Find all School-related info fast with the new School-Specific MBA Forum

It is currently 16 Sep 2014, 18:06

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Why would someone in IB or PE do an MBA?

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
User avatar
Joined: 05 Jun 2008
Posts: 78
Followers: 1

Kudos [?]: 14 [0], given: 0

Why would someone in IB or PE do an MBA? [#permalink] New post 26 Dec 2008, 19:38
Just out of curiousity, I'm wondering why anyone from IB or PE would do an MBA? (As you might guess I'm not from any of those industries). A few people I know in IB and one in a mid-market PE fund are also submitting applications this year, and I've heard that their compensation is currently at or greater than the median compensation MBA grads come out with. So for them, the ROI on an MBA isn't that substantial - not immediately anyways. So what's the incentive to do an MBA, apart from the personal growth / personal experience aspect?
Senior Manager
Senior Manager
avatar
Joined: 15 Jan 2008
Posts: 347
Location: Evanston, IL
Followers: 2

Kudos [?]: 40 [0], given: 1

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 26 Dec 2008, 19:58
BSchoolorBust wrote:
Just out of curiousity, I'm wondering why anyone from IB or PE would do an MBA? (As you might guess I'm not from any of those industries). A few people I know in IB and one in a mid-market PE fund are also submitting applications this year, and I've heard that their compensation is currently at or greater than the median compensation MBA grads come out with. So for them, the ROI on an MBA isn't that substantial - not immediately anyways. So what's the incentive to do an MBA, apart from the personal growth / personal experience aspect?


Personal growth, a break, gaining a whole new business network.

A couple friends of mine at Kellogg from PE firms are considered geniuses by their colleagues because they're riding out this bad time in b-school.

Also, some friends have their sights on raising their own funds someday. Using b-school to hone skills and work on their ideas.
Senior Manager
Senior Manager
avatar
Joined: 06 Mar 2006
Posts: 497
Followers: 7

Kudos [?]: 76 [0], given: 1

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 26 Dec 2008, 20:07
BSchoolorBust wrote:
Just out of curiousity, I'm wondering why anyone from IB or PE would do an MBA? (As you might guess I'm not from any of those industries). A few people I know in IB and one in a mid-market PE fund are also submitting applications this year, and I've heard that their compensation is currently at or greater than the median compensation MBA grads come out with. So for them, the ROI on an MBA isn't that substantial - not immediately anyways. So what's the incentive to do an MBA, apart from the personal growth / personal experience aspect?


I have a friend from IB and she is applying for MBA this year as well. She thinks IB is too stressful. She want to switch to management consulting.
Director
Director
User avatar
Joined: 14 Sep 2007
Posts: 908
Schools: Kellogg '10
Followers: 6

Kudos [?]: 87 [0], given: 15

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 26 Dec 2008, 20:45
I make more than the average salary of any B school's average starting salary (especially outside of all the traditional industries) and I want an MBA to expand the opportunities I have for future employment and for the amazing experience that it (hopefully) entails. From an NPV perspective it is probably a bad idea, but financial considerations are far from the top of the list of things I care about.
_________________

http://www.fantasticcontraption.com

Get the best GMAT Prep Resources with GMAT Club Premium Membership

1 KUDOS received
Manager
Manager
avatar
Joined: 25 Jan 2008
Posts: 166
Location: San Francisco, CA
Schools: Wharton, Chicago
Followers: 1

Kudos [?]: 12 [1] , given: 0

Re: Why would someone in IB or PE do an MBA? [#permalink] New post 26 Dec 2008, 21:25
1
This post received
KUDOS
BSchoolorBust wrote:
Just out of curiousity, I'm wondering why anyone from IB or PE would do an MBA? (As you might guess I'm not from any of those industries). A few people I know in IB and one in a mid-market PE fund are also submitting applications this year, and I've heard that their compensation is currently at or greater than the median compensation MBA grads come out with. So for them, the ROI on an MBA isn't that substantial - not immediately anyways. So what's the incentive to do an MBA, apart from the personal growth / personal experience aspect?


A few points:

1) A lot of IB/PE folks don't have a choice to remain at their firms or in the business, e.g. a lot are losing jobs, not as many promotions are available, firms might expect or encourage pre-MBAs to leave, etc.;
2) For the IB/PE folks who get MBAs, they are expecting, and indeed are the most likely, to land jobs that pay significantly more than average MBAs;
3) Many in IB get burned out and look to career switch, but they still want a higher-level employment within a new career, and an MBA is seen as the ideal transition tool; and
4) Building network to increase future opportunities for business or employment.

When thinking about the "ROI" calculations, remember that the opportunity cost for just about everyone to go to business school just decreased significantly, e.g. not only is compensation decreasing, we should now use a much higher discount rate to signify the increased riskiness of employment (probability that you will lose your job has gone up.)

