McKinsey "What reasons ..." questions

Question

Hi!

I have a question regarding the typical "What reasons ...?" Question at McKinsey interviews. For example in the picture below, I am always confused on what exactly they mean by "reasons", is it for example rather "less customers, lower income per customer" or more like the reasons behind these aspects like "are we targeting a different customer segment then our competitors and the one they are targeting is growing much faster? Do we have good products? Is our pricing competitive? Marketing ect?

It would be great if you could help me understand what they really want to here with such questions. For example for the case below the exact question is: What could be potential reasons for why the AUM has not been growing as fast as the competitors?

Thank you!

Answer 1

Hi there,

Both of your interpretations are right, they just sit at two different levels, and the trick is to move through them in order rather than pick one. Think of it as the pyramid principle: start at the top and break down. This is how all MBBs expect you to think, by the way, not just McKinsey.

Level one is the mechanical breakdown of the metric. For AUM growth, that is roughly: are we attracting fewer new investors, losing existing ones, or is the money per investor lower. This does not yet answer "what reasons", it just locates where the gap is.

Level two is the actual reasons underneath each branch. Once you know where the gap is, you ask why: are we targeting a different customer segment than competitors and that segment is growing slower, are our products weaker, is our pricing (the fee) uncompetitive, is distribution or marketing the issue. This is where "reasons" really lives.

So when the interviewer asks "what reasons", they want you to structure it top-down: break the metric first to locate the problem, then reason into the drivers under the branch that matters. A candidate who jumps straight to a list of causes looks unstructured, and one who stops at the mechanical split has not answered the question.

Hope it helps. Feel free to drop me a message if anything is unclear and good luck with the prep!