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Is there any point in studying an MBA in this market?

MBA applications are probably about to go through the roof, but is there really any point in lumbering yourself with another 40k+ of debt right now?

Students who have already embarked upon this course of action seem to think there is. Current students point out that anyone starting an MBA in 2009 with a view to getting into (or getting back into) banking will be a lot better placed than they themselves are.

“By the time anyone applying next year leaves, the industry will have reshaped itself to take account of new regulations, and there will probably be a hiring boom again,” says a member of the class of 2009 at one of Europe’s top schools.

This may be slightly optimistic, but a few things suggest banks will still need MBAs in 2011.

One is the MBA’s “well-rounded profile”. Bank recruiters say the MBA profile is likely to be more popular in future than, say, the profile of a quant-focused PhD, whose currency has waned with the demise of structured products.

Another is the internationalism of MBAs, and their exposure to emerging markets. At top European schools, a high proportion of students are Indian and Chinese, meaning many of their graduates come with the international credentials required by banks looking to build in what are still likely to be the markets of the future.

However, the way banks hire MBAs is likely to change. Unless a dramatic recovery does indeed trigger a hiring boom, students embarking on an MBA next year are likely to find banks a lot more choosy about who they take on.

“Triple jumpers – people who are changing role, function and location – will find it a lot harder to get into banking,” predicts Derek Walker, head of careers at Oxford’s Said Business School, and a former head of recruitment at Barclays Capital. “The emphasis is likely to be on hiring people with specific skill sets that are easily transferable across to a particular business area.”

In future, more banks may take the Citigroup approach to MBA hiring – recruiting strategically in small numbers, rather than across the board. “We use MBAs to selectively inject high-calibre candidates with a particular profile into the business,” says Citi head of graduate recruitment Brian Hood.

What of the remainder of the would-be bankers in the MBA class of 2011? A few may find joy with boutiques, asset managers and private equity funds. The rest could always work on restructuring their own debt.

Comments (35)

  1. I think MBA can get you the possibility to join a big investment bank as a first year associate, that is quite frustrating if you are 30 years old given that internal hired associates are 27 years old…

    Honestly, I think a junior associate is quite a low level position today, so I don’t understand why people go to MBA for achieving something that is not such a good deal… I repeat, a first year associate is a too junior position if you are 30 years old….

    Wow, I’m posting 3 posts in less than 2 hours, I’m not very busy today…

  2. I see many,many CV’S from MBA qualified people every day.The average age is probably 27-28. This does suggest that these candidates have never done much apart from Academic Study. I would rather see good academics coupled with some experience. An MBA is certainly no guarantee of a role here.Go do something first.

  3. Even in a good market, if you do not have proper pre-mba training (e.g. analyst training programme) it is challenging to break into areas such as PE or boutiques. The reason is that they need people who will hit the ground running. e.g. if you are applying for a PE role they will test you on LBOs (properly), you need to understand how to deal with all bankers (especially M&A bankers), etc. In a challenging market, the probability is close to zero as most funds have stopped hiring and if they have an opening they might as well go for a third-year analyst. People should be realistic.

  4. Following an MBA from a leading Asian school in 2001, I worked in the structured finance area with Banks at Asia, Dubai & London; progressing from Sr Analyst to VP, and am aged 32 now.

    Assuming a risk to role, given current market conditions, and the need to re-skill, is it advisable to re-apply to a European/US school for a 1Y / 2Y MBA program?

  5. DR, your post must be fake.

  6. I don’t really think that there is any point doing an MBA at the moment if you are dreaming for a job within the Banking system! The point is you will remain a junior without any experience and therefore will certainly not get a job in the actual environnement! The Worst part will be your bank loan…

  7. I see a lot of CVs around the place with MBAs – in fact, I am being inundated with resumes from INSEAD, LBS, Judge and Said Oxford candidates still. When you meet them, the less discrete ones tell you that a large proportion have interviewed with more than 50 companies and still don’t have jobs – it makes you wonder if it was worth leaving their previous companies at all. Head of HR, big consultancy firm.

    Jane (not real name) Reply
  8. M&A, I’d really appreciate some constructive comments here for the audience please, if you may. There’s nothing fake about persons who chose to study in Asia, work in Asian structured finance markets, and progress from Sr Analyst to VP working in Banks at Asia, Dubai or London.

    Rephrasing my earlier query,
    Is US/European MBA education a recourse for persons with 7-9 Yrs experience in the structured finance markets (securitization / asset finance), aged 32 and most recently at the VP level ?

  9. Before the credit mess, there was a clear trent toward technical degrees instead of MBAs for capital markets FO positions. After the mess is cleaned up, we can either dumb down the system, which is good for MBAs, or come to the realization that many of those taking decisions didn’t understand the risks due to their lack of technical skills. Personally, I never understood why MBAs are hired to do things such as trading and structuring when someone with a degree in math finance, or even economics is clearly more suited.

