Give up banking and MBA? Difficult choice and disappointing stats on top MBA compensation 10 years in. Any comment?
Hello everyone! I recently stumbled upon an article showing that the average compensation for someone 10 years after his MBA is only $200K, and this for top schools like HBS! I then checked out the data for law school and it was daily similar. Check out the articles below:
https://www.cnbc.com/amp/2018/03/08/how-much-grad…
https://www.google.it/amp/s/www.cnbc.com/amp/2018…
How can this possibly be? This is really lower than expected given that 2/3 of MBAs go into either finance or consulting. It seems to show that professionals in America in general are not as highly paid as people seem to think. Is someone looking for a way to earn $1m+ a (or even $5m+) better off looking at other careers path such as starting a business or real estate development? Looking forward for all of your insights and reflections, even the anecdotal ones.
Thank you!
EDIT: I have just checked it out and actually the numbers are inclusive of the bonus. Check out the link below:
Something tells me you aren’t actually in banking because if you were you would know (albeit not easy to achieve)
The 2ib -> 2pe -> 2 mba will easily get you to $500k+ and can reach that $1mm+ status
or just stay in IB or IB > career track PE. easily would hit $1m+
My point is that this data show It's really, really hard to stay in PE / IB long-term due to the steeply pyramidal team structure and the ratio of burnouts. I used to think like you but then I saw this data which basically show that top bankers and top consultants from HBS end up nowhere. Was that not surprising to you too?
My point is that this data show It's really, really hard to stay in PE / IB long-term due to the steeply pyramidal team structure and the ratio of burnouts. I used to think like you but then I saw this data which basically show that top bankers and top consultants from HBS end up nowhere. Was that not surprising to you too?
If you want to make that you don’t need a degree...you need to own something.
It’s really, really hard to make a million dollars in a year. Less than 1% of Americans do (and far fewer clear it with only salary).
~$200k is 90th percentile.
But still starting salary out of the top schools is about $160k, so it is a little shocking that 10 years later, it's only gone up $40k. Especially when you consider all the IB+PE guys entered HBS making $200k. Maybe it's not including bonus or stock?
It's really, really hard to stay in PE / IB long-term due to the steeply pyramidal team structure, so not realistic to expect all MBAs who came from or started in (post-MBA) those industries to experience the same explosive growth in earnings. 9 out of 10 of them move to a job with both 1) a lower starting salary (at equivalent seniority) and 2) much lesser growth potential.
More importantly, you're also comparing the starting salary for 2019 grads to median current salary for 2009 grads, which is fallacious (you should be comparing it to class of 2019's earnings in 2029). Look up starting salary in 2009 and compare to that 10-year figure to get a real idea of the growth rate (or perhaps class of 2007's starting and 2017 salaries, to remove crisis impact)
Regardless, $160-200k in 10 years is still a >2% salary increase per year, not too far off the usual ~4%. It's slightly lower because your starting basis was so high and there a ton of MBAs competing for these 'lesser' roles.
That’s part of the trick with high salary entry level jobs. I had a labor econ professor who called them “rookie professions” ie banking, law, consulting, where they overpay entry level people because they aren’t just paying you for your work, they’re also paying you for your option value. In other words some small % of that class will grow up to be a partner who is worth a ton to the firm.
So as you move up the ladder, many of those options prove worthless and those people slowly peel off and do other jobs that often pay less than what they made in their earlier years . . or if not less than still not much more.
Point is, nobody should assume that salaries just automatically increase over a lifetime. That’s more true for other jobs, less true for these ones.
Well if you make 1,000 random Americans apply to HBS my guess is that 1-2 will get in so the fact that average Comp at 40 years old is so low for an HBS graduate is indeed super concerning.
It seems to me that the attrition rate is very high in IB and most IB exits can't get a decent job if they want something outside corp dev.
I am not from the US so my experience may not be a typical case on WSO but I worked at a BB and moved the an MM PE in my region (sort of a global name with smaller presence vs the MF guys).
