Is finance a good career path? For many MBA hopefuls, the answer is a resounding yes. To help you decide, we’re going to take a look at a variety of factors you should consider. These include:
- How do finance career paths and MBA admissions overlap?
- What’s the appeal of the finance career path?
- Pros and cons of investment banking
- Who are the finance industry employers?
- Investment banker salary + bonus
- Post-MBA associate position at an investment bank
- Private equity compensation
- Is investment banking a good career path goal for my MBA essay?
- Sample MBA application essay excerpts
How do finance career paths and MBA admissions overlap?
Check out our overview of what is an MBA, including facts and myths. Our insights about MBA admissions for finance industry candidates initially came from a client study we did several years ago about success factors for getting admitted to Harvard, Stanford, and Wharton for private equity applicants.
We discussed the merits of the investment banking career path in a conversation with SBC consultant Puja, whose professional trajectory followed a similar route.
“I began to work towards an investment banking career after earning my MBA from Wharton. The idea of working on large corporate deals was intellectually exciting to me. Plus, the prospect of applying my strong quantitative foundation, along with the ability to interface directly with clients, was extremely appealing.”
In this new analysis, we hope to guide young professionals who currently are not in either investment banking (IB) or private equity (PE) roles, but seeking that career path through and after their MBA program.
Career switching through the MBA experience is common, but it requires a lot of time and diligence. We often see clients whose pre-MBA career paths primarily entail softer skills. Hence, they look to the MBA degree to acquire hard, quantitative analyses and frameworks for a comparably data-driven career path ahead.
We have also seen many non-traditional applicants, including those from education and marketing, covet the finance industry career path because of its prestige and financial upside.
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Is Finance a Good Career Path? What’s the Appeal?
A Wall Street career path conjures images of advising the super-wealthy through billion-dollar transactions. It’s not surprising that many ambitious professionals find that path alluring. Selling financial savvy and market predictions can give these young professionals the feeling that they are superheroes—and bring huge paydays.
IPOs, mergers, acquisitions, corporate lending, institutional trading, and other big-ticket Wall Street transactions are all among the appealing-but-demanding work responsibilities of a finance professional.
Without a doubt, investment banking is the foundation of Wall Street riches. Bloggers online have said, “Wall Street is still the greatest bastion of individual capitalism in the world and a place where determined individuals can work their way from answering the phones to calling the shots in just a matter of years. But the reward doesn’t come easy, free, or fairly.” It requires much diligence, preparation, and work ethic.
Pros and Cons of Investment Banking
When we canvassed sources about the pros and cons of the finance, here was what we heard:
- Rubbing elbows with the rich and famous
- Six figures compensation right out of school
- Investment banking pays more than consulting
- Gain an incredible financial skillset
- Build a great network
- Incredible exit opportunities into other attractive career tracks
- Long hours: 70 to 100 hour work weeks
- Pay is traditionally heavily weighted toward the bonus, which is volatile
- Positions usually go unadvertised and require hustle; must fight tooth-and-nail for a shot
- Filled with high-performance people who are used to getting their way
- Quality of life concerns due to overwork
Who are the finance industry employers?
Bulge Bracket Investment Banks:
JP Morgan, Goldman Sachs, and Morgan Stanley; Bank of America Merrill Lynch and Citi; Credit Suisse and Barclays; Deutsche Bank and UBS.
Middle Market and Other Full-Service Banks:
Wells Fargo, RBC, Jefferies, Houlihan Lokey, Harris Williams, and many European, Asian, and Canadian banks, such as HSBC, BNP Paribas, Mizuho, Nomura, BMO, and CITIC
Elite Boutique Investment Banks:
Centerview, Evercore, Greenhill, Guggenheim, Lazard, Moelis, Perella Weinberg, PJT Partners (formerly Blackstone), Qatalyst, and Rothschild (only in Europe)
What do finance jobs pay?
Investment banker salary* + bonus
- Analyst – First Year: $70,000 – $150,000
- Analyst – Third Year: $120,000 – $350,000
- Associate – First Year: $150,000 – $350,000
- Associate – Third Year: $250,000 – $500,000
- Vice President: $350,000 – $1,500,000
- Managing Director/Partner: $500,000 – $20,000,000+
Typically an IB analyst bonus is between 30-100% of base salary.