  10. Doing an MBA from a good school is a passport into Investment banks, if you do not have prior investment banking experience. If you are already in an Investment Bank and you really want the letters after your name see if you can get your employer to sponsor you. I know of a collegue that did this at Columbia School in US – He worked in London – and got flown out there whilst in the employe of the bank. Now that was a trade!

  11. I am working in Project Management and Cost Control in multi billion construction programmes (Cost control is similar in ways to Management Accounting). I will start my 2 year MBA (part time) in Sep . The idea is get out of the “execution” side of the industry to get more into the financing and investment of these projects. I will be 30 when I graduate and will 7 years of experience in my pocket . Reading the article and posts making a anxious ! anybody has thoughts on this ?!

  12. Those who want to do an MBA to get into banking obviously have a very week commercial sense. You should look at MBA as an investment and in the light of what has happened it looks very bad. Assets across the board have been devalued by half. Yet B-schools still have the nerve to charge for their asset the same or even more than it used to be. I guess there are still plenty of naive buyers… Reality check: your MBA on its own is not that valuable especially for banking.

  13. DR,

    I think an MBA can give you a junior associate position in a bank, therefore, given that you are already a VP, I don’t think it make sense for you to do another MBA.. I’m a 27 years old associate without an MBA, and I’m sure an MBA cannot improve my job situation…

  14. After 5 years in structuring, what can you do if there is no more jobs in this field? there is not much that one can do with these skills…
    Why it does not occur to anyone that MBA can be used to go OUT of financial services?

    exCDOstructurer Reply
  15. DR and Trader: sad to say but true, if one can cajole an official sponsorship letter from one’s CEO, but in reality pay through the nose for the tuition cost, it is possible to obtain a quickie but prestigious HBS EMBA in less than half a year with minimal physical attendance. Acadamics, the high priests of market efficiencies, are brand merchants (NOT globalization) par excellence. So, i no longer laugh at people who ostensibly carry LV bags etc.

  16. Banking will change beyond recognition the next couple of years.

    We did not get where we are because there has been a lack of technically skilled people. Something structurers and traders like to think of themselves to be – and some are (but my God, most are certainly not). And all sorts of ‘quants’ and other ‘techincally skilled’ people have been hired en masse during the last 10 years. So, no, no lack of such valuable talent.

    We got were we are because there is a lack of people with a bigger picture view that understand the bigger and longer term consequences of business decisions. You know that hated expression ‘well rounded’ – trust me, it will come back en vouge.

    In study after study and in interviews with top level management it comes up again and again that them lack in their staff people that understand and comprehend a strategic view, and how their business/trade fits in with that context.

    Trust me, the era of short sighted ruthless bonus chasing is over. People that don’t have the ability of looking past their spreadsheet or that one number they’re stirring at on the Bloomberg screen all days will not be so hot anymore.

  17. An MBA is a long-term invesment, and enhances your profile and career potential. As pointed out by many, however, it is not a substitute for work experience, especially in banking, and may mean that you will be older than others if you enter the financial sector.

    That said, it can potentially enable you to move back in the industry (or consultancy) with more ease, which appears to be a good option at present given that the banking industry is likely to shrink substantially, with depressed revenues over many years.

    Personnally, i feel that the golden age of banking is gone, so many people will have to retrain/find new jobs etc. That is not to say, though, that there will not be some people making a lot of money in the banking industry. There will be a lot fewer, a bit like in other industries.

  18. The young American MBAs always confuse me. They get hideously in debt doing their undergrad and almost immediately follow it up with even more debt. From a personal development point o’view I would definitely have preferred to wait until much later. The experience gave the (rather nebulous) qualification context and doing it as more of a sabbatical is in line with other industries. Current environment I would take the cash.
    And why do none of these geniuses start businesses?

  19. Let’s not discourage current MBA students … the present situation won’t be forever and there will always be a need for MBA students because its wider and more versatile. The sky is big enough for all birds to fly in without touching one another.

  20. No, not for jobs in banks but for jobs in the industry. Bankers are so specialized that they won’t fit in industry. Consulting firms thrive because industry usually don’t take MBAs but they are happy to pay consulting firms that hire MBAs.
    The HR person from one consulting firms said they are flooded with MBA CVs – not surprisingly INSEAD, LBS, Oxford produces lots of MBA each year. However, I have seen some top strategy consulting firm have people who are head and they come from lowest ranking university but entered the system after doing MBA from one of the aforesaid school, when everything are bullish. So MBAs from better school are floating around just because of demand supply mechanics.

  21. I have scene too many people completing very expensive MBA’s only to do the same or similar job they did before. Call me old fashioned but you can’t beat work experience combined with some short term technical courses.

