Why do MBAs seem to favor consulting more than banking nowadays?

Ryan Finance's picture
Rank: Orangutan | 272

Take for example, Columbia's 2017 Employment Report. I heard CBS is a finance powerhouse... but the top 5 recruiters in 2017 were McKinsey, BCG, Bain, Amazon, and Deloitte! In fact, 55 students went to McKinsey and only 8 went to Goldman Sachs.

In addition, why is the % of MBAs going to IB decreasing, while that going to consulting increasing?

Any insight is appreciated, meanwhile, these are some of my guesses (TL;DR). Since I'm not working in neither IB nor MC and I'm not from the US, please go easy on me.

  1. MBB recruit more new hires than BB IBs at the post-MBA level. However, I find it hard to believe that this is the case
  2. There are not many consulting firms (MBB + a couple of others) but there are many BB/MM/EB banks, so the recruitment for banks is more "spread out". That still doesn't answer the question why only 5-10% of MBAs in most top 15 bschools joined banks while 20-30% joined strategy consulting in 2017
  3. Perhaps Bschools group a lot of jobs into "consulting?" (while only a small % of them are actually strategy/management consulting)
  4. Most ex-BB IB analysts don't want to return to IB. They'd rather go to the buy side. This makes sense because the % of MBAs joining PE/HF/AM/VC is still high especially at Booth/Wharton
  5. IB analysts who know they want to stick with banking don't get MBAs... grind 2-3 years and get promoted to the Associate level (is that a thing?)
  6. Many ex-MBB BAs have their MBAs sponsored -> a lot of them get into M7 and then go back to MBB
  7. Bschools admit more consultants than bankers
  8. Bankers have more incentives to switch to consulting than vice versa
  9. Many MBAs start thinking about settling down so they value more spare time with the family -> banking is not an option
  10. Just a hip trend thing. After the financial crisis, bankers are seen as evil/greedy, while consultants are praised as "smart" and "problem solvers"
  11. Bschools admit a lot of engineers, liberal arts students and whatnot. Without finance experience I'm willing to bet they are more interested in consulting than banking
  12. Recruitment at MBB is easier, so of course more people get offers from there -> I don't think it's true, however
  13. The pay gap between consulting & banking is closing -> most employment reports show higher median income (but lower median bonus) for students heading into consulting vs banking
  14. The banking industry is shrinking so most students are jumping ship

Comments (3)

Sep 7, 2018

I'd say that better and more career opportunities has to do with it. If you go to McKinsey, work there for 5 years, you have all the options in the world. Pretty much every industry is going to take you in, for management positions. McKinsey is, after all, a CEO factory.

Sep 7, 2018

There are a lot more positions available for consultants versus investment banks. That's why you see 55 going to McKinsey from a single school versus 8 going to Goldman.

Sep 7, 2018