Hey guys,
So bonus time finally came around in my current job as a middle office financial reporting analyst for a mid size buy side Asset Management firm. We had a record year. But due to policy changes, since I'm not a front office employee, I got a big fat zero. This is after pulling 60+ hour weeks and making personal sacrifices.
If I wait for another year, I'll probably be bumped up to a front office role. Only thing is, all my friends who have been promoted here did not get a pay increase. Wow.
The pay is rather bad, even for this very low cost of living area, at $45k.
I've been accepted to Fuqua and Kellogg for an MBA but I'm nervous about adding more debt to my current 50k with an uncertain outcome.
Should I do the MBA or apply to a ton of places hoping someone takes me and bumps me up to 70-90k? I'm not asking for much, just a risk management role would be nice. Although if I do the MBA, it's IBD or bust, or I'll never pay back the loans.
My friend who works down the street as a maintenance guy changing light bulbs and picking up trash and is essentially illiterate makes more than me from employment (I have other income streams outside of work) because he gets overtime.
I'm rather frustrated and lost. Any advice?
If I was you, i'd do the MBA in a heartbeat. It will completely reset your pay scale.
Thank you for your advice. The massive debt just scares me. I have dealt with alot of uncertainty in the job markets because of the financial crisis and have had some pretty nightmarish experiences. I've had to fight like crazy just to get THIS job. So the prospect of incubating for 2 years while factors outside of my control could destroy the economy is daunting.
If it's any consolation, the data consistently show that those who take out the most student debt default the least. If you work hard, either of those MBA programs will give you plenty of options.
I would seriously consider CFA if your goal is to stay in asset management. MBA is always an option granted you are relatively young. CFA is much less risky in terms of your financial outlay and actually means something in traditional asset management.
I don't want this to be a CFA/MBA flame war, but I did loans for undergrad, CFA tests opened some doors for me, and I would be horrified at the idea of having to pay back 100k+ of loans after I paid off my undergrad loans
It's no doubt a risk, but youre essentially going to come out of there with a completely different set of opportunities. It's a game-changer for your career, and should really consider taking the leap while you can.
Think of it as a contract that has limited downside (cost of MBA ~$150K + unearned salary ~$120K), and potentially unlimited upside (lifetime salary can easily double your current outlook).
Kellogg is often willing to negotiate- not on your tuition rate but on how many classes you need to take and how much credit they will give you coming in.
A CFA for a risk manager can sometimes be helpful, but it's a lot more helpful in research, analytics, and maybe trading.
I've always been of the view that our utility curve tends to have this elbow 20% above our current earnings potential. If you are earning $125K/year, you don't care all that much what you make beyond $150. If you are earning $150, you care less beyond $180. An MBA sounds like a great idea to an already MBA earning $150-250K/year, and it may have felt like you were destined for that job, but to someone earning $45K, $120K in debt feels like a lot of money. In some sense, it's like telling a college student to just hail a $40 cab to take then to the airport. It's not a big deal to you, but it's a big deal on a student's budget.My hunch is that OP would much rather have an $80K/year job and no additional debt than an 80% chance at a $150K/year job and $120K additional debt. 4% interest and a 15 year repayment on that MBA debt works out to be ~ $1000/month. That's a lot easier to think about if you already had a job paying $80K or $100K/year.
If that's the case, OP needs to hit the job market. IMHO a risk manager can earn $80K pretty darned easy- that figure is probably closer to $100K in NYC.
1.) Apply for jobs in NYC. 2.) Don't disclose current income until last minute. If anyone asks for your current income, mention that street is probably $100K for a risk manager. 3.) Live in Jersey City or Brooklyn. 4.) Pay down student debt for 18 months. 5.) MBA (?)
I guess that would make sense, but only if OP already has secured an $80k/year position going into this decision. Otherwise, its also an 80% chance at a $80k gig which would change things.
"to someone earning $45K, $120K in debt feels like a lot of money"
I second IlliniProgrammer; this can't be emphasized enough. I remember not attempting to apply for an Ivy League college as a kid because the roughly $80,000 of debt that I would have had to take on was an absolutely terrifying figure to my $5.00-per-hour-minimum-wage-earning self.
The difference is that I missed what was probably a sure thing; your potential $120k expense isn't a sure thing at all.
Do what he suggests: find a higher-paying job, work for a few more years, then go for the big money. Maybe while doing this you discover that you don't really need the MBA. Maybe an even better opportunity comes along.
^^^ Not sure I'm reading you right, but I think OP has an 80% chance at a $80K job right now with $0 additional debt.
What do FO guys make at this fricking bucketshop? $60K all-in? (Sorry no offense OP, you deserve better.)
