Yet another MBA salary question

Water Cooler Careers
#1

Hey guys, I have a question related to post MBA salaries/career potential. First my profile: CFA charterholder, 4.5 years of work experience at a FoF, now working as a senior corporate bond analyst making about 80k/yr workng in a city with a low cost of living. I’m estimating that by next September, if I move to a city like San Francisco or NYC, I could make around 100-110k due to higher cost of living and the extra work experience I would have.

I’m also toying with the idea of applying to an MBA program. I’ve already taken the GMAT (730 score) and have a 3.65 GPA, however from what I’ve read, due to the ultra-competitiveness of top programs, I think my no-name undergrad and work experience from no-name companies kill any chance of going to a top 5 program. So I think maybe a top 10-15 program might be more realistic.

When I look at the starting salaries for these programs, they don’t appear to justify the cost of the program and the 2 years lost work experience. I know the standard response is better long-term growth/network, but has anyone ever quantified that? It would be a huge risk to drop the cash, lose 2 years of experience and salary for possible faster salary gains in the future. I did find an article on business week about long-term MBA pay: “New MBAs from Tuck earned the most of any of the schools on the list, $131,000, but at 20 years their median pay of $172,000”. I’m sure with just the CFA I could earn more than 172k with 20 years exp. I know my boss did with a lot less years of experience. I’m not trying to start another CFAvsMBA arguement (nor about hacksaws), more like, is the MBA worth it for someone already in Investments who can already make a similar starting salary. I know I’ve read similar things here from Ibanking people questioning the MBA, because they can just continue working another 2 years and out-earn MBA grads who join their firms.

#2

The average salary after the MBA doesn’t justify it of course. It’s not everyone getting the top jobs, which easily exceed these “averages”

No guarantees .

#3

I have a question related to post MBA salaries/career potential.

You started with salaries / career question and limited yourself to purely salaries aspect!

I know the standard response is better long-term growth/network, but has anyone ever quantified that?

If quantifying the salary and mean/mode/median is the only criteria of professional life and career growth measurement then NO arguments. Your ‘considered’ opinion win hands down. But life and, therefore, passing the days of that precious life in pursuit of happiness, satisfaction and future growth and prestige has many more dimension than the mere earning of higher than median salary. (unfortunately most people realise it after crossing the mid-career peak and the professional prestige they have been able to earn). The very fact that it is a “standard” response means there must be some strong reasons for this response to be a “standard response” of mature majority.

…but at 20 years their median pay of $172,000… If attaining or crossing just the median figure is the only aim of professional knowledge based career then it is meaningless even to consider the question that is bothering you. The $172,000 median figure is just the aprox mid-point of a wide range and the aspiration or ambition is (or should be to be at the maximum of the range rather than at the middle) and then the important consideration is ”are you one of the median capabilities in terms of knowledge, experience and future potential?”. If yes, then reaching the median mark is a great achievement and better to limit aspiration to that target only. If not, then you may need to think more rationally matching your higher ambition and future potential.

…is the MBA worth it for someone already in Investments who can already make a similar starting salary…because they can just continue working another 2 years and out-earn MBA grads who join their firms.

No doubt many have said that MBA after CFA is more of a redundant activity but, that is a big but, it is not the only belief or proven fact. “Out-earning”a specific target group at a specified time-interval or at a certain point of time, sounds good only if statistically speaking and limiting the criteria to only one variable i.e. the total salary p.a. figure. You are a Charterholder and like all other or most of them at least) your consideration certainly was/is not limited to the figure you fill in the annual IRS form and make you happy if it is equal or more than the median salary of the peer group. At any specific point of time you should focus more on the upper limit of the range of which this is the median figure, if not now then, in the near future. There comes the question of future potential and the question of “what makes you better than the median fellows?” As Iteracom rightly said, “The average salary after the MBA doesn’t justify it of course. It’s not everyone getting the top jobs, which easily exceed these “averages” .

It is entirely a reliable outlook (though not necessarily a “valid” outlook) to think and limit your decision-making for future on only statistical consideration , that too only median figures, and the figure of saving two years salary and other similar purely money based calculation on the current figure and situation basis but to what extent it was a wise decision making will be known to you when you have reached that ‘future’ date and will be wondering how to “cross this “median” label? But then due to increased commitments and other family and social/ personal constraints at that time it may be almost a hobson’s choice for you to remain a median figure in the statistics of measure of success in professional life! Till then you will remain a winner .

#4

Hi. I think you should ignore the salary statistics for now. Instead, try to imagine what sort of job the MBA degree will help you transition to. This depends on your job experience. For instance, IB analyst -> MBA -> IB associate is a typical transition. What sort of transition can you aim for given your current qualifications?

I agree that getting an MBA is a big decision. So, you should think about how this degree fits into your overall career plan and how you can systematically attack the opportunities from an MBA program.

#5

Thanks for the responses. Ohai, part of the problem is I don’t really have a career path. First I worked at a FoF, now I analyze corporate bonds. I’m not really that set on a specific specialization within the Investment management world. I’m simply examining the payoff of the MBA given I have the potential to enter a good program. Having more “prestige” or “career advancement” doesn’t do much for me; limiting my time spent in the office while maximizing my salary is what I’m after. As long as I can avoid +65 hour weeks, the challenge of analyzing then selecting investments/implementing strategy is what’s important to me. It doesn’t matter if it’s through a mutual fund, PE shop, private banking, etc… I’m already doing this without the MBA, without the student loans, so the question I need to answer is almost purely a financial one.

#6

What I am trying to say is your potential salary will be dictated by your career path. I don’t know if it is meaningful to assume that you will get a certain salary by being in the MBA program alone. Someone with IB background has much higher expected salary than someone who has managed NGOs, even if they attend the same MBA program, since they will likely get jobs in different industries. You might be able to get a better estimate of your future earnings if you can determine several potential careers that you can launch out of the MBA program. For this, I think it is worthwhile to talk to some alumni or current students at your target schools. Your options will still be open, but it will be useful to hear about various possibilities to inform your decision to attend the program.

#7

Ok so you don’t care to be a baller. That’s ok, to each his own. In that case, I would recommend that you stick with your job, get steady promotions and pay raises, and enjoy your free time. It’s not guaranteed that your job post-MBA would be better than your current one (economy, availability…etc) so just stick it out at your current place at $80k/yr (=$110k/yr in NYC). A few years later, you should be at $100k (salary + bonus), but you’ll probably still be ahead in the next 3-5 years because you won’t have the 200k+ debt plus lost earnings if you do an MBA.

#8

What area of MBA would you specialize in? Management? Finance? MBA is about broadening your skill set to become a manager or PM, etc. It is absolutely not necessary to have an MBA to make a bunch of money.

Honestly, the most important skill to have to make a bunch of money is an ability to sell people. That’s it. Simple. I know I guy who got in on P90x at the ground floor selling that stuff and he’s as rich as the guy I know who graduated with a PHD in physics from MIT at 23 years old (he’s 60 now).

Unless you have a clear idea of why an MBA fits into your career progression, you really don’t need one. I would not recommend going to an MBA program to “find yourself”, especially now.