One industry worth getting into this year is finance. Folks who graduated from the Harvard Business School in 2020 with their Master of Business Administration (MBA) degree are off to a great start. The estimated median salary of a recent Harvard Business School (HBS) graduate starting out in finance is a generous $173,500 a year.
This median salary is reported to be an increase from last year’s $172,090 average salary for Harvard Business School alumni. Which subsections of the finance industry are doing the best?
The highest paying sectors in finance include hedge funds, consulting, private equity firms, and venture capital shops
According to recent data, Harvard MBAs who clenched employment at hedge funds, consulting firms, private equity firms, and venture capital shops enjoyed the largest salaries of all. Those graduates who gravitated towards employment at a hedge fund were looking at a median yearly compensation of about $203,307. The sign-on bonus for this position is nothing to sneer at either coming in at around $28,000 for new hires. About 7% of Harvard’s recent graduating class started working at a hedge fund after graduating in 2020 which nearly doubled from the 4% of new graduates reported entering into this field back in 2019.
Yet another lucrative field in the world of finance is consulting. Starting at a consulting firm means you get a $30,000 sign-on bonus and an average median salary of $195,336. When applying for jobs most job postings will show the starting yearly salary is around $165,000 but this is before taking into account the lofty sign-on bonus and other merit-based monetary perks included when you’ve reached specific goals and benchmarks set for the year. About 9% of recent Harvard MBA graduates reported an additional guaranteed compensation of $20,400.
Graduates who chose a career path in private equity are also doing fairly well for themselves. The average salary reported for young professionals in this specific finance sphere is $186,609.
This average was calculated by adding the $25,000 sign-on bonus, $160,000 salary, and $111,500 first-year guaranteed compensation. This salary is about the same for MBAs that start out at venture capital and buyout firms postgraduate degree programs as well.
Why are the aforementioned sectors in finance faring better than others?
The pandemic has made certain industries less of a “sure thing” as far as growth—the rate at which they are willing to hire new entry-level employees—goes. Several companies have had to instill a temporary hiring freeze regarding recent graduates. This freeze happened despite a promise of guaranteed employment through a direct internship to employment pipeline programs due to financial hardships many companies endured directly related to the coronavirus crisis.
The job market has significantly tightened forcing those graduates usually interested in tech, government, and non-profit jobs to change course as far as their ultimate career goals went. You can clearly notice this trend in the broad increase in graduates that pivoted their careers towards financial markets. Harvard Business School noted 58% of graduates seeking employment in financial services and consulting compared to only 50% of last year’s graduates.
Those MBAs seeking work in big tech went down to 19% compared to 20% that accepted offers from tech companies back in 2019. Harvard also posts the median salary of alumni earners in the lowest 25th percentile and highest 75th percentile determined through base mean salaries offered for those positions. The jobs compensating graduates the least for their efforts were government and non-profit careers averaging a mean salary of $100,000 per year. The jobs in the highest paying 75th percentile were reported to be careers in private equity, venture capital, energy, hedge funds, investment management, and highly diversified manufacturing.
This pandemic has forced many people entering the workforce to consider long-term stability in a field that will remain secure despite economic downturns over passions that oftentimes can be far less stable. I don’t blame them, with so much uncertainty in a COVID-19 impacted workforce, knowing your career will be safe for years to come is one sure thing you can hold on to.
Even at an esteemed ivy league institution like Harvard job prospects have dwindled in light of financial losses experienced by companies across the U.S. Statistics show 3 months after receiving their Masters in Business Administration only 1 in 5 graduates had yet to hear back concerning employment in their studied field. Of the 90% who eventually did get a job offer in their desired field only 83% were happy enough with the offer to go through with it. This number was down 5% from 88% of HBS graduates who followed through with signing on to new companies in 2019.