I have been warning people for years that this was a tough economy that was going to get tougher for finance, and that saving money was a smart idea. I think we're about as tough as it gets now when HBS is probably going to have an 80% placement rate this year and Associates out of MBA programs are making $150 total comp at BBs.
I think it depends on OP's appetite for risk. With the MBA, his returns will have a huge variance. But, without an MBA, his returns may be modest, but with much less variance. But outside of pure statistics, I think there is something to be said about the value of and MBA that tilts the scale in favor of getting it. I guess I'm more of a bull than a bear when it comes to cost of education
OP, do you mind saying the general vicinity of where you are located?
And I would say go for the MBA. I gave up a tremendous grad school option a few years ago because of cost and have regretted it since.
Hah, you guys are great. This is exactly what I was looking for.
Simple, I am in the midwest, cost of living is on par with Houston/SLC et al
Illini, you think I have an 80% chance of an 80k job right now? If so, I'd probably take it and run.
Illini, I also understand your NYC comment, but I am really looking for a lower COL area. I'm not one of these early retirement exteme fanatics, but I lean to the minimalist side and I've been targeting areas like NC, Salt Lake, Texas, GA, FL, etc. Even Chicago wouldn't be bad. But in NYC, I'd have to make over 110k to equal my current pay, says the interweb.
Also, did you say 150k all in comp for post-MBA associates at BBs in FO Ibanking? Do you have a reference for this I can see? If so, I'm out of the MBA game. I was setting my sights on 125k base plus 75-12k bonus. If it's truly only 150k, I don't think I can justify that!
Also it's not that I'm dead set on risk management, although I find it interesting, but I just wanted to show that I am not necessarily in need of a FO Ibanking position UNLESS I do the MBA, at which point the debt would make it necessary. A cool 70-90k in a low COL area with most weekends off right now would be AMAZING, especially if it had the potential to grow to hundreds of thousands with years of experience.
The true value of an MBA is not the salary first year out. Assuming you go IB, an IB associate post MBA can expect to see their salary grow exponentially. By the third year you can expect to be making $300k+. It's almost impossible to expect that in your current position/outlook.
But again these are all hypotheticals that you will compete for if you start your MBA.
60 hours/week is sustainable. But when you get to $150K/year and 60 hours/week, the marginal value of an hour increases to $200. Those last 10 hours simply aren't worth it, IMHO.
I say start looking. It makes absolutely no sense whatsoever to earn $45K/year, even if it's a comfortable $45K/year, when you have $50K in student debt and can earn $90-100 in Manhattan, spending the money in NJ or Brooklyn. You can have a comfortable life, with a roommate in a two bedroom apartment, in Jersey City on $60K/year of pre-tax income. Every after-tax dollar after that is money that can pay down your student loans. So if you go this route, you can have your student loans paid off in two years. And then you can think about an MBA.
Doesn't it feel better to think about an MBA with $0 debt and knowing that if you got your old job back, the worst case is your loans would be paid off in five years?
$300K/year in IBD is great, if you're working 50 hours/week. But most reasonable people, if you really asked them, would take $150K for 50 hours/week over $500K for 85 hours/week assuming no option to switch careers. (How would you spend the $500K if you didn't have time to spend it?)
There are no guarantees in finance - high volatility/low job security. I think he was making a case, and not necessarily giving you a crystal ball answer.
Take a step back and really re-evaluate things. You can go to Kellogg and even do consulting where you are making north of 150k for a couple of years, then north of 200k after your first promotion. Debt or not, you have a very small chance of earning this type of money without going to Kellogg. You are making a decision which could cost you millions if you choose incorrectly, so stop just thinking about what is going to happen one or two years out. If it was me, I would go to Kellogg and never look back. You are only nervous about this because you don't have a guaranteed job offer. If you were guaranteed 125k base + 25 to 50k bonus post-MBA, why would you care about $15,000 per year in P&I payments? You would make 5x your current salary ffs. I think that you are simply not reacting well to uncertainty and it is clouding your judgement.
OP, when you say "FO", specifically what job will you have: trader? ER? PM?
If by "FO" you mean a quant supporting a desk, then no, it's not worth it, get the MBA now and you'll be making multiples of what you make now even if you don't go to the extreme of IBD. Hell, even a mid level F500 manager is making more than you right now, look at it that way.
Oh also the FO guys with MBAs and 5+ years of experience make about 100k base I believe, and I'm not sure on the bonus. I'm pretty sure the senior people who've been there 10+ years make substantially more, like 200k-300k, but that's a long time and alot of political hurdles to jump, plus this location is terrible.
Go to Kellogg and worry about your loans later.
Try running $100K for Jersey City, zip code= 07302. It's a 30 minute commute to Wall Street or midtown.
Also don't forget to factor out your ~$8K/year (pretax) student loan payment.
