The Insider: When to do an MBA

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Will an MBA really do wonders for your banking career, asks George Trower, our resident columnist and banker under cover.

The MBA is much maligned. Despite that fact, MBAs are being pumped out in greater and greater numbers and firms are lapping them up offering higher and higher pay packages.

In my own experience, a business school gives you all of the following and more:

1. A theoretical business education.

2. A network.

3. A damn good time if you are up for it.

4. A break to regain some perspective (and sanity).

5. An opportunity to change direction.

6. Higher pay and better career prospects.

7. Access to the most sought-after employment opportunities (at the top schools).

8. Streams of letters asking you for more money for the rest of your life.

However, if you're already working in banking, is an MBA really worth the two years out of the market and $150k (if you want to enjoy it at least) of direct cost - not to mention lost income?

Possibly not, particularly when you consider that instead of spending two years getting an MBA, a second-year analyst can make it straight to associate and probably be earning more than the starting MBA package in the same time.

How about the network, a damn good time and a good break? They get tick, tick, tick - no argument there.

As for business education, you will certainly learn lots. But the benefit will be greatest if you want to work in corporate finance - if you're doing due diligence on an M&A or ECM deal, you will probably be able to use your knowledge about supply chains to impress your clients and boss.

However, if you're a trader, a sales person, a structurer, or anything on the markets side, the roles are so niche that you won't really get any immediate benefits from the breadth of business education that an MBA offers. Better to do an MSc in finance, which will offer some of the real depth that's required for your job and teach you how to price derivatives rather than about informal and formal management models.

And yet I would argue that an MBA will be of help - even if you work on a trading desk - further down the line. An MBA will help if you ever have to manage desks, divisions etc. and need to think about more than how much to mark down that CDO, what that stock is worth, or where the short end of the curve is pricing. I-bankers are typically horrible managers: an MBA might help mitigate that.

The decision to do an MBA is therefore about balancing discounted future benefits against current costs. From a pure career standpoint, an MBA will only be worthwhile if you have aspirations for senior management and are happy to slip back a year or two against your peers. The benefits will only come a decade later.

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