What should I do? MBA or not?

erhan08's picture
Rank: Chimp | 10

Hey guys,

I badly need your advice on whether I should do an MBA or not.

A bit about my background and goals: I have working in investment consulting for a few years now, have CFA, graduated in engineering from a good engineering school. I know a lot about asset allocation and general investment strategies, but not a ton about company valuation.

I have been accepted to Wharton and my goal is to be investment analyst at a hedge fund or long-only equity shop. Most of these places want people who did banking analyst or PE before MBA (maybe equity research too). I don't have any of these experiences. So I'm obviously at a disadvantage against these folks.

So the question is: Am I wasting my time and money by going to business school in the hope of getting an investment analyst role afterwards? Welcome any thoughts on this...

Comments (22)

Apr 17, 2014

No, I think you have a shot and you are giving yourself your best option by going to a top MBA for a complete reset. In order to close the gap you should quit early and find a summer (even unpaid...I know it stings but there will be a payoff) internship where you get some fundamental valuation experience. You should also hustle and find a small internship at a philly area shop (could even be looking at equities for a PWM as long as it can be spun as fundamental experience). You're most likely smart given you're going to Wharton, you'll have the name recognition, you just have to add some kind of pertinent experience. You will get some credit for investment consulting BC you "get" investing/have worked in the biz etc. Also you should be taking a self study modeling course and reading all the relevant books...theres a lot you can do self study wise to close the gap. I would look at sellside equity research as a backup just in case.
As an aside ever considered fixed income? It's more macro so your investment consulting role will translate little plus the engineering is a plus. Just a thought.

Apr 17, 2014

BTW I would frame it more as you want to do fundamental equity investing, not that you want to work at a hedge fund. Broadly speaking hedge funds aren't great places to start your career BC there's little support as everyone's there to contribute from day 1 be it as a modeling monkey or an experienced idea generator....I can't see you in either of these roles (nothing wrong). Target the good long only shops that are big and have a suppport/training system etc. I doubt you ever really had a shot at working at Baupost and even Fidelity/Wellington might be a stretch....but there are tons of equity analyst roles out there. No reason with focus+hard work+Wharton you can't land at a solid mid level shop with a great career path ahead.

Apr 17, 2014

@"Vagabond85" Thanks for the comments. If I can't get into AM right after MBA, what area of finance would say would give me the best shot down the road? I banking associate or sell-side equity research?

Apr 17, 2014

I would say sell side equity research for sure. I (along with others) have posted extensively about this elsewhere. Basically if you know you like looking at stocks then get to it, don't waste time with IBD. The variety of exit ops dont matter if you're focused on AM, there's no well worn path of associate IBD to top HF etc etc. Too many people here act like long only at a top shop is not challenging, lucrative, or prestigious...wrong. And if you are good the HF ops will find you down the road.

Apr 17, 2014

What do you dislike the most about the investment consulting and general strategy and asset allocation that makes you yearn so much to jump from your post ?

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Apr 18, 2014

Having done a bit of that earlier in my career I would suspect it.s the old "you're far away from the action" vs. direct investing so it can get slower/boring and isn't as challenging (or lucrative). Also, it can be argued you don't really build a tangible portable skillset that is appreciated by anyone outside the asset allocation/FOF type niche (unless you're a rainmaker biz dev guy or a quant that can do asset class return forecasting etc).

May 10, 2014

I will be interning at a FoF, and this is my concern as well. There's no doubt that direct investing at a HF or mutual fund is more lucrative and "prestigious," but I never got into security research, no matter how hard I tried to like it. Maybe it's my trader and macro background, but I just find asset allocation and portflio management much more interesting than valuation and modelling.

Apr 18, 2014

@Vagabond85, how about if the MBA is not at Wharton but a school like UCLA or Ross? Still recommended?

Apr 18, 2014

It will be much tougher and you won't get a marquee shop, but if you're focused (pass a level of the CFA, local IM internship) then you should be able to break in. Sell side research is no shoe in though. In that range I would consider NYU (NYC), Yale/Cornell (some IM focus/name brand), UCLA (close to socal IM), or UVA (punches above its weight for IM BC of alumni) as the ones giving me the best shot.

Apr 18, 2014

Not if you have a CFA and have a consulting background but you'll be able to land sell side research-- UCLA however is much better for IM lots of shops in socal

Apr 24, 2014

@"shorttheworld" I agree with @"Vagabond85" response to your question. Investment consulting is a misnomer. You don't do much investing. All you do (and how you actually get to progress in that career) is by just constantly bringing in new clients, not finding new investment ideas. As a matter you never want to be first to an idea since it has too much career risk in it. That's why guys like PIMCO and BlackRock have tons of AUM BC they are the safe boring choice, even though there are more capable asset managers out there. And he is right on with the skill set argument. I am 28 and can tell a few more years of this and will not be able to get out of this industry since my skill set is not very marketable. Also given that i'm not crazy about becoming salesperson (which is what successful investment consultants are) I will be average at it and an average IC will never be able to attain (or at least have a shot at attaining) financial independence since pay is not huge.

Apr 25, 2014

Definitely not a waste of time. Plenty of people from related industries (FOF, consulting etc) land AM/HF offers out of Wharton. Sell-side research is a good backup plan as well. Go for it.

Apr 25, 2014

thanks guys

Apr 25, 2014

Everything comes down to sales in the end even if you're a big time portfolio manager or if you're at a solid top well known shop -- I was in my office talking with the director of research for a large well known shop the other day because he was roadshowing with some sales guys .

Everything comes down to sales no matter what

Apr 27, 2014

True, but there's a breakdown right? A PM who is a very good sales guy but is a crappy PM isn't going to get far in this environment (unlike years past). An investment consultant who is mediocre at asset allocation but good at sales could still be very successful. PM's that aren't good at sales can still be fairly successful, while the same isn't true for investment consultants. Then there's the actual substance of the non sales portion of your job for these two positions...I don't know any direct investment folks that yearn to go to the manager selection side (unless they're hanging up their spurs so to speak for something more laid back), but the line goes around the corner for vice versa

May 10, 2014

yeah but it's a matter of degree. If you're a PM or research analyst at say baupost the only type of "sales" you might have to do is convincing your boss of your idea or maybe talking to clients if the fund needs to bring in more capital (even the latter probably will rarely happen). The OP's main point is right; if you want direct investing in a risk-taking role, IC is not the right path.

May 1, 2014
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