MBAs still have one incentive for moving into investment banking over other sectors – paying off their fees quicker. For all the talk of an exodus of business school graduates away from financial services, the lure of high pay remains, at least for the short-term.
“Of our MBAs and Masters in Finance students going into investment banking this year, around 25% of them have worked in finance before,” says Richard Bland, head of employer engagement at London Business School. “But the biggest proportion worked in consulting previously, followed by finance and then law.”
The LBS figures suggest that increasingly, graduating MBAs are switching into investment banking, rather than the more common assumption that business school is used to transition out of finance.
Bland says that investment banks hired more people on campus in 2014 than any year since 2011, despite “fewer companies offering fewer choices of divisions”. In other words, the large banks are hiring for their advisory functions, rather than their markets divisions and smaller firms are not present at all.
Citigroup, Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Nomura were the biggest recruiters of LBS MBAs last year.
Typically, though, a key motivator for MBAs going into investment banking is – predictably – pay. The figures below from salary benchmarking website Emolument.com suggest that MBAs can typically pay off their business school fees three to four years after graduation.
And higher fees don’t necessarily correlate with an increased period of debt. Harvard graduates have the largest fees – at £78k – but still earn higher salaries in banking on average, so could pay off their fees within three years.
“Despite recent events investment banking still offers an long-term and well-remunerated career,” says Bland. “Most of those securing jobs this year have done so through internship conversions.”
But another careers adviser at a large UK business school who asked to remain nameless, says there’s a battle among MBAs to move into other parts of the financial sector. “Investment banking has lost its allure somewhat, although it’s still competitive. Our students want to get into private equity or hedge funds and this is tougher than banking.”