I hate my job and exit from IBD/PE are limited with steep paycuts. No interview for non-corp dev corporate roles (due to very significant skillset mismatch and my current salary is too high); more than 50% paycut for corp dev (plus I will be competing with big 4 FDD guys who are willing to take an even steeper discount)
I guess this is also the case for IBD in the US.
I am not sure if it is worth for someone working at a blue chip F100 to study at MBA business schools">m7 at sticker price. The price you pay and 2 years of career is quite a big hit to your career.
If you are in a promising career path at an F100, you can become VP anyway and your company probably would offer you loads of rotational opportunities.
On the other hand, you will work an unfamiliar job in IBD with demanding (yet unnecessary) hours and culture. Perhaps you may just survive as an average performer without the protection of a FLDP program. And 3-5 years down the road you are pigeonholing yourself to corp dev rather than all the fp&a, treasury, strategy, corp dev, etc. roles that you can try in a corporate program as a star
Is corp developing a bad areas to launch your managerial career? What do you think the best department of a f100 company is to eventually reach the C suite? Marketing? Finance & Accounting?
I haven't worked at a corporate before so I guess other posters can also chime in.
But based on my observations and experiences heard from my corp dev to IB friends, you should join those graduate development programs if the corporate has one with long history/track record.
Corp dev is not bad if you join as a junior. You build contacts with senior and at the same time you are still junior enough to rotate or second to other functions/geographies which can make you much more competitive. It is difficult to do this if you are lateraling at IB senior level though and you will be stuck at a small department in a large company and the skillset is not very transferable.
Also, it is likely that most of us hating IB won't enjoy work nature of corp dev (probably hate it much less due to better hours and culture though). So this is one more thing to consider when you are looking at exits...
I cannot believe this data, if it’s true then it sucks! A restaurant owner with one single site makes more than this!
If you’re specifically looking to go into banking I’d search WSO for salary progression threads, it’s talked about a lot. Yes, associates out of business school make ~$160k. But what that stat doesn’t include is the $30k you make over the summer, the $60-75k signing bonus you get for accepting a full time offer, and then the ~$40-50k stub year bonus you’re paid about 6 months into work. All of this is even higher if you’re a diversity candidate that receives a diversity fellowship (~60-90k). There is also a huge disparity between EBs and BBs especially over time, and given that a large part of your comp is bonus it’s highly subject to market conditions.
There are a lot of articles that talk about if an MBA is worth it. It’s a lot of people who never got an IB calculating ROE, commenting on costs, etc. If you’re seriously considering it - especially if you want to make a career pivot - I recommend speaking with people who went down that path rather than reading clickbait articles. Also FWIW I personally have never met someone who went to a full time MBA program and regretted it...
Well I guess my post was not really about MBAs in general but about how most people who are in super high paying jobs I consulting and finance at 27-29 years old end up being nowhere 10 years later
I guess I am confused because I am not surprised. Since when has an MBA/JD = Unlimited career earnings? Sure, maybe I would expected it to be a bit higher, but I would not have guessed something materially different ($250k?).
Burnout is such an overused term. The majority of people were never committed to high paying city banking/law jobs to begin with. It was just a part of growing/padding the resume/paying off debt/having “fun” while you are young and then phasing out when you start going down the second half of life road (wives/kids/house/genuine career/hobby interests).
“Ending up nowhere” feels a bit harsh. The whole game of 2 yr upgrades and never ending ladder climbing sucks and most people don’t choose it perpetually. A few career moves through 30 and then “coast” - Nothing wrong with that. I lean towards climbing, but I have never scoffed at the other option. I think you are tunnel visioned on the revenue generating “rainmaking” thing and don’t understand that the majority aren’t doing that long term.
I think you are making the mistake of equating salary and wealth.
This is a median salary. That means it's quite possible that around ~30% of people do go into and stay in high paying jobs and really kill it and make 300-400k+/yr. It's unrealistic to expect 50-60% of people to do that out of business school though, so the median reflects a more modest figure. It also may not be all-in comp, only salary.
