Why has Consulting become more popular than IB for post-MBA career??
One or two deacades ago, IB must be the most popular career out of MBA. looking at HBS's employment report in 2021, only 2~3% went to IB, while 30% for consulting. More surprisingly, Columbia sent 16.3% to IB and 33.4% to consulting in 2021. I am not curious about the difference in the nature of the two careers, but why it has changed for the past 10 years. Can anybody shed some light on why consulting has become more popular than IB for MBAs?
Here are some of the reasons I can think of. Correct me if I'm wrong.
1. In the past, I-bankers earned A LOT more than consultants and tech guys, but the gap has been narrowed down?
2. The PERKS of bankers(expenses/spending) have downsized extensively? (using corporate credit cards for expensive dinners or parties?)
3. PE/HF recruit more out of MBAs than in the past? (so more peopel choose buy-side over IB?)
Any two cents will be appreciated.
I’m at an M7 MBA right now. People just don’t think the pay is worth the hours anymore. I think a lot of my classmates prioritize some sort of WLB over huge pay. Consulting is seen as having much better hours than IB and with TC starting around 250k people don’t see much of an advantage for IB as they used to. Tech jobs are also huge post MBA now, high pay low hours.
There is a huge pay gap tho.
Top first year consultants cleared $200-215k last year. Top tier IB associates cleared $350+ last year. That is almost a 70% jump.
So there may be many other reasons but pay most certainly is well ahead in IB
Consulting has “better hours” but they are away from home 4 days a week. In either scenario they are not seeing their SO, friends, or family during the week. I guess they value getting off at 7 to have dinner at the Omaha Chili’s before heading back to the Marriott to watch Netflix.
Also, IB meaning, for the most part, having to be in NYC. Consulting allows for the same "prestige" in LCOL, MCOL cities, where people can actually buy homes and raise families. Something many are looking to do at that stage.
+1 to consulting/tech being more welcoming to people who don't fit the H/W Greenwich lax star mould. Know everyone likes to dump on diversity / inclusion efforts, but a big reason why banks are doing that is because that lack of diversity is genuinely pushing people away.
It's not just race/gender either - I'm the only analyst in my entire class who grew up not upper middle class+. I remember at one of the happy hour one of the other analysts was talking shit about people on free/reduced school lunch, not realizing I have been on free lunch my entire life. These things do not create a welcoming environment for people of different socioeconomic backgrounds. Consulting/tech still skew that way, but way way less than IB/PE.
As someone who has what I imagine is the same background as you (blue collar/lower-middle-class; first gen college student; only one parent with a high school diploma), I know exactly those feelings. For me it hit earlier (in college). I was lucky enough to go to a top LAC; the place was crawling with kids from prep schools, kids who "summered" in the Hamptons or Bar Harbor, people who legitimately went quail hunting on the Vineyard or Nantucket during Thanksgiving, etc., etc. It was such a culture shock, and I was so far out of my depth. I heard tons of comments similar to that one you mention.
I found the most useful and productive strategy was just to be direct and very aggressive with these people. For the most part, they really don't know what to do when someone confronts them, and you will more than likely gain some of their respect (or at least fear). I'm being 100% serious. It's probably what the youth of today would call sigma male energy or something, but I can promise you that it works. I ended up becoming friends with a decent amount of them because I didn't cower or listen to any of their bullshit, and I think they kinda respected that.
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Because its hard to pull 80 hour work weeks at 30, which is around the average age of an M7 graduate.
With the exception of top elite boutiques or GS, most IBD shops will pay around 350k (maybe even lower) all in to a post MBA associate. MBB will pay 250k. 100k difference pre tax is around 60k post tax. Good portion of my M7 class already came from money, so an extra 60k post tax to compromise health, happiness, etc. wasn't really worth it.
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I think it's partially because the population of MBA students changed. 1-2 decades ago it was mainly finance guys, who would obviously be targeting holy grail of finance IB. now admission committees at MBA programs try to have diverse classes. and now you only have 10% of class being finance guys, and they still target IB or PE or VC. but the rest 90% are all sorts of strategy people from various industries, tech guys, etc. - so this crowd obviously targets consulting and strategy and tech.
Having recently left IB post-A2A for MC, I can echo the poster above that having both IB/MC experience should only further enhance a profile relative to having just 1 of the 2 even for PE/VC/HF exits (added plus if you're specializing in the FS space or TMT for VC). I've seen folks exit to solid buy-side seats if that's what they wanted (some without any IB or "high finance" experience prior to consulting), and the current state of the job market definitely helps too.
In terms of the appeal of consulting vs. banking, I've taken note of the following since I've made the switch which has helped offset the pay difference:
All in all - yes the pay difference is not insignificant, but at the end of the day it's not like juniors/mid-level people in Consulting are struggling to make ends meet while juniors/mid-level people in banking are chartering jets and yachts every weekend. Sure, that extra money compounded may lead to an extra vacation home down the line, but if you live a relatively normal lifestyle - you're better off than most people by working in either of these highly-paid careers.
A totally under appreciated field is tech sales. If you're a middle bucket sales guy, you make $300-$400. I work at a late-stage tech company and our best guy made $3M this year "working" like 30 hours per week living in Utah....