Does GS blow for post-MBA associates now?

I have a couple thoughts on this that I will try and split out into different topics. Might get a little into the BB/EB debate but hopefully still adds to the discussion.

1. (Someone smarter than me (AM/Portfolio Manager) gave me this thesis on GS) - Stocks with more consistent earnings are rewarded with higher trading multiples. Investment banking is usually a pretty volatile business, at least compared to other revenue segments for these banks. I don't think GS is trying to wind down their IB business by any means but they are trying to aggressively grow other areas. Bigger wealth/asset management and consumer banking revenues will give them more consistent earnings and likely higher trading multiples, meaning better for shareholders. Solomon isn't trying to "ruin" anything but he knows his compensation will be driven by growth of other segments. 

2. The Post MBA experience - For this category I think you need to split up the candidates into two buckets. 1) The "IB = Stepping Stone" group and 2) "Career Banker" group. I think it is conservative to say that at least 75% of post mba associates fall into group #1, could easily be more. For this group going to GS post mba still makes a ton of sense. Yes the compensation is lower but if the candidate knows they want to leave after 2-5 years, the exit opportunities are still top notch. I think this will remain the case as long as GS keeps killing it, year after year, across almost any coverage group, in almost any product. So, in the short run, GS still makes sense for bucket 1. However, whether or not they continue to kill it year after year is largely attributable to how they handle group #2, the career banker. Compensation is much more important for group #2. Climbing up the ranks from associate to MD while getting lower compensation compared to your peers (BB/EB) is a really tough ask. MD compensation is pretty unknown but one thing that seems to be true is that EBs offer a better model for the "rainmaker." In 2019, 66% of the 465 MD promotes at GS were homegrown from analyst or associate classes. I think that number was around 85%+ 2010 but I can't seem to find the source I remember reading on it. Either way, they are having to hire more external MDs, I would argue it is because they are struggling to offer the same analyst/associate experience as their peers. One disclaimer though, the popularity of PE and EBs as alternative finance career paths cannot be stripped out of that 21% decline in internal MD promotes. I guess my conclusion for point #2 is that in the long run they cannot continue to provide the same or worse associate experience at lower compensation without diluting their brand.

3. The EB model - Lazard was pretty much the only real player in this industry for decades until the late 90's/early 2000s. Now this model seems to be taking home more and more advisory work every year. Regardless of how you measure it, number of deals or fee $$$, the boutiques continue to take advisory work market share from the BBs. When Steve Schwarzman left Lehman to start Blackstone he specifically decided to not enter the high capital/low margin business of capital markets and focus on advisory work (at least before raising his first fund). Robert Greenhill, Roger Altman, Ken Moelis, and others have all successfully followed this model. Bulge Brackets are trying to expand into middle market cities but I personally think they will continue to struggle to reverse the trend in advisory market share. 

I don't think GS is killing their IB department but I would argue they don't have the same recruiting advantages verse their peers they did 5-10 years ago. GS can easily compete with EBs on almost all of the things you mentioned. The only one they can't, or it will be hard, is compensation, the most important one. Right now the difference is maybe 50-100k a year for an As1. If that difference grows to 100k-200k over the next decade...I don't think GS will be getting top candidates anymore. Full disclosure, I will be at an EB this summer. I'm just a new kid coming into the industry so feel free to disagree. Just my $0.02.