What can be learned from this year's EMEA associate classes at Morgan Stanley and Goldman Sachs

eFC logo
What the MBA students did next

What the MBA students did next (Photo credit: Wikipedia)

Last week's partner and managing director promotes at Goldman Sachs have been analysed to death. Why are there still so few women at partner level?  Why so few technologists at MD level? Does the proliferation of asset management partners (now 12% vs. 4% in 2010) say something about the importance of asset management to Goldman Sachs in future? What about the decline in investment banking partners (down from 40% to 20%)?...

However, it's not simply senior staff changes which tell a story. In recent weeks and months, new associates have also been settling into their roles at US banks. In the case of Morgan Stanley, much of the 2012 associate intake have only just been registered with the FSA. Several of Goldman's new associates have proudly declared themselves on LinkedIn. We've looked carefully at a sample of the 2012 associate classes at both Goldman Sachs and Morgan Stanley. If you're thinking of doing an MBA with a view to breaking into a US investment bank, this is what you need to know.

1. Most MBAs hired by investment banks have some previous financial services experience  

Don't assume that you can use an MBA as a springboard to move from the healthcare industry or the automotive industry into investment banking. It doesn't seem to happen.

All the new Morgan Stanley associates we looked at had prior financial services experience - albeit not necessarily in an investment bank. Take Matthew Ball, who joined Morgan Stanley as an associate in IBD after completing an MBA London Business School: Ball previously worked at buyout firm Ennismore Capital and before that was part of the forensic assurance team at PWC. Or take Dimitry Karelov, another new associate at Morgan Stanley, who completed an MBA at INSEAD and previously worked for Sberbank and financial services consulting firm Oliver Wyman.

The situation seems similar at Goldman Sachs. Marco Quirico, a new Goldman associate who came within the top 10% of his class at INSEAD, previously worked in M&A at Ernst & Young. Uri Zahavi, a new Goldman associate in the consumer and retail group, previously worked as a corporate finance analyst at William Blair & Co. Allen Mayer, a new associate at Goldman Sachs asset management and London Business School MBA, previously worked in transaction services for PWC.

The implication is that you can use a big brand MBA to make an accretive career move - to move within financial services to a bigger-name employer. But you cannot use it as a transformational career move. This is borne out by most recent figures for MBA employment at London Business School: only 22% of finance hires came from industry.

"All banks state that they're interested in looking at MBAs with a range of backgrounds, but if you want to move into M&A you tend to be at a definite advantage if you have some kind of transaction experience," says Richard Bland, finance team head at London Business School's careers service. "This means that students with an accounting, legal or consulting (both Strategy and Full Service) background also have a good chance of making the transition into investment banking."

Morgan Stanley declined to comment for this article and Goldman Sachs was unable to respond within our timeframe. However, we understand that Goldman does embrace MBA applicants from outside financial services and one business school careers counsellor said that it's generally known to more amenable to hiring MBA wildcards than other banks.

2. In London, Morgan Stanley and Goldman Sachs favour big European business schools, although Indian MBAs are making inroads

Businessweek has just produced its ranking of top international business schools outside the US. The first and second places go to London Business School and INSEAD. Unsurprisingly, this is where both Goldman and Morgan Stanley appear to have sourced several new associates .

The 2012 associate class at Goldman Sachs includes Marco Qurico from INSEAD, and Uri and Allen from LBS. Morgan Stanley has hired Matthew Ball and Matteo Masi from LBS and Dmitry Karelov and Nischal Dolia from INSEAD.

However, Morgan Stanley has also taken on Rahul Jain, an MBA graduate from the Institute of Management at Nimra University in India and Pushkar Sah an MBA from the Narsee Monjee Institute of Management Studies, suggesting MBAs from Indian schools can be a route to a job in London.

3. A high proportion of associate classes have spent their entire careers at the banks in question 

It's worth bearing in mind that MBA hiring is merely a top-up for banks' existing analyst classes. With revenues shrinking and analyst intakes in recent years likely to prove unsustainably large, banks will find it less necessary to hire associates externally. On the other hand, hiring in associates from other banks and MBA schools allows banks to upgrade their analyst classes. Around 40% of the associates we looked at had been hired in from outside. The rest had joined the respective banks straight from university.

4.  Just because you leave a bank and study an MSc and PhD, it doesn't mean you will return into a more elevated position 

Finally, the case of Christian Hertrich, an associate at Goldman Sachs, may prove illuminating for anyone thinking of supplementing their CV with additional academic qualifications.

Hertrich was an associate at Goldman Sachs in 2009, working in the equity and equity linked derivatives business. He left to study a masters in finance at Cambridge, followed by a PhD at Stuttgart. Three years later this August, Hertrich returned to Goldman - as an associate in the equity capital markets business.