I'm a huge fan of analytics, but let's run them well. My hunch is that if you are willing to add ~20 minutes to your round-trip commute, you can have a nicer life in Jersey City or Brooklyn on $90K than you can in the Midwest on $45K.
I used to live in JC and it was great. Huge apartment, 20 minutes from my place to the 34th PATH stop and extrememly cheap. I highly recommend it.
Have you attempeted to find a new job? Or basically just starting the search. Might as well see whats out there and what interviews you can land
I hadn't considered that. I know it's a must to live in manhattan for ibd because of the hours, but for risk, a commute might be ok...,
Yeah. My rough estimate is that if OP goes out on the job market, there is an 80% chance he can find $80K/year assuming he is a reasonably competent risk manager. Heck, this is analyst starting salary in New York for risk. I'm not even giving the OP the benefit of a $10K bonus.
OP should not take the money and run immediately. OP should get the offer first, then take the money and run. Keep your current job, interview for the risk role, and when the time comes for final round, you have a doctor's appointment that you need to take a day off of work for.
Risk is a 0.5 beta job. It is not trading. It is not even research or banking. It carries some risk, but so does OP's current job.
Also, OP should be aware that while NYC has a lot more in common with Chicago or the midwest than San Fran does, the NYC work ethic probably means an extra five hours a week.
I may be just talking complete non-sense as I really don't know anything about MBAs... but could you defer admission, wait until you get promoted to FO and then go MBA?
Maybe it doesn't matter after b-school but would having FO prior be beneficial as well?
Well, you can defer admission for a year but it has to be for a serious medical reason or active military service. Even then, tuition is rising by almost ten grand per year. And then I'd be screwing over whoever hires me, since I'd only be there for a few months. I don't think it matters what you do (FO/Bo/mo/snakecharmer/male escort) before you do the MBA. It's pretty much a reset button. Also, wow....my pity party thread has a graphic now. Hilarious
Just to make it clear, what is considered FO when we talk about Asset Management?
I think Illini Programer already did a good job covering most of the salient points, so I'm really just piggy backing. If you've been accepted to Fuqua and Kellogg obviously those are damn good MBA programs even if they're not the traditional finance powerhouses like Booth, Wharton, and Columbia. A quick glance at their employment statistics will show that they will most likely place you in the six figure income range initially out of school, both schools also seem to represent well for IB outside of NYC.
Personally, I was in a similar situation to you this time last year, 50k ish job in a LCO area, although no loans. I feel like I made the right decision in going back to get my MBA because so far it has put me in the running (i.e. I have an internship lined up) for an income bracket that would have been difficult to attain without the degree. Although, for full disclosure I was NOT able to secure an IBD internship despite gunning pretty hard for one, but was able to get a finance internship. In the long run you're probably better off getting that MBA, it serves as a little bit of insurance for your career and like I said will propel you into another income bracket that will make taking on that level of debt a reasonable decison. Not sure if you've done this, but I would make SURE to go back to Booth and Kellogg and ask for more money. Not saying you'll get more for sure but it can only help you and you would be surprised what becomes available especially as the schools know who has accepted and declined their offers and subsequently their financial awards.
If you're going to get to FO as a matter of fact, I'd stay, but only if you're CERTAIN...otherwise go to bschool now. If you get the bump, leverage it towards a better job at another company and/or go to bschool next year with better options. The rest is noise.
Get yours dude.
200k in debt isn't so bad when you've got a job paying you >100k, which is the level that the MBA programs you got into (congrats) put you in. Just live a bohemian lifestyle and aggressively attack any loans.I've seen it done on multiple occasions, so it's not rare. I'd do the MBA IN THIS PARTICULAR SITUATION in a heartbeat. Sure you might have to delay buying that house and luxury car, but you'll be too busy paying your dues anyway to notice.
You sound a little TOO certain about getting that FO role. I'm a little jaded as I've had the rug pulled out from under me on more than one occasion, so just be careful with that. Of course it's probably not the best idea to have people on an anonymous site advising you to quit your job and borrow large sums of money, lol, but since you're not really any closer to your career goals (yet), you have to take the avenue that gets you there, no? If you get offered a 100k gig next week then you can revisit.
Other thing is this: if you're really worried about borrowing a lot of money for grad school and are happy making 60-90K, why not just get a masters in accounting? You can do these programs in about a year, will have guaranteed job security, will be making +/- 80K after a couple of years, and they can be dirt cheap...some start at 30K and the better ones are 50-70K.
This assumes just paygrade, not actual work, so if you like risk/trading better and don't care as much about pay, then see my other post.