I'm going to go ahead and prognosticate here, but I think that there are still a lot of IB/PE wannabes who assume that the business, and more importantly compensation, will bounce back to the glory days, and they are going to be disappointed at the conclusion of their b-school experience. Both the IB and PE business has fundamentally changed, but the reaction of MBAs will happen slower than reality because of all these pre-MBAs in IB/PE who assume they can "hide out" in b-school and a job will be happily waiting for them once they graduate. Inevitably all those pre-MBAs have career-switcher friends who will probably believe the same thing and hope that they will get a seat at the table once the economy rebounds. Don't get me wrong, there is a place for IB/PE, but the competition for those jobs just got a LOT tougher, and the outsized compensation may never return to pre-2008 levels. Gradually, a lot of career switchers are going to realize that they won't be able, or even want, to land in IB/PE, and the will inevitably move on to a new hot industry which offers either high prestige or compensation. That industry will get inundated with smart, young, ambitious, aggressive, relatively inexperienced and yes, money hungry, MBA graduates. Times will be good, for a while, and invariably things will fall apart again repeating the same cycle. My more optimistic side wants to believe that other career tracks will just gain ground on finance and there will be more of an equilibrium, but prices, or paradigms in this case, are sticky.
MBA Admissions Consulting
avatar
Joined: 26 Dec 2008
Posts: 2422
Location: Los Angeles, CA
Followers: 72

Kudos [?]: 527 [0], given: 0

Re: Why would someone in IB or PE do an MBA? [#permalink] New post 27 Dec 2008, 00:07
They go precisely for similar reasons that other applicants go -- to get out of their current industry and find something else. There are also others who are looking to upgrade their employer names (i.e. they want the Goldman job, they want to work at a better fund, etc.). Same with consultants - the Big-4 guys looking to get the McKinsey job.

From my experience with applicants, friends, etc. I've known or worked with I'd say it's 50/50 - half want out of finance, and the others are looking to upgrade their existing wardrobe so to speak.
_________________

Alex Chu
alex@mbaapply.com
http://www.mbaapply.com
Follow me on Facebook

Senior Manager
Senior Manager
User avatar
Joined: 13 Jun 2007
Posts: 410
Schools: Wharton, Booth, Stern
Followers: 11

Kudos [?]: 79 [0], given: 0

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 27 Dec 2008, 01:53
AlexMBAApply wrote:
They go precisely for similar reasons that other applicants go -- to get out of their current industry and find something else. There are also others who are looking to upgrade their employer names (i.e. they want the Goldman job, they want to work at a better fund, etc.). Same with consultants - the Big-4 guys looking to get the McKinsey job.

From my experience with applicants, friends, etc. I've known or worked with I'd say it's 50/50 - half want out of finance, and the others are looking to upgrade their existing wardrobe so to speak.


Alex, are you the guy from BW forum? If so, welcome to this forum!

PS: sorry, off-topic
_________________

Wharton admits, join the rugby team!! It'll be by far the best experience of your MBA life

SVP
SVP
User avatar
Joined: 31 Jul 2006
Posts: 2308
Schools: Darden
Followers: 41

Kudos [?]: 423 [0], given: 0

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 27 Dec 2008, 02:23
Most IBs have 2 year analyst programs, with a potential for a third years. Relatively few people are promoted directly from analyst to associate (depends a lot on the firm). So even those that want to stay in banking might have to get an MBA. As others have pointed out, some people look at business school as a break from the grind. Also, people armed with premium experience will be well positioned for jobs that pay above the average business school salaries.
Senior Manager
Senior Manager
User avatar
Joined: 23 Jul 2007
Posts: 313
Schools: Attending Stanford
Followers: 6

Kudos [?]: 64 [0], given: 0

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 27 Dec 2008, 04:49
pelihu wrote:
Most IBs have 2 year analyst programs, with a potential for a third years.


Same is true for most PE firms... it's generally ~two years IB (sometimes MC), then two years PE, then off to B-school.
SVP
SVP
User avatar
Joined: 11 Mar 2008
Posts: 1634
Location: Southern California
Schools: Chicago (dinged), Tuck (November), Columbia (RD)
Followers: 8

Kudos [?]: 179 [0], given: 0

GMAT Tests User
Re: Why would someone in IB or PE do an MBA? [#permalink] New post 27 Dec 2008, 08:39
Welcome to the forums, Alex. Great to have you around.
_________________

Check out the new Career Forum
http://gmatclub.com/forum/133

Manager
Manager
User avatar
Joined: 05 Jun 2008
Posts: 78
Followers: 1

Kudos [?]: 14 [0], given: 0

Re: Why would someone in IB or PE do an MBA? [#permalink] New post 28 Dec 2008, 01:03
Hey Alex, thanks for responding to my post. I regularly read your BW posts and have always found them insightful because you give very good life and career advice in addition to simply application advice. Anyway, I think I speak for everyone when I say that all of us here would love to see more of you in the forums.

BTW, I found one of your BW posts (about making the best of your time at B-School) very helpful. I'm posting it in the main forum.

Thanks, and I wish you a wonderful 2009!
Re: Why would someone in IB or PE do an MBA?   [#permalink] 28 Dec 2008, 01:03
    Similar topics Author Replies Last post
Similar
Topics:
3 Breaking into IB/PE/AM without pre-MBA exp at top school? appliedsums 9 04 Jul 2013, 11:50
GMAT for IB or PE? wubs1234 3 02 Apr 2011, 14:56
Why would GM do this? refurb 9 07 May 2009, 02:33
3 IB & PE Compensation Report 2007-2008 nink 4 24 Feb 2009, 05:04
Why you want to do MBA pravinkawadkar 0 28 Jul 2006, 06:59
Display posts from previous: Sort by

Why would someone in IB or PE do an MBA?

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.