If You’re Not Confident You Can Get Into Investment Banking, Should You Apply to Master’s Programs to Hedge Yourself?

566 Comments | Investment Banking - "Plan B" Options, MBA & Master's Programs - Using the Degrees to Break Into Finance

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Crossing out Plan A and writing Plan B on a blackboard.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?

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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566 Comments to “If You’re Not Confident You Can Get Into Investment Banking, Should You Apply to Master’s Programs to Hedge Yourself?”

Comments

  1. LR says

    I have a question if any one can help me. Between LSE and LBS, What university for a masters in finance would be more prestigeous worldwide and is more reputable ?
    Thanks

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