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MBAs first to get dumped

The associate intakes of 2006 and 2007 are being decimated, according to both bankers and the recruiters who are left to pick up the pieces. So what does an MBA with big debts and only one year’s banking experience do? Private equity, boutiques, or strategy consulting seem to be the answer.

“Most of the people who’ve gone from the team are MBAs who joined at the junior associate level,” says a VP at one US bank. “Unfortunately, it just makes sense to get rid of them – they have a limited amount of banking experience and they’re relatively expensive. They’re getting hit particularly hard.”

Recruiters confirm that a disproportionate number of recent MBAs are coming through their doors. “We’re getting a lot of MBAs coming to us,” says Katherine Howe at recruitment firm KHG Partners. “They’re either last year’s banking intake, or the intake of summer 2006.”

Faced with the choice of dumping a recently hired MBA or an analyst who’s been nurtured at a bank for several years, Logan Naidu of recruiters The Cornell Partnership, says banks are typically going for the former option. “MBAs are as expensive as third-year analysts, but analysts have spent three years with the firm and know how a deal is put together.”

Business schools are a brake on the MBA purge, however. If too many of their alumni are ejected, banks get a bad reputation on campus at the major business schools, which they are anxious to avoid, says Howe: “If you hire a load of MBAs from a top business school and treat them all appallingly, that school might be less inclined to allow you to recruit on campus in the future.”

As a result, she says some banks are now letting go of high performing third-year analysts rather than reneging on offers made to MBAs who are joining this year.

MBAs who are dumped by banks do have other options. “The alternatives are boutiques, private equity, corporates, or strategy consulting, depending on experience and background,” says Naidu.

Comments (31)

  1. Did anyone say Mediocre But Arrogant???
    Performance is usually a driver in difficult economic times.

  2. Performance AND whether your face still fits or not….

  3. MBAs. What an absolute waste of 2 years whilst your peers are earning 6 figures climbing the ladder further.

  4. Hmmm, why do MBAs have more options then?

  5. Not finance it seems…

  6. The artikel is right.. I know for fact that people with MBA aren’t necessarly more clever than non MBA people. Infact, non MBA, they deliver better results.. !

  7. Also, not all MBA programs are 2 years. International options are often the best bet, as many of the top programs such as INSEAD are only essentially 10 months.

  8. this guy in my MBA section smelled really bad- he was from India like me. Nice guy but damn did he smell……..

  9. Having an MBA is not a question of being smart or not, nor being better than someone who has none – hello people! ….did a technical degree, and after a few years went for the MBA while working at the very same time, studying in the weekends & having no real life for more than 2 years. Is there a difference now ? You betchya – you may fire me tomorrow (which happened to me while at CS), yet the options are much wider once on the free market again….within days I was called by several headhunters for several different positions and roles ….as opposed to only one particular job in one specific area if I still had my IT degree …got then a new job within days in a different vertical, had nothing to do with what I had to do with CS. This is possible not because an MBA is smarter (dah), nor more experienced, but rather because an MBA has the chance (or not) to have the right tools and foundation to a specific problem, and then go from there……just like every graduate of any degree, not everyone is good at it, kind of annoying to explain thaagain and again. The best investment I ever did in my life, not even worth the 2 years salary that folks out there may miss by going for it.

  10. Many MBAs are those that didn’t get into a good IB job after their undergrad so it goes without saying that they are not the best candiates and perhaps should be the first ones to go.

    Unless you have MBA from Wharton or Harvard that is different of course

  11. thanks amod, that was so informative and helpful. The only thing your post told us is that you have no friends to discuss work with and so you post random comments online to engage in unrelated gossip.

    anyhow, like a lot of further education i think MBAs are a personal choice and don’t necessarily lead to substantially better career prospects. from my understanding, MBAs provide educational networking opportunities.

    V for Vendetta Reply
  12. Hi all MBA haters! As a current MBA interning the summer in banking. Don’t you hate the fact that I can still choose to leave banking and go find an equally stimulating six figure job elsewhere?

