Why hire MBA associates?

There's too much A2A churn which explains why there is MBA hiring.... 

Too many people leave their firms or the industry altogether leading to a thin promotion cohort to associate. When hiring gets tighter usually MBA hiring is one of the first funnels to go...

IBs would rather not fix their shitty staffing model and the way they treat analysts who carry most of the material creation workload and just replace them with MBAs.

Number 2. Most of the best senior bankers are MBAs. Partially because more MBAs stick around, and partially because the skillset of a good senior banker is totally different than what makes a good associate/VP.

If a bank hired no MBAs, there wouldn’t be a large enough senior banker pipeline.

Sorry to break it to you but most senior bankers and bank execs are MBAs. Being a great analyst might make you a great buyside recruit but rarely produces a great senior banker. 

I'll try and break down the thought process.

You already know this, but seniors are the ones who actually make the bank money so they need to protect that pipeline. There simply aren't enough A2A's to fill the need especially if you consider they need to last long enough to also become a VP and Director first, whereas you get a larger batch of MBA associates each year to try and push through the meat grinder once the largest filter has passed. You can't lateral hire to fill the need either because the same under-supply applies at scale. But you are right than an A2A is a more efficient hire in a vacuum, I've seen teams cancel their MBA internship interviews because an analyst unexpectedly opted for an Associate seat.

To your first point, the B School relationships are still important because they exist as a talent filter for people with strong quantitive and communication skills that banks don't need to spend time (money) assessing. Second, the MBA allows new bankers to come in with a semi-organic network full of industry nepo babies who could potentially convert to future business, you can't readily recreate those relationships.

To your second point, you are partially right, speaking from experience, the ideas of "long term potential" and "management skills" contain a healthy amount of cope. It's more realistic to say MBA associates have fewer exit opportunities that beat the comp they can get in an IB role relative to their analyst counterparts and are thus more likely to follow the path to completion.

So yeah, you hit the nail on the head in comparing individual A2As and MBAs, but for firms and the industry it's an issue of supply and demand.

This is a worthwhile question to ask - as PE fundraising slows and recruiting pipeline dries up, I can imagine A2A becoming a more attractive path (in relative terms). I also may have been over optimistic about AI progress - it is nowhere near close to shaving meaningful time off analysts days as of yet and so there will still continue to be a sizeable analyst pool (to the dismay of group heads betting on AI)

To me, this “soft skills” advantage MBAs have is overstated. An analyst who has more technical reps and have been in the seat longer will have equal or greater competency speaking with clients, running workstreams independently,sector knowledge, pulling together pitch materials, etc etc. although maybe banks that shut analysts off into a dark corner to arrange logos won’t get the benefit of that skill development 

Because MBAs make better senior bankers, even though they are a net negative the first year or so. They’re better socially, and they usually came from “lesser” backgrounds & hustled for their MBA so they have that “dog” in them. And let’s be real, most good IB analysts leave to other opportunities. 

No need for 50 pissed off analysts to offer a rebuttal 

“Why am I right and all the banks are wrong?”

You don’t need to be smart to do IB. Just need to give a fuck about the job. MBAs have life experience and usually are (sometimes) young / new parents who need to make money… they realized being an IB lifer despite the brain hemorrhage would be better off than underwriting loans in corporate banking or auditing fortune 1000 companies getting paid like shit.

You'd obviously rather retain good analysts but usually not enough that both want to stay and who have the right skillset.

Laterals have their own challenges. Those who are good have a ton of goodwill built up at their bank so if it's a peer there is no real rason to leave. Those from a few tiers lower may be hungry but often aren't used to doing work at the level required, which forces you to have to teach them to unlearn a bunch of bad habits

Laterals have a higher short term floor but lower ceiling usually. The good juniors are well regarded at their current shops so they don’t leave, so you get lateral candidates who were either fired or at lesser banks

There is no reason

MBA associates are pointless.

A2As are the only way to go. Pay them more, train them, retain them. There’s nothing an associate can do that an analyst can’t. 

And if you’re screwed it up so badly you can’t retain analysts just hire laterally big 4. Better than any MBAs.

You’re right on the short-term point—A2As are usually more productive early on. But banks aren’t optimizing for year 1 output. The main reason is pipeline + attrition. A huge chunk of analysts leave after 2 years (PE, HF, etc.), so there simply aren’t enough strong A2As to fill all associate seats consistently. MBA recruiting becomes a reliable way to restock the class every year. Also, the job changes pretty quickly after associate. By VP, it’s much more about client interaction, judgment, and relationship building than pure modeling. MBA hires are often screened more for those traits, even if they lag technically at first. There’s also a long-term retention bet—MBAs are more likely to stay through VP, where banks actually make their money back.

So yeah:

A2As = better short-term efficiency
MBAs = solve hiring gaps + better long-term pipeline

It’s less about who’s better day-to-day, more about staffing the system over time.

OP was hoping this would turn into a MBA hate post but got uno reversed lol

A lot of their classmates are buyside. 

Also MBAs from top schools don’t want to work in IB. There are much better options. Probably negative selection bias for those who go into IB because they have much better buyside, consulting, or industry options

It’s just a different risk. I have not seen any non-boutique bank successfully cut its MBA program. You need the pipeline because of how abruptly juniors can flame out 

Instead of hiring useless MBAs, they should hire muscular twunks from German or Nordic countries. 

I'm not in IB but I always find these discussions funny. It's almost invariably an analyst who probably has limited life experience, and limited context on the "why" behind the deals they're working on. They're probably good at being excel monkeys and put way too much weight on this. 

The older I get the more I understand how important life experience and varied experiences become. That is what MBA hires bring even if they are not as fast. I would wager they understand the big picture a lot better, they can connect with clients and leadership a lot better, and understand the industries they serve in a much more direct way than a 22 year old spreadsheet monkey does.