There are many investment banks that pay their employees to obtain a Masters in Business Administration (MBA). Obtaining one of these degrees can be of great help to those who want to climb the investment banking ladder. However, acquiring an MBA is not always a necessity for those who want to move up, and those seeking this degree have several caveats to keep in mind.
The MBA Advantage
Over the last several decades, MBAs have become more prevalent and increasingly expensive to obtain. Many programs cost a student $87,000 to $160,000 in tuition plus living expenses, books and other costs for the length of the program. Full-time programs generally take two years. Companies can help pay for this, but any amount they provide over and above a certain exemption is taxable. As of 2020, this exemption is $5,250.
Even with these considerations, many who work in investment banking find that obtaining an MBA can help them move up the ranks. Senior bankers, for example, are quite likely to hold one of these advanced degrees. At the same time, investment bankers should keep in mind an MBA is more valuable for some investment banking functions than others. Those working in trading, sales or portfolio management are less likely to hold this degree.
In addition, investment bankers must remember that hiring managers in their industry tend to source candidates from top schools; therefore, an MBA from such a program could prove far more valuable than a degree from a less prestigious school. For those who have considered the aforementioned variables, investment banks have varying methods of assisting their employees in obtaining MBAs.
Goldman Sachs Group Inc. (NYSE: GS), the world’s largest investment bank, helps its employees pursue degrees such as MBAs through tuition assistance. This firm also offers MBA fellowships to first-year business school students who are female, Hispanic, Black or Native American. The company evaluates candidates for the fellowship, which is awarded for notable leadership and community achievements after they complete the Summer Associate interview process. Those who secure a fellowship receive a cash award of $35,000 in addition to the Summer Associate salary. If the candidate completes the summer internship and accepts a full-time offer, he receives another $40,000 from Goldman Sachs in addition to any full-time signing bonus.
Employee-owned financial institution Robert W. Baird & Co. Inc.’s Baird Scholar program pays 100% of an MBA’s tuition expenses, as well as the costs for books, as long as specific criteria are met. The program caters to high-performing associates who have excelled in their first several years at the firm and shown a commitment to investment banking.
To receive funding, associates must attend an approved business school, work for Baird during the summer following their first year of business school and then return to the company as an associate after completing their MBA.
Credit Suisse Group AG (NYSE: CS) has an MBA fellowship that is similar, in some respects, to Goldman’s program. Credit Suisse’s fellowship program targets first-year business school students who are either female, disabled, veterans, LGBTQ, or of Hispanic, African American or Native American descent.
Eligible candidates must be enrolled in a business school program full time and eligible for a summer internship during the summer following their first year of business school. Candidates for a fellowship should have a strong interest in pursuing a career in investment banking, as well as being accomplished in leadership, academics and their professional life.
Fellows receive a $40,000 stipend for their first year of business school, as well as a summer internship in investment banking at one of Credit Suisse’s U.S. offices. Fellows can also earn another $40,000 for the second year of business school if they complete a summer internship and accept a full-time offer with Credit Suisse.
While many investment banks pay for MBAs, people interested in taking advantage of such opportunities need to keep several caveats in mind. For starters, an MBA is not always the ticket to moving up the ranks, as this degree is far less common in certain investment banking functions, and some have made great progress without it. Finally, many investment banks have a history of recruiting from top business school programs, so bankers considering an MBA should keep the prestige of any schools they are targeting in mind.