Firstly – a confession, I’m an MBA who attended a top business school with the intention of going into sales and trading. Secondly, I’m not here to bang on about my ‘ruinous investment’ in the same way that one graduate has done recently. But I do want to offer some words of caution – if you want to go into sales and trading, there are probably better options than an MBA.
My own experience (at a top business school with a focus on finance) was that sales/trading roles were among the most sought after. Banks were ubiquitous on campus from nearly day-one, and students sharpened their elbows to make sure anyone listening was aware of their ‘passion for the markets’. Landing the coveted job became, for many, just another achievement – their application skills having been sharpened by the MBA process itself. From what I witnessed and experienced, however, little thought was given to the career path that the post-MBA sales or trading job was setting them on, or what they’d actually be doing.
Sales and trading is very different from corporate finance/M&A. The fate of your career in sales and trading is very dependent upon the desk you start on. Far too many MBAs see ‘sales and trading’ as a homogeneous opportunity, without realizing that the roles embodied in this area are incredibly different. For example, starting off on the the high-yield desk vs. the interest-rates desk (as an example) may seem like six of one and half a dozen of the other, but could result in a massive divergence in potential future earnings and career trajectory. Yes, good people do get to move around, but compensation-maximization in sales and trading is all about specialization and specializing in the wrong product can stall your career before you’ve even started.
This is an issue for everyone in sales and trading, but it’s a particular issue for people trying to get into the business after a costly MBA. The traditional MBA recruitment process gives individuals very little control over the area of the business they go into. Is it really worth spending $60k on an MBA and then leaving your future to chance?
Nor is this the only problem for MBAs going into sales and trading roles. In terms of corporate structure, you’ll typically start off about five years behind your university classmate who went straight into banking from being an undergrad. This may not seem significant in the long term, but keep in mind that bankers typically have shorter career spans. New pay structures (i.e. large deferrals) also mean less (voluntary) turnover at the senior level and consequently fewer opportunities to move up the ranks.
This isn’t to say there aren’t MBAs who have a clear idea of which sales and trading product groups are interesting and poised for future success, and who are able to maneuver themselves into roles there. However, there are plenty for whom it doesn’t work out. And for those, natural exit opportunities beyond the industry are limited. Unlike the investment banking division (IBD), which can give a good background for industry, sales/trading prepares you for either the buyside (if you’re a talented trader), or another bank, or inter-dealer broker, or nothing.
Personally, I have no regrets about the decision to take an MBA – as cheesy as it may sound, it was a truly transformative experience. For the next step of my career, however, I’ll be taking a more considered approach to finding a new role. When you’re knee deep in debt and working in a highly competitive environment, a potentially high paying (another conversation altogether) and prestigious job seems like an easy decision – but without a longer-term plan it is simply a gamble.
* Paul Goci is the pseudonym of an ex-MBA student who now works in sales and trading.