I'd be more interested in the distribution of all-in comp 10 years after business school.
Deal_Team_6 also makes a great point... compare it not to the 160k/year people get out of MBAs now, but whatever it was when they finished their MBAs.
That 200k number is base salary only. Also the 160k you see on the employment report is just base salary.
Are you sure? Where did you get that info?
It is just common knowledge. Call and ask admission offices. The only bonus shown is the signing bonus and it is listed separately.
This is 100% correct. Those employment reports only show base salary (and sign on bonus). Example: 200k VP IB salary could be making 500k all in. Won't show up on the report.
Source: Went to a top 10 MBA program, was in the student government and worked with administration on compiling data for these.
I have just checked it out and actually the numbers are inclusive of the bonus. Check out the link below:
https://poetsandquants.com/2018/01/29/the-highest-paid-mba-alumni/
I have just checked it out and actually the numbers are inclusive of the bonus. Check out the link below:
https://poetsandquants.com/2018/01/29/the-highest-paid-mba-alumni/
Look at the school specific employment reports, they’ll show you the breakdown of base salary and bonus salary.
I think you're conflating the goal of an MBA and salary as another post did a few days ago.
Post MBA, the goal is a fast track to a mid to high six figure salary where you have both optionality career wise and eventually some semblance of work-life balance and/or a career you're passionate about which you didn't have before (not necessarily mutually exclusive). All of us MBAs in banking did it first and foremost for the money and second for either the passion for the industry or the exit opportunities (which yes, are different than an analyst). I forget the exact statistic, but only 1 out of 5 incoming Associates typically makes it to MD, not great odds, for various reasons ranging from burnout to other life goals which are more appealing.
Unless you own your own company or join a startup which has a supremely lucky break, aka are being rewarding for the risks you take, the odds of becoming a millionaire are pretty low from your full time job.
Realistically, outside of being a c-suite executive at a company and possible a tech whiz, there are not many jobs that pay you above a $250K base salary annually (salespeople make tons of money, but its commission based not base). Most roles the higher you go even in banking are going to offer you upwards of $200K base and some combination of stock and a cash bonus which fluctuates based on market conditions.
Even making $200K base you're already richer than a significant majority of Americans, if that is your sole goal.
I went to business school to pivot from a low six figure job to a mid-high six figure gig and create optionality for my spouse and I faster than I would have been able to otherwise, to build an incredible professional and personal network and of course do dumb shit like start a company just to see if I could. Mission accomplished and would do it again in a heartbeat.
Yawnfest, but if you live below your means, save, invest and plan for retirement you will be in a great financial position in 10+ years. People forget that basic life hack.
Work hard, stay healthy and don't be an asshole- all things in your control that lead to a pretty fulfilling life.
It's definitely the same guy – "Analyst 2," view that not making partner at Bx after MBA = "burnout" / "failure," flawed methodology of comparing current starting salaries of current grads to salaries of 2009 grads 10 years in, issues understanding nuances of using median / mean for this data set, etc.
Do you plan to stay in banking long-term?
TBD- these are some weird times we're living in so grateful for a job first and foremost and will work hard at it period.
My personal goal is to own a company in 10 years. Keep in mind the company could be anything from providing financial/consulting services to managing rental properties to starting a teashop- I am still sorting out exactly what I really love and how to carve that into a business, but I know I want to try my hand at owning something 100% in full.
In theory if I slogged along for 10 years and wasn't chopped I can make MD and then bounce to start my own thing, but keeping an open mind and being realistic about personal goals (having a family, traveling, etc.) will probably cut out in a few years.
Life is too short, no matter how you spin it, and with all this time to really think about what I want out of life, it's better to pursue it sooner than later.
Actually the $200K is not just the base. It includes the bonus too. Additionally the $200K figure is just for HBS, the figure for the other MBAs are about $160-180K which is even more depressing
Who the fuck uses PayScale as a source for this type of thing? May as well have just plucked the number out of someone's asshole and started waiving it around like it's a hot tamale.
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