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Do You Need an MBA To Be a Successful Investment Banker?

Investopedia logoInvestopedia 08-12-2015 Melissa Parietti
© Provided by Investopedia

When it comes to the hiring process, education is certainly a topic of interest for hiring managers. Obtaining a certain level of education shows hiring managers that a potential candidate wields an understanding of key topics, can take direction and can complete assignments in a timely manner. However, a Master of Business Administration (MBA) degree doesn't necessarily make a candidate exponentially more attractive in today's competitive investment banking job market.

The most obvious and overlooked benefit of obtaining an MBA when trying to get a job in investment banking is the networking connections you can make with fellow colleagues while attending classes, along with the connections made to valuable resources of information at the college, such as professors and career counselors. Peers move on to various firms and their own business ventures after graduation, and it never hurts to have more friends who can open the gates to future possibilities, such as introductions to hiring managers, referrals for sales or as sources of information. In this respect, it's not that the actual degree is valuable; rather, it's the connections you create while you're working toward your MBA in conjunction with holding the degree that deliver the most value.

School Organizations Lead to More Connections

In addition to the opportunities you have to make friends with other business-minded individuals, graduate school also provides access to business fraternities, clubs and organizations along with networking events and career connections events. These outlets serve as more opportunities to meet potential employers and peers who are seeking shared goals. The proactive environment that an MBA offers for learning in conjunction with advancement of practical skills and relationship building can help foster a future career as an investment banker.

Schools also offer opportunities for recruiters to come to campuses to meet prospective employees. A face-to-face meeting with a recruiter offers more credibility to potential employees over a cold glance at a resume through an email or online job posting system. Access to alumni is another valuable feature that can give you a break into investment banking after receiving your MBA.

Is an MBA Necessary?

An MBA is not necessary to be successful as an investment banker, nor is it necessary to get hired. What is necessary is a demonstration of your leadership skills along with a high work ethic, which may be more difficult to prove without an MBA. An MBA is a more valuable asset when you are in pursuit of an investment banking career than it would be for another position on Wall Street, such as a portfolio manager or an equity trader.

For a career in investment banking, it is more necessary to hold a Series 79 and Series 82, as these licenses are likely to be required. Many open positions in investment banking require at least a bachelor's degree without specifying the area of study. Companies that seek out candidates who hold MBAs may be looking for degrees from specific schools, such as Wharton or Chicago, depending on the selectivity of the firms.

Skills and Qualifications

Investment banking is a difficult field to break into because the demands are strenuous and intense. Being able to work under pressure for long hours and forming market models in reaction to constantly changing stock prices are not typical requirements for most jobs. Investment bankers work, at times, over 100 hours per week, and some of those hours may be through the night if the work is not completed during the day.

Creating complex valuation models is a key skill for an investment banker. If you have not learned this skill through accounting or related field experience or through an education program, it can be difficult to learn.

Full-time experience working long hours in an analyst role or related position within the financial services industry is an important part of your resume. If you have less work experience working in a quantitative role in which the valuation of companies is a critical demand, then you are less able to compete with other candidates who already hold MBAs.

Having completed an MBA program suggests to potential employers that you have been exposed to concepts relating to corporate finance, accounting and forward-minded pricing models. An investment banker needs to be able to look at the future valuation of a company's stock price from a mathematical perspective as well as based upon key developments in the company's business model; the viability of the products and services offered by the company in the future; how it will perform in relation to competitors and future competitors that could emerge; and with the hiring and firing of key employees that might affect the quality of management within the company. When an investment banker places forward-minded pricing models onto the company's valuation, there are multiple key indicators on which the model bases the valuation, and one model can produce a very different valuation from another. An investment banker must develop the models, gather information and review the information – but most importantly, he must make sound judgment calls on the information that he has gathered.

The ability to handle high-pressure situations calmly is an underestimated skill, but it is essential for a successful career as an investment banker. You may be able to fill an investment banking position after working for some time as an investment banking analyst. Hiring individuals who have previously held positions as investment banking analysts is safer for a company. It can prove to be less costly than hiring someone with or without an MBA, because the lower-tier analyst position has requirements that mimic the requirements of the investment banker position in terms of the workload and the type of work to be completed.

Career Changers

What may prevent you from entering the investment banking field is a history of previous work experience and education outside the realm of finance, accounting, business or economics. An MBA can help you by showing hiring companies that your skill set and interests have shifted toward matters that are more relevant to the investment banking field.

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