An MBA seems to be the rite of passage for many institutional investors. However, with course fees running into the tens of thousands, does it really provide “value for money?” Of the institutional investors we interviewed, many cited attending business school as critical to their entry into the realm of institutional investing and subsequent investment success.
In this week's edition of Trusted Answers, we look at some institutional investors’ insights on attaining an MBA:
I would say that having Columbia Business School, or an Ivy League MBA on your resume, can certainly help get you into a conversation. I think it shows that you have a broad base of skills to have been able to attend that type of program. And I think that employers or potential partners understand that. You were a good student, probably pretty personable, hard-working, interested in building a network, among other intangibles that you bring to the table. So I think having that on your resume may take a lot of questions off of the table so you can get to a more direct and important conversation.
And then I would, again, highlight the fact that I have been able to leverage the Columbia network when I have made a couple of job changes over the last fifteen years. The school’s network has been extremely helpful in making introductions, in taking calls and in writing or speaking on my behalf. That has been extremely helpful over time.
My dad said, 'Get a Harvard MBA – it’s the West Point of capitalism.'
When I returned from East Germany [after intelligence gathering during the Cold War] I was offered the opportunity to attend graduate school.
As much as I enjoyed my adventures behind the Iron Curtain, I realized that wasn’t what I wanted to do with my life, and I wasn’t sure what to study if I wasn’t going to be a spy. My dad said, “Get a Harvard MBA – it’s the West Point of capitalism.”
Once I got to Harvard, I felt so well prepared from West Point that I was really able to focus on the educational opportunity and not become overwhelmed by the pressure.
In hindsight, Wharton was very fortuitous. I didn't know much about what I was getting into, but Wharton turned out to be the ideal program for a mid-career transition to the investment world. I came out of the military with no relevant finance experience. It was essential for me to get up to speed on the fundamentals of business and finance. Wharton more than met that need with a two-year financial fire hose, for which I will always be grateful. Socially, it was just as important, as the relationships I developed there have been absolutely critical at every turn. Overall, I would say that attending Wharton was the single biggest determinant in shaping my investment career.
...I went back for an MBA basically to learn things I didn't learn in undergraduate school such as finance and accounting and marketing and all the business-related things that I never had a formal education in.
I was an electrical engineer. I worked for Intel Corporation for more than six years. I'm very comfortable with quantitative analysis and math in general. Then I went back for an MBA basically to learn things I didn't learn in undergraduate school such as finance and accounting and marketing and all the business-related things that I never had a formal education in. Of course, that's very helpful. Then on top of that, I'd say pursuing the CFA designation after the MBA was icing on the cake, because I'd added fixed income in particular and then reinforced a lot of the same curriculum and filled in the gaps from my MBA studies.
Michael Trotsky, Chief Investment Officer and Executive Director, Massachusetts Pension Reserves Investment Management Board
Read the full interview here.
My first job out of school was with a finance company that provided financing for middle-market buyouts. Right from the beginning of my career I gained an appreciation of private equity and what private equity can do. That led me to apply to Harvard, which I knew had a solid reputation for helping people achieve careers in private equity. There is a great private equity ecosystem at Harvard. I applied to business school and went off to Harvard with the game plan that I would be involved somewhere in the realm of private equity or alternative investments.
We looked at capital markets and various ways of investing on a public or private basis. Harvard was a terrific place to learn about that. I studied under professors Michael Jensen, Josh Lerner, and Rick Ruback. They taught me an awful lot with respect to private equity; the underpinnings of private equity; and the good and the bad of private equity.
I came out of Harvard, interestingly enough, not pursuing private equity. I went into banking. I was a banker for seven years after Harvard... After banking I became a faculty member at the University of Pittsburgh. I was teaching electives in the MBA program, as well as some electives for the undergrads. I was teaching all finance courses, including private equity, venture capital.
That combination of the education I received -- an undergrad in finance; the MBA at Harvard; then the experience of working as a banker and trying to make transactions happen; and then teaching students, reading the research and becoming more familiar with the underpinnings of what makes the markets work and what makes private equity work -- provided a great background for going into endowment management at Carnegie Mellon University.
I attended the University of Chicago Booth School of Business for my MBA. Booth has a great program, the Private Equity Lab, which gives students working experience at a private equity firm. During the quarter, you intern at a local private equity shop and take a class based on that. I interned with Sterling Capital Partners, a mid-market buyout shop in Chicago, during my first year and then became a summer intern. Then, at the end of my summer internship, the firm’s founder gave me an offer to join full time. So I ended up working full time and getting my MBA during my second year of business school. I was at Sterling from Mondays to Thursdays and then took business school classes on Fridays and Saturdays. It was a tough year, but it was great. I joined Sterling after graduating.
In graduate school, some of my great professors were also great people. They focused on the fundamentals of quantitative and qualitative right and wrong. That dynamic was so aligned with what I found when I joined Goldman Sachs. The business principles at Goldman Sachs were consistent with the education I received at the graduate school from those great professors. They helped support and develop a formative and fundamental belief within me that if an individual works to develop the quantitative and qualitative skill set and does good work for the right reasons, success would find them. At Goldman Sachs we described this as being “long term greedy.” Once again, those really great professors I had in graduate school were people that I could respect not just for their intellect, but also for who they were, how they presented themselves, and represented the school. I thought wow, that’s aspirational.
I was recruited right out of Mt. Holyoke to become an investment banker and worked as a portfolio manager for the first half of my career. Everyone I knew on Wall Street in the early 80s had degrees in literature, philosophy, other liberal arts from ivy league schools… A CFA may be more important than an MBA if you want to play a pure investment role.
...I've never felt that I've missed anything by not having an MBA.
...I've never felt that I've missed anything by not having an MBA. I was always focused on getting things done, even in the planning part of my career. I wanted to do things that actually got built or put in place as opposed to just being on paper, so I was always interested in execution. I would say if anything, I don't get lost in a spreadsheet. I know that there are a lot of other elements that go into a successful investment.
Mark Barnard, Managing Director of Private Investments, Howard Hughes Medical Institute
Read the full interview here.
Trusted Answers is a weekly series that delves into some of the most pertinent issues within institutional investing, and shares some of the insightful responses from the 40+ institutional investors we have interviewed in the past year. Take a look at some of our other Trusted Answers.