If You’re Not Confident You Can Get Into Investment Banking, Should You Apply to Master’s Programs to Hedge Yourself?
It’s always on your mind, but especially so when the economy is in shambles and shows no signs of recovery:
Plan B.
We’ve looked at a number of different options, from becoming a ski bum to becoming a cocaine addict and moving to Buenos Aires, but today I wanted to focus on one of my most frequently emailed questions:
Should I do a Master’s Program? If I don’t get into investment banking during full-time recruiting, should I go to graduate school instead? Will these programs help me get in?
Are they worth it?
Definitions
By “graduate school” I’m not referring to MBA or Ph.D. programs – those are completely different ball games, and you’re probably not considering them if you’re still in school.
And if you are, think again – getting an MBA to get into finance is only helpful with several years of experience and a Ph.D. is only helpful if you want to be a quant.
In this article, we’re referring to programs that last a year or two and result in you getting a Master of [Something] title, where “Something” is usually related to finance.
Some Answers, Please
The short answer is that these programs by themselves don’t help you, but going to a better-known school and delaying recruiting by a year could definitely help you.
When I went to career fairs at schools, Master’s students would always come up to me and say, “So, once I finish my degree I can start working as an Associate, right? How do I get an interview?”
But that’s not how it works: you don’t come in at a higher level. You’d still be an Analyst or at least starting at whatever the bottom position is called wherever you end up.
Another common question: “So if I do this program, they’ll see that I’m really interested in finance, right? And then I’ll have no problem beating all those guys with PE internships this summer, right?”
The answer, again, is no. It does help incrementally – more so if you were not an economics/finance major – but no amount of classes, school, or training will ever make up for non-existent internships.
So if these programs themselves don’t actually help you, why should you bother instead of just moving to South America for a year?
They help you when you lack either prestige or preparation (or both).
Lack of Prestige
I hate the word “prestige,” but I use it here to mean, “You don’t go to a brand-name school that most banks recruit at” (otherwise known as a “target school”).
We all know that it’s very, very difficult unless you want to spend months cold-calling, going to other schools’ career fairs, and networking with alumni.
It does work, but it’s very time-consuming and you’re unlikely to get into the largest firms like this.
Long-Term Prestige?
But the lack of a brand-name school also hurts you with exit opportunities after banking and business school admissions.
There’s always debate over how much a top school helps you with getting into a top business school, but it never hurts.
And with exit opportunities – private equity especially – firms are distinctly biased toward picking people who have had a track record of well-known names on their resumes.
Yes, you can get in without having a brand-name background, but it’s not common. Even at smaller PE firms, the tendency is to interview based partially on how well-known your school is.
But What About Networking?
Yes, networking works but networking with a well-known school on your resume works even better.
So if you’re serious about finance, then applying to Master’s programs at top schools is a good idea – even if you think you have a good shot at getting full-time offers.
Of course, if you don’t have a shot at getting into top programs due to grades or other factors, then this “Plan B” is not as viable.
Lack of Preparation
Master’s programs could also help you when you’re not prepared for recruiting.
Maybe you just got interested in finance over the summer and you’re about to graduate in a few months; or maybe you’ve had some finance internships but just haven’t had time to properly craft your “story” and figure out what you’re going to tell recruiters.
In this case, it’s still worth going through recruiting because you never know what’s going to happen – and it’s good to get the practice anyway.
Some people underestimate how random the recruiting process is and don’t understand how even tiny details can tip the scales one way or the other. Remember, there’s a reason you didn’t get an interview from JPMorgan.
Time, Not Prestige?
If you’re in this position, you’re after extra time to prepare rather than prestige – you could be after both, but if you’re reading this right now and you’re not at a target school, you’ve probably already done a ton of preparation on your own.
If you just need extra time to get your act together and you already have a brand-name school on your resume, where you go for your Master’s program doesn’t matter as much. You could just stick to your current school and complete a program there, if they offer it.
Just make sure you actually use the extra year to prepare – i.e., don’t sit around playing Wii Tennis and catching up on Lost and 24. Set aside at least a few hours per week to network, work on your “story,” and learn finance if you’re weak technically.
