Career options after Ph.D in Finance

[senoz]

I am doing Ph.D in Finance. The structure of the program and the courses that I am taking does not give me much chance to apply my knowledge in c++, stochastic calculus and other math topics. So I think I am losing much of my quantitative skills instead of improving them.

You guys are working at hedge funds and investment banks. I was wondering if you guys meet people with Finance Ph.D and what do they do?

I know about Peter Carr but I am pretty sure that today he would hire someone with Ph.D in Physics or Math instead of Finance.

I am taking courses on Econometrics, Options, Futures Market, Market Microstructure etc. and I am using SAS or Matlab.

In short I would like to know how much chance do I have in Wall St. with a Ph.D in Finance and what my options are besides quantitative analyst positions.

I know this is a site for quants so I don't mind if you remove this thread or do not answer my questions.

Thanks anyway.

 

[GoIllini]

It's my understanding that only something like 100 Finance PhDs get created every year outside of maybe a few programs, and something like 80-90 of them will go into academia for an easy life of teaching MBA classes and doing research 30-40 hours/week and collecting a solid, six-figure paycheck in many cases.

If you're one of the 10-20 foolishly throwing away that wonderful lifestyle to go into industry, I'd like to think you'll get into almost any interview for a quant job. Whether you'll get an offer or not will probably depend on the interview, but you'll have a lot of doors open to you. The company I worked for (before it capitulated in September) required all of its quants to have PhDs in Finance, Physics or a hard science, Math, Econ, or Comp. Sci- these jobs weren't available to typical financial engineering masters'.

Other options for finance PhDs will probably involve investment banking research, risk management, or M&A/IPO work at a typical investment bank. Basically, almost every front-office door will be open to you.

If you're at any sort of disadvantage because you're not a Math PhD right now, the Finance PhD will serve you extremely well in ten years. There are fewer Finance PhDs out there, which makes your status, well, unique. Also, if there is another market-crash, you've got a built-in put for academia.

 

[IlyaKEightSix]

Hmmm...SAS I heard is used a bit in Wall Street, though I myself much prefer R to that or MatLab, which seems to be liked by OR types since it has every known heuristic known to man pre-implemented. On the downside, MatLab is slow. SAS, however, is almost as fast as C/C++ (there's like a 50% speed improvement from SAS to C++)

As far as your stoch calc/C++...ouch. As with any topic, if you don't use it, you lose it. And odds are, the more difficult the subject, the shorter its half-life, at least in my opinion.

As for job options...you can become a finance professor teaching a bunch of financial theory to a bunch of "if we major in finance, we'll know how to get rich" students. As for quantitative positions and those that trade the more quantitative instruments (options/futures/etc...), as far as I see, firms want engineers/math/physics majors for that.

In short...I wish you luck.

Edit: Unless you want to work in academia teaching MBA and undergrad finance courses. It's just that I consider that purgatory. And if GoIllini says you've got X amount of doors open to you, he knows better than I do. But I see math (and its applied variant)/CS/physics/hard quant science PhDs specified.

 

[chaoticrambler]

Hmmm...SAS I heard is used a bit in Wall Street, though I myself much prefer R to that or MatLab, which seems to be liked by OR types since it has every known heuristic known to man pre-implemented. On the downside, MatLab is slow. SAS, however, is almost as fast as C/C++ (there's like a 50% speed improvement from SAS to C++)

As far as your stoch calc/C++...ouch. As with any topic, if you don't use it, you lose it. And odds are, the more difficult the subject, the shorter its half-life, at least in my opinion.

As for job options...you can become a finance professor teaching a bunch of financial theory to a bunch of "if we major in finance, we'll know how to get rich" students. As for quantitative positions and those that trade the more quantitative instruments (options/futures/etc...), as far as I see, firms want engineers/math/physics majors for that.

In short...I wish you luck.

I think you are mistaken.

 

[DanM]

Peter Carr has a PhD in Finance, a BCom in Accounting/Econ, and an MBA. So it isn't completely undoable to gain entry into quantitative finance - though I'm sure he's an exception, rather than the rule.

 

[Stefan Zota]

I agree with GoIllini about value of Finance PhD. In fact I know 2 people working on Wall Street with such a degree. They are in good positions (focused more on econometrics side) and they have pretty safe jobs.
The option to teach is always something worthwhile. Many other sciences graduate large number of PhD and few open tenure spots (e.g. Math, Computer Science, Physics).

 

[chaoticrambler]

I agree with GoIllini about value of Finance PhD. In fact I know 2 people working on Wall Street with such a degree. They are in good positions (focused more on econometrics side) and they have pretty safe jobs.
The option to teach is always something worthwhile. Many other sciences graduate large number of PhD and few open tenure spots (e.g. Math, Computer Science, Physics).

Definitely!! I don't know how much research Finance professors get to do, but I would kill to have a tenure track faculty position (like 100000 others). I am finishing engineering PhD next year, but my adviser has made it clear that there is no way in hell I would get a tenure track position at a good university without putting in another 2 years a postdoc (my publication record is strong( 3 very good journal publications plus another one under review) but I don't have any science/nature type publication). But the point is, even then it is big gamble and there are too many people jumping from post-doc to post-doc into their mid 30s.