    You guys may have earned six figures, but that was because you were riding a bull market.. Now wouldn’t you wish to have an Ivy League degree for the next time you are called to a “meeting” with HR?

    I guess I should feel sorry for you, so all the best.

    PD: MBA’s are not better technically, we are paid more because we have wider vision and more drive than most. You can have the same characteristics without having an MBA; but the MBA brands you. It’s like selling a Porsche Cayenne vs. a Great Wall SUV.

    And sorry to break it to you, but statistically, it is very proven that in the long-run MBA’s do outperform… 2 years is nothing in a 45 year career, I would think the current markets would have made that clear. Try getting on a board without a top 20 MBA behind your name.

    Ivy League MBA and Loving It Reply
  13. As always there is always people bashing MBAs. It is also supprising to see how SUV owners are also bashed. Maybe there is high correlation between having and MBA and owning an SUV, and the big bucks associated with both things. The poor dogs without these can’t help but bark. Love to get into these articles to see how this always happens.

    Ignacio Alvarez Reply
  14. You guys make some really useful and insightful comments. Now run along and go listen to Uncle Keith “angry man” Olberman and post some screeds on the Daily Kos as the quality of thought there would equal the “my MBA smelled bad” and other well reasoned musings.

  15. some people do MBA just because they couldn’t find jobs

  16. MBA’s are not necesarily the best adapted training for a financial positions such as analyst or portfolio manager. MBA is a business school not a financial training. I believe these two have been mixed up in the recent past where to many MBA’s of HARVARD for instance were hired in the hedge fund arena. Clients discover those people are excellent business men, but rather make money for themselves than for a client.
    On the other hand studies like a CFA’s or other economic and financial studies don’t get the credit they deserve because they may not be reserved for an social elite but just need hard working to obtain and therefore create a selection by drive and motivation.
    We now may be returning to normal, which probably is a natural evolution.

  17. The best program option for Finance and banking is the MIF (Masters in Finance) at LBS… you can either do it in one full time year, or the best in two years but without leaving your job…. Its fully focused on investment banking and forms strong finance professionals… people half way through are receivieng VP offers this year at top banks in the city….in my opinion the best option.

  18. to the bloke who said mediocre but arrogant. I know who you are and you are one of the most mediocre people I have met in my life and you should have been kicked out of where we met ages ago.
    don’t pretend to be amongst the finance community, you are a busy driver and we both know it

  19. Can I just say as someone coming to the end of a doctorate and wanting to get into Finance I am feeling increasingly the UK sector is getting shafted. Adopt the UK plan on fixed petrol prices at the pump before its too late Brown you absolute erse!

  20. I think MBA only pays in the long run and indeed it is true the non MBA analyst or others do make more money than MBA just becuase of their experience. Also worth noticing is the fact that many people do MBA to change function, sector, geography, career etc.

    CFA is indeed a great program but it lacks the practical expertise of B school. Surely, it suits well to a working guys who has hands on experience and want to reinforce his theoretical basis.

    MBA with specialization in Finance is quite rigorous but I would doubt it will has the rigour of CFA particularly in the context of Financial Statment analysis.

    Just my thoughts.

  21. i think MBA only prolong you adolescence

  22. MSc or PhD maths/physics is the better way to go. The required finance and economics you can pick up in a few months, but the harder quantitative theory is what is important to have a firm grasp of.

  23. “Don’t you hate the fact that I can still choose to leave banking and go find an equally stimulating six figure job elsewhere?

    You guys may have earned six figures, but that was because you were riding a bull market..”

    Err. I can leave tomorrow and be earning a healthy 6 figures in a range of other areas, with only a 3yr BA and no MBA. Frequently I get asked if I’d like to get involved in new initiatives which have secured 6-7 figures seed capital, I get approached by consultancies and economic / political organisations like thinktanks who say they could match what I make here, and a couple of times I’ve had the opportunity to be CFO of middle market orgs.