*Source: Wall Street Oasis
Post – MBA Associate position at an investment bank
Varies according to signing bonus, relocation bonus etc.
- Base salary: $125,000-$150,000
- Bonus: $80,000-$200,000
- Total: $200,000-$500,000 based on tenure and seniority
Private equity* compensation
- Analyst/Associate – First Year: $100K – $250K
- Analyst/Associate – Second Year: $150K – $300K
- Analyst/Associate – Third Year +: $170K – $350K
- Vice President: $300K – $800K
- Managing Director/Partner: $500K – $10MM+
Is investment banking a good career goal for my MBA essay?
We asked the former MBA Admissions Officers on our team to chime in. A former Wharton Admissions Officer on our team shared, “Stating attainable career goals within the MBA application is essential for the top MBA programs, especially since several, such as Wharton, have combined Admissions and Career Services under the same umbrella.”
MBA Admissions Officers are thinking about exit opportunities when reviewing the application in terms of:
- is this person already on the fast track
- are their goals achievable and reasonable
- do they have a plan for how they will use their time during the program
- how will they meet their goals
Whether investment banking makes sense for your career path essay depends on many factors. When you’re actually at your MBA program, what you end up pursuing is entirely up to you. But, getting in is the top priority. Let’s look at sample career goals next.
Sample MBA application essay excerpts
After receiving an MBA from Columbia, I first intend on transitioning from strategy consulting into investment banking, where I will gain financial modeling skills and have the opportunity to identify and evaluate prospective targets. In this role, I would combine my previous acquisition implementation experience from consulting with M&A finance principles from my MBA coursework to achieve a well-rounded understanding of the entire transaction life cycle.
My role in investment banking will then serve as a critical stepping stone for me to move into private equity after 3-5 years. This transition will allow me to integrate financial and operational deal knowledge to make sophisticated investment decisions and enhance stakeholder values. An MBA at Columbia at this time would be pivotal in helping me navigate my career transition from strategy consulting to investment banking.
Post-MBA, I plan to pursue an investor relations role focused on Latin American clients at a private equity firm. Leveraging my background of working directly with Latin American institutional investors in custodial banking services, I will pivot into a front-office role of acquiring and servicing new clients for this investment class at a firm such as XXX or ZZZ.
With the increasing popularity of private equity investments, I believe I could be a real asset to a private equity firm due to my fluency in Spanish, cultural background, and experience with local regulation in Latin America. These skills, combined with a Goizueta MBA, will enable me to capitalize on the opportunity to help PE firms grow and expand into the growing Latin American markets.
However, I recognize that I need the technical finance skills that a Goizueta MBA could offer me to succeed at a PE firm. Additionally, I believe Goizueta would help me enhance my worldview through the global focus and the immersion opportunities to engage in projects globally.
An MBA from Wharton will enable me to transition from management consulting to private equity. As a consultant, I have sized markets, analyzed SWOTs, and developed quantitative and qualitative research techniques. As early as 2007, I was leading projects on my own, including a study to expand market penetration strategies and scenarios in the regional jet market for Spirit Aerosystems, a multibillion-dollar aircraft structures manufacturer.
Based on my recommendations, Spirit has expanded into a standalone aero-structures supplier, breaking out of its captive supplier position by broadening its customer base. My five years as a consultant, coupled with my military training and leadership, have provided me with a solid foundation to begin my MBA. A Wharton MBA will allow me to integrate the lessons I have learned in both pursuits and provide me with the managerial knowledge, cross-functional business acumen, and formal leadership training required of a successful private equity professional.
In the short term, I will use my MBA to transition to a private equity investment role at a multinational investment firm like Carlyle, Blackstone, or KKR. By capitalizing on Wharton’s advanced elective finance classes, I hope to sharpen my analytical proficiency and deepen my investment strategy knowledge.
Ultimately, I hope to leverage the leadership skills I develop at Wharton to land an executive position in the private equity division of a global investment firm. I intend to use my platform to campaign for the promotion of women to leadership positions across the industry. Through courses such as William Lauder’s Decision-Making in the Leadership Chair, I will have direct exposure to C-suite professionals and learn how to position myself for a similar role and overcome challenges once in the position.
See our Career Recruiting by MBA Program overview for more information on career opportunities.
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