Some people on this board think getting a quant or trader position on wall street is hard. Those people have no idea how hard it is to get a tenure track position in a top-50 university in science/engineering/math.
There are way smarter people seeking those positions than your average MFE quant, and going nowhere and ending up frustrated.
In a typical top-20 engineering school, every faculty position gets 100-300 applications.

 

[Andy Nguyen]

Forget about tenured track at a top 20 school in any field. The Math dept of Bronx Community College (CUNY) received over 200 CVs a few years ago when it advertised an open tenured-track assistant professorship. Positions like that are now far and few between.

 

[chaoticrambler]

Forget about tenured track at a top 20 school in any field. The Math dept of Bronx Community College (CUNY) received over 200 CVs a few years ago when it advertised an open tenured-track assistant professorship. Positions like that are now far and few between.

Yep, Math and Physics situation is worse than engineering.

 

[Andy Nguyen]

In short I would like to know how much chance do I have in Wall St. with a Ph.D in Finance and what my options are besides quantitative analyst positions.

I read somewhere that Finance PhD programs will reject you out right if you ever mention going to industry when you apply. Maybe it's true for the few top programs only and the idea of Finance PhD is going into academia?

 

[senoz]

I read somewhere that Finance PhD programs will reject you out right if you ever mention going to industry when you apply. Maybe it's true for the few top programs only and the idea of Finance PhD is going into academia?

It is true. It is also not wise to tell your profs that you are thinking of working at industry. Our program director does not care much, but there are profs who would treat you differently.

 

[GoIllini]

I think you are mistaken.

Agreed. Finance PhDs basically get a guaranteed ticket into academia (hundreds of finance and MBA programs throughout the country; only 1-2 finance PhD grads from each school every year.) Average salary for an assistant finance professor is also one of the highest starting salaries for profs; they begin at around $100K and include full benefits. You don't need a postdoc- just graduate and apply and you'll probably get a couple offers assuming you're decent at teaching. (I would guess that teaching is emphasized a bit more than research with business professors as opposed to engineering or the hard sciences.)

As for job options...you can become a finance professor teaching a bunch of financial theory to a bunch of "if we major in finance, we'll know how to get rich" students. As for quantitative positions and those that trade the more quantitative instruments (options/futures/etc...), as far as I see, firms want engineers/math/physics majors for that.

I don't care who I'm teaching to; if I can easily get a $100K offer for a cushy, low-stress job where I work 30 hours a week teaching and then spend my money in a college town rather than New York, I would say I've gotten a great degree. 30 hours/week of work sounds more like a vacation to me, and that's more money (after tax) than the wiser quants on the street will spend in two years. If anything, the past two years on the street have taught me that money is important, but free time is even more precious.

I have no idea why cinoglan wants to go into industry; you'd have to have a three inch hole in your head to want to work 80 hours a week in New York when you can have a very, very, nice life in Ithaca, NY, New Haven, CT, or Berkeley, CA. Hopefully, cinoglan will remember that I hit him upside the head (and maybe accidentally knocked some fluids out of the hole in his skull) in two years if/when he gets tired of it. That would be a good time to go back to academia for a while.

As for quantitative positions and those that trade the more quantitative instruments (options/futures/etc...), as far as I see, firms want engineers/math/physics majors for that.

We simply have to agree to disagree on the quantitative positions issue. My (limited) experience is that a lot of Finance and Econ PhDs graduate with more quantitative firepower than financial mathematics MS's, and some of them can even give Engineering and Physics majors a run for their money.

Yes, Econ PhD quants are rarer because most of them aren't forced to go into industry to find jobs. However, I happen to know two Econ PhD quants- that's as many Physics PhD quants as I know. I see no reason why a Finance PhD would be different; I would think the program would be just as quantitatively oriented as Econ.

People who get into Econ and Finance PhD programs also look very different than a typical Econ or Finance major. They often have undergrads in math and sometimes engineering and come in with roughly the same quantitative firepower as an engineering major (3 semesters of calculus, plus probability and/or stats, and often two or three other math courses like discrete math or real analysis). Many of them will spend five years doing academic research that looks more like that of a quant's than a math or physics PhD's work.

There's an ancient Greek word called At. I think this pretty much describes the intellectual background of anyone accepted into a top 10-20 Econ or Finance PhD program. This does not necessarily describe someone who gets into a top 10-20 Math, Physics, or Engineering program. I am an engineer applying to a fin math/ fin eng program, and if I get in, I will be the perfect example of someone who is most certainly not excellent at everything, intellectually speaking.

 

[herron]

I think the price tag on PhDs from top 25 programs is a little bit higher (near $200K). But there's a little more risk in going for the PhD. Since someone else is paying your tuition and living expenses, there tends to be little less tolerance for shortcomings at any point along the way (thus the high salaries).

And don't underestimate the quant-ness of PhDs in finance. Most take courses in optimization, real analysis, linear algebra, a series in statistics, and maybe some stochastic calculus. The grad school curriculum in fiance and economics is far from the linear supply and demand curves from undergrad. What I think most finance/econ PhD programs lack is numerical methods, which I guess is by design, because the goal tends to be theoretical research.