    And lol, I’ll be making a healthy 6 figures during every year of this bear market. In my mid 20s, my basic salary alone is approaching 6 figures. With an MBA you start at Associate level, where I was age 23 – whilst your typical MBA entrant is 27-28 and scraping the low end of 6 figures. Hilarious.

  24. An MBA or any other ‘paper’ qualification doesn’t truly reflect ones ability.

    I’ve go no MBA, Masters or degree and run my own futures trading operation. No one in commerce/industry wanted to know when I was struggling – now they can go and…….

  25. MFin from Princeton is better than the MiF at LBS.

    What people don’t realize, is that there are a much wider range of highly paid jobs outside the City and Wall Street, and that’s what an MBA usually can help you get. And yet, there are plenty opportunities in South Asia and Latam for instance, either in finance (Banking, PE, HF, VC) or SM.

    London opened its borders for MBAs, attracted many people with degrees, as getting VISA in other places was harder, now is “correcting” a little, no surprise, at the dot com Bubble it was WAY much worse…

  26. Oh! how disheartening to get such nonsensical statements from a bunch of ‘immature grown ups” who claim to be in the financial sector. i thought the deliberations will be focussed on the MBA gaduates and the fact that they appears to be the ones facing the chop.
    I, for one am an MBA graduate and am proud to be one, whether from Oxford, Havard it doesn’t really matter. For all i know, my scope is much broader than most of you who claim to have hands on experience in the financial sector. most importantly, without any doubt my opinion will be a bit more credible than some of you in the business forum.

    How do you like that, losers?

  27. Tips,
    I happen to be an MBA form one of the institution you have mentioned. I agree that you have broader prospects, however those who are trying to make into fin sector at this time because of MBA are losing as most employers prefer experienced staff considering there is no dearth of them.

  28. To the young big swinging d..ks: well, I have an MBA, I joined banking, industry pre-MBA, then after seeing what actually is corp finance (monkeys’ stuff), joined an investment fund, working less, earning more. Dealing with CEOs, MDs every days… enjoying screwing bankers that now do the crap stuff for me…

    As part time, thanks to what I have learnt at my MBA, the network, the credibility (yes, MBA give also credibility), I am opening my investment fund with a bunch of other MBAs….

    Let’s see who is earning more, dear big swinging d…ks, everyone knows what you guys actually do in banking…you are just like monkeys doing every day the same things (the cut-n-paste stuff for pitching etc). You don’t have the skills to manage a start up, that is proven. So pls go back to your excel spreadsheets preparing stuff for those like me.

  29. Hilarious, “MBA ruler”. Firstly, people like myself can move to a buy-side hedge/investment fund whenever we want, there’s always opportunities, WITHOUT an MBA. I’m giving it another year here then I’d be able to start as a Portfolio Manager. And an MBA certainly doesn’t give you credibility, it probably detracts credibility just as much from people who see MBA on a card /signature and think “chump”.

  30. This is pretty low level of debate.

    MBA or no MBA, someone good is someone good and “normally” gets to keep their job. As an MBA at an investment bank with 3 years experience Ive seen my classmates go whether or not they were an analyst or an MBA.

    The fact is there is no business and won’t be until banks delever and rid themselves of their leverage loan pool. In terms of cutting people, most banks have reached a point now where good people are also being cut. Ive just accepted a job from a PE fund earning the same as I got in 07 (where I was A rated), but Im not gloating since I really enjoyed IB and whether they had an MBA or not some of the people I worked with were some of the brightest and most hard working people I’ve met.

    Why don’t people just admit that there is a need for MBAs since the attrition rate in the industry is very high. Lets face it there is an equally polemic argument which says that only the really average analysts actually stay in an investment bank.

  31. MBA or no MBA, the arrogance is astounding from most of these postings. Find your happy place people and stop berating others.

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