If You’re Already Working…
If you’re already working, a Master’s program isn’t nearly as relevant as an MBA.
Yes, you can re-position yourself with a simple Master’s program but you’ll run into problems when you hit recruiting and have more work experience than everyone else: they won’t know what to do with you.
There’s always debate over how much experience is “too much” if you want to do this, but if you’ve had 1-2 years or less of full-time work, you can probably do a Master’s program if you want to get into finance without an MBA first.
Just be aware that standards will be higher the more experience you have. And if you’re trying to make this type of move, you better have a really good “reason why” you’re now pursuing investment banking when you chose not to right out of undergraduate.
International
And yes, before anyone brings it up I’m aware that outside the US and especially in Europe, it’s common to stay in school for more than 4 years and complete the equivalent of a Master’s program before you even apply to banks.
So if you’re in this situation, the recommendations above are not quite as applicable to you.
But you could always decide to stay in school even longer or complete other graduate programs – in which case, the same tradeoffs apply.
The Bottom-Line
It’s almost certainly a good idea to apply to Master’s programs if you’re an undergraduate right now approaching full-time recruiting in the fall, if only to “hedge” yourself in uncertain times.
It’s like how you always apply to “safety schools” for colleges and business schools, even if you think you have a 95% chance at Harvard.
It does take time, so I would not kill yourself with polishing your applications unless you really have no shot at full-time recruiting.
Any questions?
Break Into Investment Banking
Free Access to Exclusive Content for Members Only!
Sign up for The Banker Blueprint today and enjoy:
- Free Report: 37-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews.
- Exclusive emailed bonus material.
- Free Banker Blueprint newsletter with more in-depth advice.
- Unlimited access to all articles, videos, and advice - and free updates whenever new content is added to the site.
Hi,
I am currently doing a MSc in Financial Economics at a top 10 school in the UK. The programme is very theoretical, half pure economics and half financial economics (economic based). My programme is like a 1st year of Phd for Economics or Financial Economics so as you can imagine I am missing the applied part of finance.
Now I am thinking in taking another Master (both are fully sponsored by my government) and I am between an applied Master in Finance or maybe a Master in Management (where I can take electives in applied finance). I can afford an MBA so these are my alternatives.
The question is, would be seen too wired in my cv a Master in Finance after a Master in Financial Economics?, wouldn’t be better to round off myself with a more general master like a master in management or strategy and take some finance electives there?.
Thanks in advance!!!
errata: I cannot afford an MBA……..
I don’t think doing another Masters degree would help you if you want to break into banking. I think you should start applying and networking now and see how it goes.
Thanks Nicole for your direct answer,
The problem is that I already applied to many graduate programmes and nothing happened. I was not able to apply for internships since I don’t have time given the structure of my programme.
I think that one of my weaknesses is that I am above 30s and I only have 3 years of experience in Sales & Trading in my country (I am an int’l student), so maybe I am too old for analyst positions and without an MBA there would be no chances for an associate role. And as I explained before I have no opportunity to take an internship and show me to potential employers.
Thanks for any advice you can give me.
Yes you’re a bit too old for analyst positions. I’d network a lot within your community and try to work for a smaller/boutique bank. You can also focus on your valuation experience in your last 3 years in S&T in your interviews and focus on why you want to move into banking when you start talking to people.
Hi,
I go to a top undergraduate business school and am very interested in investment banking I’m currently a junior and have had no luck with summer internship recruiting-I’m guessing due to my low GPA (3.2) I’m currently at a loss of what do. I have had to fight for a few interviews and have not been able to convert. I want to work in this industry but I dont know how to best position my self. I worry that if I plan on applying to graduate school that most likely the prestige of the graduate school won’t be anything near the prestige of my current school. What do your recommend I do to break into this industry?
Thanks.
