Where Within Financial Services Do Recent Grads Land?
Now that we’ve established the frontrunners in terms of schools sending grads into finance—as well as who’s teaching finance students and what they study—let’s drill down a little more into which part of the financial services spectrum each school seems to send the most students.
Though each school breaks things out a little differently, in broad strokes the financial services industry can be divided into three large subcategories: investment banking/brokerage, investment management (including private equity, hedge funds, venture capital, and other asset management), and diversified financial services.
Let’s pause for a moment to better define each of these categories. One way to look at things is in terms of sell side versus buy side. On the sell side is traditional investment banking and brokerage, in which the goal is to pitch and sell assets or opportunities. On the buy side, meanwhile, fall private equity, hedge funds, venture capital, and other asset management. Buy-side firms have capital and are looking for lucrative investment opportunities. Diversified financial services—defined by the Global Industry Classification Standard as “a range of consumer and commercially oriented companies offering a wide variety of financial products and services, including various lending products (such as home equity loans and credit cards), insurance, and securities and investment products”—draws a relatively small percentage of MBA grads, so we’ve limited our focus in this article to largely buy-side and sell-side, loosely grouped into investment banking versus investment management. (Although we should note that Chicago Booth sends 7 percent of its grads into diversified financial services, well ahead of other schools, suggesting those interested in this area of work should be sure to look at Booth.)
INVESTMENT BANKING/BROKERAGE
When it comes to investment banking and brokerage, NYU Stern is the clear frontrunner, sending a whopping 28.89 percent of its Class of 2016 to work in this field. By comparison, the other four schools all sent between 13 (Columbia) and 17 (Cornell Johnson) percent into banking.
But beyond the sheer volume of grads heading into the field, the prestige of the firms where they land is also an indicator of the relative strength of the various MBA programs. Where are graduates from a given school getting jobs in investment banking? Historically, the term “bulge bracket” has been used to refer to the elite banks—harkening to a time when the names of top-tier banks appeared first and largest on financial industry advertisements. But in recent years, the terminology has shifted toward tier-one, tier-two, and tier-three banks.
While there is not absolute consensus about which banks fall into which tiers, a 2017 release from research firm Coalition identified the tier-one banks as including JP Morgan Chase & Co., Citigroup, Bank of America, Goldman Sachs, and Morgan Stanley (in that order). It went on to list tier-two investment banks as comprising Deutsche, Barclays, Credit Suisse, and HSBC, respectively. In our examination of leading MBA programs for finance, we’ve chosen to zero in on which schools help grads get into these firms.
At Columbia, Goldman Sachs was the top finance employer, hiring 15 graduates, followed closely by Morgan Stanley with 14 graduates, Citi with 11 graduates, and JP Morgan with 10 graduates. In total, 55 graduates earned a position with a tier-one bank (including five at Bank of America). Notably, Columbia’s Board of Overseers includes at least three members with deep connections to Morgan Stanley: CBS Dean Emeritus and Professor Meyer Feldberg (MBA ’65), who is a senior advisor at the firm; R. Bradford Evans (MBA ’70), also a senior advisor, and James P. Gorman (MBA ’87), chairman and CEO.
Chicago Booth sent most of its MBA graduates in finance to the Bank of America (11 graduates) followed closely by Morgan Stanley (9 graduates), Goldman Sachs (8 graduates), and JP Morgan (8 graduates). In all, a total of 42 graduates headed to a tier-one bank—including six graduates to Citigroup.
NYU Stern, Wharton, and Cornell Johnson are more guarded with their employment stats. NYU Stern notes companies that hired more than three graduates, but not how many more. An asterisk denoting three or more hires appeared beside every tier-one and tier-two bank for the Class of 2016 save HSBC. Alumni listed in the school’s “Hall of Fame” include Goldman Sachs Managing Director Alison Mass (MBA ’81) and Bank of America Merrill Lynch Managing Director Jessica Reif Cohen (MBA ’79), which could offer insight into the strength of Stern’s relationships with those firms.
