Investment banking, a field that lost its charm for MBA students following the 2008 global financial crisis is slowly clawing back into reckoning with annual starting salaries around $125,000 along with standard bonuses and other compensation. Which are the top business school’s to target?
Apart from the money, what makes the sector more attractive for fresh graduates is the chance to work with top level employees right from the start, interact with some of the most powerful people in business and chalk out a well-defined career path, besides switch over options to client companies or starting one’s own firm.
In such circumstances, how does one choose the right business school for investment banking? One way would be to consider schools that send higher percentage of students to the field. While the students would face some amount of competition among themselves, the advantage lies in the fact that the schools would be prepared to allocate more resources along with investment banking firms becoming more willing to hike the renumeration.
Investment banking had once rivalled consulting at most top schools. Columbia Business School (CBS), which sent a whopping 43.7 percent into banking in 2001, had just 16.3 percent in 2015. The University of Chicago Booth School of Business did slightly better at 16.7 percent, a slight rise over the previous year (15.7 percent). All the same, investment banking still remains the second-most sought-after career path at both schools and several others.
Apart from the money, what makes the sector more attractive for fresh graduates is the chance to work with top level employees right from the start, interact with some of the most powerful people in business and chalk out a well-defined career path, besides switch over options to client companies or starting one’s own firm.
In terms of salaries, CBS 2015 graduates received a median starting salary of $125,000 with median other compensation totalling $50,000. At Chicago Booth, the median starting salary was also $125,000, and the median starting bonus was $40,000. Here, too, investment banking helds its own against almost every other industry.
However, this was down from 31 percent in 2012 and 30 percent in 2014, bucking the trend at CBS and Booth, where interest in investment banking seems to be on an upward trajectory after a huge fall following the Great Recession. In terms of earning power, the mean base salary for 2015 Stern grads heading into investment banking was $120,634. Together with a mean signing bonus of $45,963 and mean other guaranteed bonus of $36,429, this made for average overall compensation packages north of $200,000.
Now, which all schools can get you into the ‘bulge bracket’ , the first tier of banks listed on financial industry advertisements notifying the public of recent deals or financial transactions? The ‘bulge’ comes from their names appearing first and in the largest font as they place the most securities in various transactions).
This category generally pertains to the biggies that include Goldman Sachs, JPMorgan Chase, Bank of America Merrill Lynch, Barclays, Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse and UBS.
CBS saw 14 of its graduates from the latest batch claimed by JPMorgan Chase with Goldman Sachs coming just behind with 13. Bank of America Merrill Lynch and Citigroup, each hired nine, and Morgan Stanley took another eight. A point to note is that CBS’s Board of Overseers includes at least three members with connections to Morgan Stanley. CBS Dean Emeritus and Professor Meyer Feldberg is a senior advisor at the firm; R. Bradford Evans is also a senior advisor, and James P. Gorman, chairman and CEO.
Bank of America Merrill Lynch took 12 Chicago Booth 2015 graduates with Credit Suisse and Goldman recruiting 11 each. JPMorgan Chase followed with eight, and Citi and Morgan Stanley each took seven. In terms of alumni of influence, the current Council on Chicago Booth, which advises Booth’s leadership, includes Morgan Stanley Advisory Director Jack Wadsworth and Goldman Sachs Investment Banking Advisory Director Linnea Conrad Roberts.
Deutsche Bank Global Chief Operating Officer for Human Resources Bruce Rigal and Chief Operating Officer Henry Ritchotte also are on the school’s Global Advisory Board.
NYU Stern does not give out details of employment statistics. However, an asterisk beside each of the bulge bracket firms, indicates that all hired three or more graduates in 2014. Alumni listed in the school’s “Hall of Fame” include Goldman Sachs Managing Director Alison Mass, Bank of America Merrill Lynch Managing Director Jessica Reif Cohen and UBS Global Chairman of Corporate Client Solutions Ros Stephenson.
Now, take a look at the faculty and coursework at the top business schools. NYU Stern offers the most for students aiming for a career in investment banking. Six of its 24 courses, namely Banking, Corporate Finance, Finance, Financial Instruments and Markets,Financial Systems and Analytics and Quantitative Finance are tailormade for them with students allowed to take up to three.
The school also has individual courses like Law and Business of Investment Banking, Investment Banking, Private Equity in Entertainment and Media and Entertainment Finance. It has more than 50 adjunct faculty members and visiting professors in addition to more than four dozen full-time faculty. They include Finance Professor Robert Engle, who won the 2003 Nobel Prize in Economics and Professor Kenneth Froewiss, a former managing director in JPMorgan’s investment banking division.
CBS has the largest Finance and Economics division that includes Joseph Stiglitz, former senior vice president of development economics and chief economist of the World Bank, who won the Nobel Prize in Economics in 2001.
The CBS core has a half-term course called “Global Economic Environment” that looks at the way a company’s performance and management may be influenced by external factors across an entire economy, drawing on current events to illustrate the practical implications of the concepts covered.
Its Financial Studies Program also offers electives for students pursuing careers in investment banking and corporate banking. These include “Financial Statement Analysis and Valuation,” which covers how firms communicate with one another through financial statements and involves analyses of publicly traded companies or “Debt Markets.”
Courses in Value Investing area aim at enabling students to find value that the market might not see and make profitable investments accordingly. Others include Security Analysis and also Distressed Value Investing, which covers the opportunities of investing in companies in bankruptcy.
Second-year MBA students at CBS could attend Master Classes, project-based electives, that analyze the problems of a partner organization and make recommendations.
Chicago Booth has as many as 40 finance professors including Economic Nobel Prize (2013) winner Eugene Fama, who is known as the “father of modern finance” for his research on markets and market efficiency. Other professors have experience as executives of major investment banks, board members of public and private companies and members of the Federal Reserve Board.
It has a flexible MBA curriculum where students are able to select one of several options to tailor their studies to their interests, objectives and current level of knowledge.
Under the Foundation Courses element of the core, Chicago Booth students take one course each in Financial Accounting, Microeconomics and Statistics. They are able to select a Fundamental Course in each of these areas, or select from a list of Advanced Alternatives in the event that they already have a sound basis in the subject.
In addition, they could also choose one of 13 areas of specialization. While not required, students usually choose between one and three concentrations to develop the tools and analytic skills relevant to areas of particular interest.
It also has courses like Advanced Investments that analyses the activities of top financial institutions and the changes in asset pricing over the past 20 years. Other courses include Financial Instruments, which examines the pricing of derivatives with a pointed focus on managing risk, and Financial Markets and Institutions, which delves into studies financial institutions, financial crises and the design of financial contracts.
Apart from the regular courses, Student clubs help in job searches. For example, the Investment Banking Group (IBG) at Chicago Booth links up students, career services and investment banks. The annual IBG Conference has career panels of industry professionals and company representatives from many leading banks.
During the Bank Week, students visit banks, which provide lunches, presentations, cocktails and other networking events. They could also have informational interviews. Those interested in careers in sales and trading could also get an exposure to trading desks. They also participate in the London Banking Days along with students from seven other business schools for a two-day trip.
CBS also has an Investment Banking Club (IBC) with ties to Wall Street and provides more than 100 networking, recruiting and informational events each year. Area investment banks co-sponsor events with the IBC and participate in merger and acquisition case studies, panels and interview workshops.
The IBC conducts internal programs for first-year students allowing them to examine various facets of the industry, hosts social gatherings and puts on events such as a Training the Street Workshop and the Interview Power Prep Session with Professor Donna Hitscherich.