    As for “After the mess is cleaned up, we can either dumb down the system, which is good for MBAs, or come to the realization that many of those taking decisions didn’t understand the risks due to their lack of technical skills. ” What a load of rubbish, a lot of the senior managers who allowed us to get in this fix were MBA’s (check out the sacked CEO list), just because you complete one does not make you a good business man

  22. I think it is an additional credit to enter top tier banks but not neccessary an essential requirement of course. In this volatile market, no one is being secured whatsoever.

  23. MBA is certainly a long term investment and one needs to do it only after gaining 5-6 minimum experience. People who do it right out of graduation will always have myopia towards the ground realities of business.

    Moreover in the present scenario, one should plan an MBA only, if one wishes, only when the market has picked up again, say after 2 years. Anytime sooner and the sheen of the freshly minted MBA will fade too fast before the job market improves!

    As Omar sharif said in Lawrence of Arabia – when there is a desert storm, the only thing and the right thing to do is to sit it out.

  24. The popularity of MBAs means that every one is trying to get such professional education. So the problem in the market is supply & demand of MBAs. Because of such reaction, the MBAs are cashing in low packages.

  25. A load of rubbish! The qualification to get is that of the Chartered Institute of Management Accountants.

    Charles Morgan Reply
  26. Guys, lets separate crisis from education.
    MBA never was panacea for every type of jobs, be it banking, consulting or industry. It is an additional asset that may suit one professional with proper experience and may not assist another without relevant background.

    Investment banks arguably were largest employers of MBAs due to general complexity of the business. One can argue but a solid MBA course can provide you with base knowledge and skills for tackling such tasks. However, banking jobs are going away as investment banking bubble burst while some of those will probably disappear forever. Let us recall, when many fresh MBAs preferred to work for dotcoms instead of banks until internet bubble deflation. How may MBA jobs are in dotcom area now?

    Finally, one should think probably twice about future job market before committing itself for MBA course. I wish you good luck.

  27. I can’t believe how many of you are really considering doing an mba and then joining/remaining in the banking sector – its time to wake up and smell the coffee ladies & gents, the financial landscape will not be the same again, if you think it will be business as usual in 2010 and beyond then think again… do yourselves a favour, by all means get a mba, build up your networks at the school, learn, develop and then go an do something useful in industry.. there’s far to many of us in the banking business and the axe man cometh…. cheers, merry christmas and happy new year…

    fatherchristmas Reply
  28. An MBA is an investment for the medium to long term. It certainly does not give all the answers, but is a great help in providing frameworks and understanding to identify opportunities and qualify out of poor decisions.

  29. To be honest, I’m a bit worried that there are so many fickle minded ppl in this industry that can’t isolate facts from fiction and the temporary effects of a depression from ubiquitous trends. Firstly, its a depression. It happens periodically, T = 10yrs (approx.). This is a feature of credit based capitalist ecomonies. And during depressions opportunities are scant, but the planet earth doesn’t fall out of the solar system – opportunities will not cease to exist. They will come into existence, albeit, of a modified nature. Secondly MBA’s and quantitative analysts will not become archaic entities, they have survived previous depressions, this is no different. There is also a prevalent thought that quants in particular will become extinct. Well everything suggests the contrary. We’re in the technology age. Investment decisions and asset management will continue to become a more quantitative and computative discipline, and besides there is a lot more to quant finance than credit based derivatives – may be this might sound like news to some.

    Lets isolate facts from fiction!

  30. “Keep it real” you didn’t get my point. What I am trying to say is that many of the guys making decisions (including regulatory oversight) were in fact MBAs, What I am arguing is that the degree is generally thin on the technical skills needed to understand the complexity of certain products. That is, we can dumb down the system to accommodate these people, or hire people with solid skills as opposed to half dozen accounting courses and high school statistics. Nothing wrong conceptually with structured credit. It’s just not as simple as stocks and bonds…

  31. i most definitely agree with “anonym” otherwise MBA’s would have probably been extinct after 1987,1998 where there not even nobel price laureates in the LCTM team :P, and still we have highly quantative people in the industry.
    I dont really think that banking and MBA’s/ quants will go apart, they will still be needed, even if it is for now not in the same quantities as before.

  32. Hi… I am from Pakistan and am currently working as a Finance Manager for one of Multinational FMCG. Last year I had applied to a couple of schools and was on the wait-list of Columbia and Stern. I wanted to apply again but considering all that is happening in the economy, I am not sure if that is the right thing to do. Can anyone help me with my decision?

  33. The European MBA has NO summer internship, which is key in securing a job offer. The US MBA from a top scholl remains the better way to go – that’s why i-banks’ London offices come to the US for MBA recruiting.


  35. too many MBA students have a one track mind towards banking. Well all of that will change now because the financial rewards will be gone for a long time. It always perplexed me why so few MBAs look in to asset management. Stop following the crowd to the city- there are many great asset management firms that are in relatively good shape. Your lifestyle will be better, the locations are often more interesting and it is generally more stable.

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