Saturday, April 27, 2013

The Curse of the Trader

In my opinion, traders have a VERY tough time getting into top b-schools, moreso than almost any white-collar job out there (ok, a bit of a hyperbole but you get my point).  Multiple people who have also noticed this have asked me why this is the case. I think there are several key reasons.

1. Traders do not develop transferable business skillsets.  At the end of the day, what we traders do is analyze the markets and make decisions based on incomplete information, all with the intention of maximizing profits.  We develop a very specialized niche expertise in a certain product or strategy that doesn't carry over to other areas of finance and certainly not other industries.  For adcom, this is a huge problem because they want students who can contribute in the classroom and out.  What value can an ex-trader add in the general management MBA courses, especially when compared to say a consultant from Mckinsey who consulted firms in a wide array of industries?

2. Trading is inherently an individual endeavor.  This aspect was particularly a problem on my Tuck application, where teamwork and "collaborative leadership" (god, these MBA buzzwords make me sick) are critical components.  This is not to say that there was no teamwork involved.  I actually worked closely with a team of programmers and developers and managed a small team in my last year at the fund.  Nonetheless, the type of leadership and teamwork examples that I discussed in my essays just weren't the type of stories that resonate with adcom.  And I'm pretty sure that other trader applicants struggled with the same issues.

3.  Adcom just doesn't really know what we do.  B-schools get tons of applicants from the usual feeder industries such as consulting, banking, private equity, marketing, corporate strategy, and general management.  They know what these people do at work and have relationships with many of these firms, so there aren't that many question marks when it comes to the type of work they do.  In contrast, trading is an esoteric field in MBA land, and in my case, it was worse since the type of trading my desk was doing was rather technical.  How do I explain the nuances of say algorithmic trading on an MBA resume or essay?  Well, you really can't since they won't get it, and quite frankly, they probably don't care about that.  What they do care is the impact that one made at the firm and what type of skills he picked up that could be applied in a b-school setting.  Because adcom is not that familiar with what traders do, the burden of proof becomes that much higher as we write our applications.  The resume, recommendations, essays, and interviews all have to SCREAM "I'm not just a geeky trader who loves making money! I am also a leader, great team player, and all-around nice guy!  You want me in your school!" 

4.  Adcom is not really sure why traders need an MBA.  The argument for an MBA if you are say an ex-military vet, engineer, consultant, or private equity associate, is crystal clear and a rather easy one to make.  For traders, the why MBA story becomes more difficult and murkier.  If you are an exceptional trader (or just plain lucky in many cases but that's a different topic altogether), you are making enough money that it does not make sense from a purely economic standpoint to go back to school.  If such a person wants to go to b-school, the question of "Why an MBA at this point?" becomes critical, and many traders whiff on this in their essays.  For those traders who weren't as quite as successful, adcom may think that this guy was not exceptional at his job and is looking to use the MBA as some sort of escape.  In those cases, the essays take on an even more critical role as your narrative needs to be as sharp as a laser. Or else, expect to get a lot of ding e-mails in your inbox.

1 comment:

  1. Hmm, not sure if many traders need the MBA unless they want to transition into one of the other aforementioned fields. I am aware of quite a few traders able to make it into top ten MBA. Perhaps it would be prudent to learn how they bridged the gap.

    Also, although trading is primarily an individual endeavor, it does require teamwork, working well with the IT and administrative staff, as most trades need more than one person in order to be executed (will say that I know nothing about trading, but logically, this is the only way a trade can occur).