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Where Wall Street Gets Its Finance MBAs

Columbia is more than just a uptown neighbor to Wall Street. The B-school led a list of more than 30 elite MBA programs in the percentage of grads going into finance: 37%. They were among the highest paid, too. Courtesy photo

Before the world of finance was upended in 2008, more than half of Columbia Business School’s graduating class went into finance. Everything changed when Lehman Brothers, a major Columbia recruiter, went belly up in an economic upheaval that sparked the Great Recession — but some things changed more than others. The fact is, Columbia is in New York, and Wall Street is in New York, and the rest should be pretty easy to figure out. Just as it was in 2015 — though this time by a slightly wider margin — Columbia was the top feeder school to the finance industry in 2016, sending 37% of its MBAs into Wall Street and other banking, investment, private equity, or financial services jobs.

New York is the world capital of finance, home to Goldman Sachs, Morgan Stanley, JP Morgan/Chase, Bank of America Merrill Lynch, and dozens more of the most prestigious firms in the industry. And while many of the most lucrative MBA careers are in finance and the elite programs continue to churn out finance MBAs, the sector is showing some signs of yielding some of its talent to other fields — perhaps to an upstart like tech.

At Columbia, where the sound of Wall Street’s bull is loudest, digging out from under the weight of the ’08 collapse continues. In 2014 the B-school sent 35% of its MBAs into finance; in 2015, Columbia edged out the University of Pennsylvania’s Wharton School for the most MBAs in the sector, 37.1% to 36.9%. Now it’s putting some distance between it and the next biggest finance factory: In 2016 the second-most finance MBAs came not from the Northeast but the Midwest, the University of Chicago’s Booth School of Business, which moved up to 35.0% from 34.8% in 2015. New York University’s Stern School of Business was third at 35.3%, moving up 1.3 percentage points and one spot on Poets&Quants‘ list of 35 elite business programs; while Wharton fell 1.8 percentage points and two places to fourth with 35.1% of finance-bound MBAs.

COLUMBIA MBAS WHO GO INTO FINANCE ARE ALSO LANDING FAT FIRST PAYCHECKS

Among the school’s top ten employers in 2016 were four financial powerhouses: Goldman Sachs, which hired 15 members of the Class of 2016, Morgan Stanley (14), Citi (11), and JPMorgan Chase (10). Yet the list of the school’s biggest recruiters only tells part of the financial story at CBS. Up and down the school’s employment list are one finance player after another: Credit Suisse (7), Bank of America Merrill Lynch (5), Evercore (5), Barclays (5), Prudential Financial (4), UBS (4), American Express (3), Bayside Capital (3), Fidelity Investments (3), Deutsche Bank (2) and a near endless number of investment boutiques and PE firms, including Grey Mountain Partners Macquarie Capital and Moelis & Co.

As is often the case, the biggest firms with the greatest hiring needs tend to dominate the list of major finance employers at most prestige schools. At Chicago Booth, for example, Bank of America Merrill Lynch led all finance firms in hiring the most Boothies last year (11), or roughly 2.2% of the graduating class. Morgan Stanley (9), Goldman Sachs (8), JP Morgan Chase (8), Deutsche Bank (7), Lazard Freres (7), Citigroup (6), and Fidelity (6) followed. At London Business School, the employers were more spread out. Goldman led LBS finance recruiting in 2016 with just half a dozen hires, followed by Credit Suisse (4), Deutsche Bank (3), MetLife (3), Pillarstone (3), Admiral Group (2), Citi (2), Coller Capital (2), Credicorp (2), Morgan Stanley (2), and Partners Group (2).

Columbia isn’t just sending more than one-third of its graduating MBAs into finance — it’s also getting them some fat first paychecks. The school reported that its 2016 grads earned a median base salary of $125,000, one of 14 schools to report that figure. In fact, only two schools reported higher numbers: Stanford Graduate School of Business and Harvard Business School, both of which reported median base salaries of $150,000. The lowest reported median base salary: $100,000 at Olin Business School at Washington University in St. Louis, followed closely by Michigan State University’s Broad College of Business ($100,400), and Indiana University’s Kelley School of Business ($101,250).

GAINS FOR TECH COME AT EXPENSE OF FINANCE?

Stanford (31%, no change from 2015) and Harvard (28%, down 3 percentage points) remain reliable finance feeder schools. So do Cornell University’s Johnson Graduate School of Management (32%, down 2 points) and Georgetown University’s McDonough School of Business (30%, down 3 points). But of the 35 elite programs examined by P&Q, 20 saw drops in their numbers of finance-bound MBAs. The drops were small, just 1 or 2 percentage points in most cases — with some notable exceptions. Washington Olin saw the biggest subtraction, 17 points, to just 12%; Northwestern University’s Kellogg School of Management (down 6 points to 13%), Indiana Kelley (down 3.5 to 9.7%), Yale School of Management (down 4.7 to 19.7%), and UC-Berkeley Haas School of Business (down 3 to 12%) all saw more significant decreases.

Why the dropoff? In some cases, the answer may come down to student preferences or the industry’s own needs. But there is little question who is getting more elite MBAs at the expense of the financial firms: tech. At Kellogg, the 6-point drop was concurrent with a 7-point gain in tech grads; at Kelley, tech-bound MBAs increased a remarkable 10.3 points from 2015. McDonough saw a 4-point tech gain from 2015 to 2016.

While some schools fell back in the finance field, some went the other way, gaining steam in their finance programs: UNC’s Kenan-Flagler Business School led all gainers with 7 points, to 25% of all of its Class of 2016 MBAs; while Carnegie Mellon University’s Tepper School of Business (up 3.2 points to 17.3%) and UCLA Anderson School of Management (up 3.7 to 19.6%) had not-inconsiderable improvements in their offerings to the world of finance.

SOFT NUMBERS, HARD NUMBERS

When you look at employment results by function, rather than by industry, the numbers can get even higher (though not at Columbia, where the number actually drops to 34%). In fact, some schools can approach or even surpass the median for a top-25 business school of about 20%. Indiana University’s Kelley School of Business, for example, is an anemic 9.7% in finance jobs by industry; by function, on the other hand, the number jumps to 21.3%. Likewise UCLA Anderson (19.6% to 29.7%), Notre Dame University’s Mendoza College of Business (18.8% to 31.2%), the University of Washington Foster School of Business (6% to 21%), the University of Texas-Austin McCombs School of Business (14% to 32%), and the University of Michigan Ross School of Business (13.6% to 21.6%).

But what about actual numbers students going into finance? After all, 13% at Kellogg, which had a class of 653 in 2016, is better than 19% at Mendoza, which had a class of 127. Here’s where the big programs set themselves apart in yet another way. Columbia’s 37% translates to about 287 finance MBAs, while Harvard’s 28% means it sent about 262 MBAs into the sector and Chicago Booth’s 36% becomes 204 MBAs. But in this game Wharton wins hands-down with about 298 finance MBAs — more than the entire Class of 2016 at over a dozen other elite programs on the list.