Cornell Johnson, likewise, does not provide specific number of hires, sharing simply that all tier-one and tier-two banks recruit and hire at the school. And Wharton denotes the following top-tier banks as having hired more than two graduates: Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, and Morgan Stanley.
You may also want to check out this piece from the Clear Admit archives, which looks specifically at best business schools for banking.
AMID SOME REBOUND, MORE GRADS STILL LOOKING BEYOND INVESTMENT BANKING
Investment banking took a severe hit in the aftermath of the financial crisis as strong students following a traditionally clear and safe path suddenly found themselves with nowhere to land after graduation. For several years following the crash—subsequent MBA classes avoided IB like the plague, fearful that they too might graduate jobless, or that jobs they did get could disappear when the next “too big to fail” bank went under. Case in point, 33.1 percent of Columbia 2007 MBA graduates went into investment banking and brokerage. By the Class of 2012, that number had fallen to 21 percent.
As evidenced above, investment banking has rebounded some at some schools from those darkest days, but not to its pre-crash levels. And at schools like Columbia, it’s only continued to decrease. Which means MBA students who in the past followed scores of others like them along the IB route now are exploring other paths. For some, that’s meant consulting or technology. But others have looked for ways to put their financial prowess to work on the buy side. This diversification within financial services is why all of the schools we’ve highlighted here still report sending a third or more of their graduates into finance.
INVESTMENT MANAGEMENT
When it comes to investment management, identifying individual schools as clear frontrunners becomes more difficult for a range of reasons. The first is a reporting and classification issue. Different schools divide the categories within investment management in different ways. For example, NYU Stern lumps private equity, venture capital, hedge funds, and “other investment management” into a single “asset management” subcategory. Chicago Booth, Columbia, and Wharton break each out into individual subcategories. Johnson, for its part, does break those who go into finance into a range of functional groups, though its subcategories only correspond to the other schools’ groupings in a couple of instances. For Johnson the divisions are financial analysis, investment banking, managerial finance, other finance, and private equity.
Hedge Funds
Still, digging into the data that is provided yields some useful information. Chicago Booth leads all other schools we’ve examined in this article with regard to placing its students in hedge funds, sending 6.7 percent of graduates from the Class of 2016. Wharton sent 4.6 percent, and Columbia sent 3.8 percent. NYU Stern—which sends many more students into investment banking than any other school—sends comparatively fewer into any of these buy-side industries. It reports sending 3 percent of Class of 2016 graduates into “asset management,” inclusive of PE, VC, and hedge funds.
Private Equity
Wharton leads the way in terms of PE, sending 7.7 percent of ’16 grads into the hard-to-break-into field. Columbia follows, at 5.4 percent, Chicago Booth sends 5.1 percent, and Johnson trails at 3 percent. NYU Stern is presumably somewhere behind that, with a subset of the 3 percent it reports headed into asset management as indeed PE-bound.
Venture Capital
Venture capital draws comparatively fewer students than either hedge funds or PE. Wharton leads here, with just 2.6 percent of ’16 grads heading into VC. Columbia and Chicago Booth each sent 1.2 percent, and NYU Stern, again, sent an unspecified fraction of 3 percent. Specific data for Johnson students heading into VC was not available.
Investment Management Firms Recruiting MBA Grads
It can be equally difficult to pinpoint which employers hire grads from which schools and whether they hire them for PE, VC, or hedge fund work. Complicating things still further, some firms will only hire a single graduating member of a class, which won’t get captured in the school’s employment reports, which often list only those recruiters hiring two or more graduates.
If you are interested in potential employment at specific funds, funds of funds, venture capital firms, or private equity firms, your best bet is to scour the school’s individual employment reports to see which—and how many—such firms appear. This can serve as a guide of how successful schools have been at placing students in these firms and also indicate that alumni from those schools may actively attempt to recruit fellow alumni.
