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“MBAs haven’t fallen out of love with investment banking: it’s complicated”

MBA

Die UBS hat ein Herz für Investment Banker

You don’t need me to tell you that MBAs’ interest in investment banking careers has waned. The popular narrative is that investment banks to prefer to train their staff up from analyst level, while MBAs are no longer attracted to the industry, and would rather go and work for a tech firm.

The reality of the situation is decidedly more nuanced. For a start, far more MBAs are heading into consulting than anything else – and you don’t get a more traditional career path than that. The other fact is that if you have an MBA from a top school, investment banks are still hiring on campus – albeit in smaller numbers – and there remains a healthy core of students determined to get into the industry.

This is why investment banking is a still an attractive option for MBAs.

1. The work is actually very strategic

Exposure to strategic work is a big priority for MBAs. They have an appetite to be involved in strategic projects that make an impact, so consulting – which has an undiminished desire to hire MBAs – attracts a lot of applications. If you work in IBD as an MBA the assumption is that you’ll be stuck in front of Excel spreadsheets all day but reality is different.

Actually, because MBAs are joining as associates, they’ll have a more strategic role in M&A deals, divestures or IPOs and it will only get more complex as they progress up the ranks. Investment banks are rarely explicit about this when they recruit on campus, but the sector offers strategic work to new MBAs.

2. There’s a steep learning curve

MBAs often think they have a right to be involved in C-level strategy discussions from the outset, but this has to be earned. In investment banking, you don’t get this exposure immediately. The first years at associate level will be tough and the hours will be long. The learning however will be outstanding: it is often said that one year is the equivalent to seven years in a “normal” job (if there is such a thing now). This is a big selling point for MBAs going into banking.

3. Careers are structured, pay is high

You could hardly guarantee the safety of an investment banking job these days, but it’s a very structured career path. Now that flat hierarchies, lateral moves and career switching seem to have become the norm there is something reassuring about this. Moving from associate to managing director usually takes 10 years, and a large proportion of those in the senior ranks have MBAs.

Then, there’s the money. You can earn over £450k as a senior investment banker and compensation can start at £115k for newly-minted MBAs – still the highest paying sector. It’s not the be all and end all, but it still turns candidates’ heads.

4. Location

This might seem trite, but geographical change is one of the three driving forces of MBAs’ career decisions and investment banks (at least for now), cluster around London, New York as well as Hong Kong and Singapore. In most other sectors MBAs are usually encouraged to apply to their country of origin. Investment banks are extremely selective about who they hire, but if a candidate fits, nationality is rarely an issue.

5. The exit options

If you talk to a consultant on campus as an MBA, they will tell you all about their illustrious alumni and the exit options as selling points of their careers. Investment banks do not. Understandably, as banks only hire a few MBAs every year, they want them to stay all the way to managing director. But let’s be honest, investment banking opens a lot of doors – private equity, hedge funds, corporate development and strategy roles. Investment banking is still a good career in its own right, but it also gives you options.

Pascal Michels is associate director of career at IESE Business School. He previously worked for BNP Paribas and Citi and holds an MBA

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