an MBA you get a chance to cast a super wide net and interview with all of the banks at the same time, you get a defined summer Associate program to "test the waters" so to speak, etc. A lot of people also used it as a chance to switch locations. I agree with you as well on trying not to pay full sticker price but that also depends on your pre-MBA salary.
Definitely all true, but at least at my MM I saw a decent amount of like Big 4 hires and also some corp. fin. folks coming in as as analysts with no prior IB experience. Can't speak to BB or EB, but I think if you can break into a MM (IMO, doable), shouldn't be too hard to lateral to a BB or EB and then from there you'll be at the same position as if you went and got an MBA. Especially with a Ross/Fuqua/Darden-level school where breaking into a BB or EB isn't guaranteed in the first place. But in general I agree with your sentiment that there is going to be some element of luck to breaking in.
That 25/75 split for first year associates is skewed by analysts who leave for PE/VC or an MBA, as well as analysts who decide the industry isn't for them and move elsewhere.
If analysts were held constant with 100% retention, I imagine that would swing to 75% A->A promotes, 25% MBA.
B-school, all day every day. It will give you additional exposure to other finance carer paths. It can also provide exposure to great leadership positions down the line. Good Luck!
Take the analyst gig. It seems silly to forgo two years of income on top of shelling out loads of cash for school. In two years you will be at the same spot (associate level) having made 300k+ and not spending money on school. Good luck with your decision!
Can you define what you mean by 'solid MM in town' - that makes it sound like it isn't a well-known bank and is perhaps in a regional city as well (both of which will potentially significantly hamper your ability to lateral upward or break into PE).
If this is choosing between an analyst role at a good MM like Houlihan Lokey/Blair/Harris Williams vs. MBA I'd probably pick the analyst role. If it is somewhere like Raymond James, KeyBanc, etc. I would pick the MBA because you likely won't be able to get into a solid PE shop and you would have difficult lateraling upward as well
Appreciate the response. It is a well known MM but in a regional city as you guessed. Moving to PE or any other bank would almost certainly require relocating.
May I ask why you are interested in switching to banking?
I have spent a lot of time thinking about what I like and dislike about my job and what IB might offer. I find many areas of finance genuinely interesting and AM has allowed me to learn a lot, but I like the idea of working on more project-based work rather than what seems like a perpetual wheel. I have also lost some confidence in the investment philosophy of my firm (and many like it) but that's a topic for a different day. I think that getting to work on transactions for individual companies is attractive. It feels closer to the action. I could just as easily get in it and realize the grass isn't greener but I also recognize that now (via analyst or MBA) is really my only real chance to find out.
+1SB, gotcha. I wish you the best!
I'm a top 20 MBA grad and career switcher into investment banking. I'd say take the analyst job over a (Ross, fuqua, or darden). Nuclear penguins has voiced most of my reasons
Pros Two years of analyst experience is way more valuable than sitting in b school. Especially for ib. Second year analysts effectively have to train associate 0s. Preserves optionality for pe, lateral to a better ib, or even if you decide later on you just really want to go to b school. Better from an opportunity cost and hard dollars hands down No guarantee you'll land at a clearly better bank coming from a darden, Ross, or fuqua. I actually know a few non international students who struck out on ib from those schools completely but this was over 5 years ago so things may be different.
Con Two years from today you will be a second year analyst when you could start from b school as an associate zero but I would argue the reasons above outweigh being 1 year "behind"
Here to add two my two cents. Placement rates for domestics at my school were over 93% this past cycle.
Lot of context missing from that number. I don't think any school tracks the number that really matters, which is the % of IB hopefuls who got IB jobs. Even the schools that could report a very high rate on this statistic (Wharton, Chicago etc) choose not to. I think it's mostly just that the career offices are too lazy to do the dirty work of properly defining the # of people who were primarily recruiting for IB.
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