In a way, it's kind of refreshing to see someone who's NOT obsessed with taking the most hardcore approach possible and has a balanced mindset about career. Typically, most discussions about grad school look something like "oh hai bioches, HARVARD!!! -> ibD -> pe/hf -> HARVARD!!! -> something something found billion dollar company -> wheeee rule da worldz omgz" blowhard crap. Hearing someone actually worry about 50K of debt as the financial industry circles the drain is probably a good move, considering that it's going to keep getting worse for another couple of years.
That's the other thing, I already have a master of finance from a reputable (in the top 10-20 range) school. So for me the marginal value of an MBA is reduced. I know it's still necessary to get into ibanking and other "prestige" jobs where I'll wear a tie and smile alot, but ultimately that is not where I want to be. I'd just be doing those sorts of jobs for a few years to stash some cash and run. Many of the jobs I'm applying for just require a master's in something, not necessarily an MBA. I started applying like a madman about a week ago, so hopefully I can lock something up before I need to make a hard decision about school. That is such great advice about Jersey City. You've literally multiplied the number of jobs I'm applying for by a factor of ten, since NYC is now an option.
I see what you mean about the marginal value of an MBA.
But it's worth noting that having a Mfin and an MBA changes your prospects strongly towards a trading/AM/quant research direction. You'll be ahead of your peers in recruiting for those areas, and you can learn much more interesting things at school because of your strong quant background... which will in turn make you more competitive during recruiting. Chances are,(at Kellogg or Fuqua) your average classmate will have non of the quant finance background you have, which makes you really stand out. The Mfin give you an edge when coupled with the MBA to come out of recruiting with some stellar offers. I wouldn't worry about your job prospects post MBA.
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You already have a top 10 MFin and you're only working for 45k? No wonder you're so confident about getting bumped up to FO. OK now the question becomes how badly you want a "prestige" job? Because you technically already have enough experience and education to find a nice comfy well paying more senior role, mitigating the need for the MBA. Consider meeting w/ a headhunter to see what your options/opportunities are. They're usually the next best thing without access to OCR or MBA networks.
You have the change to go to two top MBA program. If I were you, I would quit in a heartbeat and attend either.
From your post you seem to want your salary bumped up to 70-90k at your current role, which you sound like you don't enjoy. Also factor in that once you hit that 90k, you're probably going to be at the upper end of the pay scale in your role, so effectively you're hitting a glass ceiling.
Now consider that median salary (not including sign on + end of year bonuses) is around 100k first year out at most top schools (assuming you were to go into finance or consulting), and it only goes up from there. Plus the opportunities that the MBA would open up would definitely not be available to you otherwise.
If you take a long-term view, your best option is to take the MBA route.
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If it helps, I've never personally met or seen a top 10 MBA WITHOUT good prospects overall. They may not have ended up doing what they originally dreamed of doing (I know a guy who was Consulting or bust but ultimately had to "settle" for a product manager gig at fukking Amazon.com) but best believe they found a way to get paid. Even the ones who weren't really inclined towards business or quant (which you happen to be), ended up getting six figure roles as school administrators or what have you. A few others did Admissions Consulting as a side hustle(!). You get to write your ticket at a top 10 school. If debt is your ONLY worry, while significant, your earnings potential ought to take care of it. Besides, you've got a pretty raw deal as it is as underpaid as you currently are.
Yes, not doing an MBA could cost OP millions. But the utility of those millions may not be worth it for OP. People are risk averse, they want to have lives, and $200K isn't worth it.
Right now, I am debating between landing at this brand name hedge fund where many people who join wind up becoming worth eight figures, and joining a lower key firm with really nice hours. And it's a surprisingly tough decision. My gut wants the trading firm; my brain wants the hedge fund.
This decision is being made without the benefit of an MBA, btw. With OP's MFE degree, he could wind up having to make a similar choice one day, again without an MBA.
I know where you're coming from here, and I surely agree with you that MBAs are vastly overrated. However, you're deriding the argument that the OP could be in line to make a far higher salary out of a top MBA program, then immediately suggesting that he might be given the opportunity to join a HF where he could be worth "8 figures" without the MBA? If we're really talking about probabilistic outcomes, this shouldn't even be a consideration.
With your past education and experience (assuming you are not a weird person), you shouldn't have major difficulty getting a IB job out of Kellogg or Fuqua. Most are paying $100K base, $40K~ signing bonus and $35K+ stub bonus, then bumping base to $125K or something next year. If you don't want to be in NYC, you can find your way to Wells Fargo, Harris Williams or any Chicago MM firms.
The worst that can happen with an MBA from either school is you get a corporate finance gig that pays $90K-$100K in a low cost of living city. And both Kellogg and Fuqua aren't just good schools, but actually a fun place to be. You can wait another year or two, but will only get older or be the Risk Mgmt guy forever cause you are too risk averse.
Disclaimer: Borrowing every penny and going to MBA now, doing IB this summer.
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