Are more MBAs seeking the safety and salary reliability of finance amid the chaos of the coronavirus pandemic? Or is the durability of the sector shining through in an uncertain time?
Whether it’s the former or the latter or some combination of the two, finance is definitely proving its ROI, according to MBA Class of 2020 data from 34 top B-schools in the United States and Europe examined by Poets&Quants as part of our final review of the big three industries before the onset of a new school year. (Earlier this month, we did the same for the tech industry; next week we will look at consulting.)
How reliable is employment in finance for an MBA graduating from one of the top B-schools? Quite — but the sector is not impervious to reality. Though the long-term prospects for the industry remain unquestioned, with 20 of 34 schools showing growth in MBA placement rates over the last three years (2018 to 2020), that growth definitely slowed between 2019 and 2020: Six fewer schools reported growth in finance placement between the last two years for which we have data. New employment data will of course shed light on the trends when it becomes available from individual schools over the coming months.
CRUNCHING THE DATA
In 2019, five top schools put 30% or more of their graduating MBA classes in finance — largely Wall Street banks, but also, increasingly, venture capital, private equity, investment management, and other areas of the sector. The next year, despite the ultimate disruption in hiring in the form of the worldwide pandemic, that number grew to seven schools. Salaries, meanwhile, have climbed steadily or remained flat — with a few notable exceptions.
Cornell University Johnson Graduate School of Management was the surprise top school for percentage of MBA graduates employed in finance in 2019, at 37%. But last year the University of Pennsylvania’s Wharton School reclaimed its crown, as Cornell lost 3 percentage points to fall into a three-way tie for second place with Stanford Graduate School of Business and Harvard Business School. Landing in fifth place was New York stalwart NYU Stern School of Business, at 33.5%; its neighbor in the world’s financial capital, perennial finance powerhouse Columbia Business School, was sixth with 33.2%.
But it was a smaller school that saw the biggest leap in finance MBAs both year-over-year and between 2018 and 2020: Vanderbilt University Owen Graduate School of Management, in Nashville, Tennessee, which saw its share of finance grads skyrocket to 27% from 15% in one year. Since 2018, Vanderbilt’s finance MBA cohort has grown by 108%.
MORE ON PLACEMENT RATES — INCLUDING THE BIG DROPOFFS
After Vanderbilt, the biggest placement gain over two years could be seen at three schools: Harvard, where it grew from 29% to 34%, and a pair of Southern U.S. schools: Emory Goizueta Business School and Georgia Tech Scheller College of Business, the former climbing from 13% to 18% and the latter from 5% to 10%. That seemingly modest leap also helped Scheller set the mark for biggest gain since 2018: 150%, though of course the number of actual graduates was low given the business college's small class size.
Several schools went the other way, notably HEC Paris, which dropped from 19% to 13% between 2019 and 2020, and London Business School, which declined from 26% to 21%. Over three years, the biggest finance placement reversals occurred at USC Marshall School of Business, which lost 50% of its total from 16% to 8%, and at Washington University Olin Business School in St. Louis, Missouri, which lost 45.5%, from 22% to 12%.
Looking at the granular data in the table above, which not all schools provide, one change is worth noting: the uptick in Harvard's private equity/venture capital MBAs from 20% to 23%. That puts HBS just 1 percentage point behind industry leader Stanford, whose name is practically a byword for VC. Click here to read more about the years-long battle between the schools in the entrepreneurship/VC space.
SHOWING THEM THE MONEY
Salaries have slowed for finance MBAs, there's no doubt about it. From 2018 to 2019, 29 of 35 schools examined by P&Q saw year-over-year salary growth; from 2019 to 2020, however, that number shrank to 13 of 34 schools. Leading the way in finance MBA salary growth over three years is Spanish school IE, which saw its average starting salary grow an incredible 40% from $77,328 to $108,737. UNC Kenan-Flagler Business School was next, with 21.9% salary growth; nine other schools gained $25K to report a median $150K in 2020. Overall, the average salary growth over three years at 26 schools for which we have enough data is 14.9% — not too shabby. See page 3 for details.
Only a few schools have reported actual declines. Among them are Notre Dame Mendoza College of Business and another Spanish school, IESE — but the biggest salary decline occurred at HEC Paris, which dropped 31.7% to just $80,618 in 2020.
On a brighter note, 16 schools reported a median $150K for finance grads in 2020, up from 11 schools in 2019. Nine of those schools are in the P&Q top 10; the other, Stanford, boasts the top median finance salary at any school: $175,000, up $5K from last year. Stanford keeps getting its finance grads paid — except in terms of sign-on bonuses, where GSB has the lowest reported median of $34,500. Five other top-10 schools report median bonuses of $50K.
See the next pages for tables showing the placement rates and salary and bonus data for 35 top business schools in the United States and Europe.