I’d suggest you to keep at it, network a lot, and cast your net wide – focus on smaller / less well-known firms.
http://www.mergersandinquisitions.com/no-investment-banking-summer-internship-offers/
Hi Nicole,
Is staying another semester at my college better or going to do a masters better? One of the good things about staying at my college is that it is cheaper and that I might have more time to do recruiting since I will have more time? And I guess that that didn’t turn out well I can always to masters later.
Is this the right way to think about this?
Best,
Yes, as long as you can make use of the extra time to network!
Hi Nicole,
I’m currently a junior majoring in economics and the only finance-related internship I have is my internship this upcoming summer with a bulge bracket’s equity research department in Asia. In addition to not being confident I have all the necessary skills to break into investment banking, do you think it’s a good idea to get a Master’s degree so I have more time to get more banking-related internships?
Congratulations on your internship offer! Equity research is a great way for you to hone your skills to break into IB. I’d try to network as much as you can and leverage this experience to land an IB offer after. I don’t think a Master’s degree is necessary at this point. Focus on excelling in your internship, get a return offer, network a lot, and try to land an IB role for a FT offer. If this doesn’t work out, then you can pursue your Master’s. I don’t think you’d have the energy to do excel in ER, land a FT offer in IB, and prepare for your Master’s at the same time, though I may be wrong.
Thank you so much! I forgot to mention I am a foreign student studying here in America and was wondering if getting a master’s degree would help me get a FT offer in America.
It may, you have one year OPT after your studies but you will still need a firm’s sponsorship after to stay in the States. If you look for roles outside in http://www.workpermit.com/us/us_h1b_occupations.htm it may be easier for you to get a visa.
Hi, I am a rising senior at a semi-target and am considering whether or not to pursue a Master in Finance. I was wondering if you could help me out with my questions:
1. If I were to do a Master in Finance program, would you recommend me to start it straight after undergrad or after a year of work experience? (The work experience will likely be something like commercial banking)
2. If I do go straight from undergrad to Masters, would it be possible for me to get a BB SA position in the summer between undergrad and Masters?
3. This summer, at best, I will have a regional boutique IBD internship. Considering that FT recruitment for BB IBD positions is almost impossible without an SA from a BB, (and if I can’t get an SA in between undergrad and masters), would getting a prestigious MSF/Mfin even matter much at this point?
Thanks a lot!
1. I think you can do it straight after undergrad
2. You may have higher chances with boutique banks because I don’t think most banks take in summer interns who have already graduated. However, you may want to check in with HR of the banks because your case is slightly different and you may be able to apply
3. If you go to a target school, it can increase your chances and broaden your network so it helps. If you don’t have a FT offer at an IB, it is almost certainly a good idea to apply to Master’s programs if you’re an undergraduate right now approaching full-time recruiting in the fall, if only to “hedge” yourself in uncertain times.
Hi Nicole,
Thanks for your prompt reply.
Regarding your response to my 3rd question, I guess my takeaway is that, without a BB Summer Internship beforehand, it will be almost impossible to secure a FT BB IBD position after my Master’s even if it is at a highly prestigious program. Though the Master’s would certainly help for other finance positions in general… Is this right?
Not necessarily… having an internship certainly helps, but you can still break into IB after your masters without the experience. Not impossible, though there may be challenges.
What are your thoughts on Harvard Extension school for a master’s, you get access to a solid On campus recruiting program at harvard. Not all banks recruit there, but a good number do, and you still become a member of Harvard’s alumni.
I am not familiar with this program. If this program gives you access to the on campus online recruiting resources then you may want to give it a try. I’d suggest you to speak with their career services center to see if there’s any restrictions etc versus normal Harvard candidates.
It seems to be that a master’s would make sense if you could go through SA recruiting again your senior year. If, however, that is not the case, then what exactly is the point of getting a master’s as a “hedge”. Nicole stated above that BB’s rarely take summer interns who will have graduated.
Yes BBs don’t usually take graduates as summer interns, though you may be able to intern during the summer prior to the start of your master’s degree. Yes undoubtedly it can still be hard to break in without the experience even with a master’s degree, though the degree can increase your chances by buying you more time, expanding your network, improving your credibility and giving you another chance to apply IB roles