When’s the perfect time to take an MBA to advance your finance career?
Is there a sweet spot in your finance career when taking a few years out for an MBA is most beneficial? No, insist business schools, which say they accept old and young students alike. Yes, suggest the statistics and – privately at least – graduate recruiters in investment banks.
The theory is that undertaking an MBA is pointless, or at least of minimal benefit, if you have little to no work experience in the real world. Equally, it seems an odd decision to start at a business school with decades of experience under your belt.
The most recent classes of top business schools suggest that [efc_twitter text="the optimal level of experience is five years, and the perfect age for starting an MBA is 28"]. The class of 2016 at London Business School has an average age of 29 and mean work experience of 5.5 years – the youngest person is 23 and the oldest 38. A[efc_twitter text="t Columbia, the average work experience is 5 years, and the oldest person is just 30"], while at Insead the average age is 29 with six years’ of experience. At New York Stern University, where 27% have a background in banking or finance, the average amount of work experience is 4.3 years.
Ageism is one of the last bastions of prejudice in financial services. Careers rarely last beyond aged 50. Chris Carpmael, the former CFO of Credit Suisse stated during an ageism court case at the bank that it was simply the “nature of the business” that few survive once the grey hairs hit. Combining a lot of experience with an MBA therefore appears destined to fail if the aim is to work in finance - particularly if you intend to join one of the banking 'associate programmes' which MBAs have traditionally been hired into.
In the U.S., junior bankers traditionally completed two or three years of an analyst programme in a bank and then quit to study an MBA. Lloyd Blankfein’s sons typify this trend: Alex Blankfein started his MBA when he was 25, after a couple of years at Goldman Sachs, while Jonathan Blankfein started his aged 24. If you’re aged over 30 and are applying to an investment bank’s associate programme, you’re therefore going to stand out. And if you don’t have any previous banking experience, it’s going to be tough to break into investment banking once you’re over 28, even if you do have an MBA.
Investment banking graduate recruiters, speaking on the condition of anonymity, say that while no formal policy is in place to restrict the hiring of older MBAs, they generally favour a small amount of industry experience combined with academic and other achievements that create a more “rounded individual”. The latest batch of recruits into Morgan Stanley’s associate programme indicate that late-20s is the ideal age to take an MBA. Most had internships in investment banking, some had industry experience, but more had backgrounds in consulting or private equity.
However, Christian Dummett, head of finance careers, London Business School, insists that there’s no perfect level of experience for MBAs seeking a move into finance. “Larger institutional finance companies are generally more interested in leadership potential than past experience,” he says. “Students with strong leadership, interpersonal and intellectual qualities allied with focused motivation will have as much chance to succeed as those with relevant experience. For smaller companies with fewer resources to train on the job, the focus is more likely to be on experience.”
Dummett claims that most MBAs going into finance are not entering through formal programmes anyway. “In finance, structured programmes have only ever accounted for a portion of the roles our students end up in,” he says. “Unstructured internships and lateral hiring remain a key opportunity for many of our students. This is particularly true in private equity, real estate, infrastructure, impact investing and hedge funds where we are seeing both interest from students and supply of opportunities from recruiters.”