MFE -> Investment Banking?

[CGiuliano]

Can MFE lead to investment banking? What's the best academic background for an investment banker?

Thanks.

 

[Roger Trimble]

Are you thinking of corporate finance / M&A? You probably want to stick with the traditional MBA for that.

 

[bluechimp]

From my unfortunate foray to private equity, I'd say that there's no one 'best' academic prep if you want to break into investment banking. Beyond the basic finance and accounting, there isn't much knowledge-specific skillset (a la stochastic calculus in financial maths) that you need to get an entry position in IB.

In lieu of that, IB demands you to be really 'alpha'..

 

[Liquid Assets]

I agree with Roger. If you want to work on the corporate finance side (M&A, Advisory, IPO's etc) I will say get an MBA from a top 15-10 B-School. If you wantto work as a front office quant, pricing assets like MBS, CDO's, Synthetics or underwriting some structured product (Fixed Income) I was get a MFE. Also, to calculating options on bonds, FE or some other asset class requires PDE's which you will not learn in a MBA class.

 

[CGiuliano]

Bluechimp- I think I know what you mean by "alpha," but can you expand.

Maybe I misunderstood this excerpt from an FE description:

"The increased pace of financial innovation has multiplied the need for highly qualified Financial Engineers in investment banking, hedge funds, corporate risk management and regulatory agencies."

FE is needed in IB, but FE's can't be IB's?

 

[EconomicsStudent]

Generally, "investment banker" refers to Mergers & Acquisitions and securities underwriting. These positions are very different from what a quantitative analyst working for an investment bank does. A lot of people who work as "investment bankers" don't even have undergraduate degrees in business - some have psychology degrees, some have sociology degrees, some have engineering, etc. But having an MBA is required.

 

[financeguy]

Financial engineers, among other possible things, develop ways to price assets that investment bankers and traders have to price for whatever reason. The investment bankers then go ahead and misuse/overuse these models because they don't understand the underlying assumptions and methods (and nor do they really care). This is because investment bankers do not have FE backgrounds. They majored in comparative literature.

Joking aside, having an FE degree would make you possibly the best informed investment banker in the world. I doubt you'd ever use 90% of what you'd learn in your FE degree, though. Maybe it would be thing that gets you promoted faster at the higher levels. Maybe they'll want to promote a VP faster who has an FE degree because he can understand the models at use in the bank and can communicate more effectively with the quants. At the entry-level, you will not use your FE degree in a traditional investment banking job for sure.

In any case, the quote that you have there isn't talking about investment banking in the same way as you are. It's talking about FE degree holders as quant support to investment bankers. I wouldn't get an MFE if you're just planning on going to a 2 year analyst program at a BB in M&A, ECM, DCM, or any other one of those acronyms.

Bluechimp- I think I know what you mean by "alpha," but can you expand.

Maybe I misunderstood this excerpt from an FE description:

"The increased pace of financial innovation has multiplied the need for highly qualified Financial Engineers in investment banking, hedge funds, corporate risk management and regulatory agencies."

FE is needed in IB, but FE's can't be IB's?

 

[bluechimp]

From Wikipedia:

In social animals, the alpha is the individual in the community whom the others follow. Where one male and one female fulfill this role, they are referred to as the alpha pair (the term varies when several individuals of the same gender fulfill this role). Other animals in the same social group may exhibit deference or other symbolic signs of respect particular to their species towards the alpha.

It's kinda tough to pin down the exact attributes that makes someone to be qualified as 'alpha', since it encompasses many things: physical stature, choice of speech, mannerisms & body language, driven-ness. It's like that forceful aura that makes you do what your boss wants you to do, without exactly using forceful words/instructions. It's also somewhat of a ranking system, so what you might consider an alpha male might not be the case for someone else.

Hrrm, it's an elusive question to answer. Have you ever watched the movie 'Wall Street'? Gordon Gekko is a badass alpha male.

 

[CGiuliano]

I guess it was more of a stupid question... I am just trying to find a career path that fits, so I can best choose my internship/coursework. After brief research it seems that IB is not for me. I am a math student first and foremost.

Off topic question: Other than teaching, what can one do with an MS Math degree?

 

[bigbadwolf]

Hrrm, it's an elusive question to answer. Have you ever watched the movie 'Wall Street'? Gordon Gekko is a badass alpha male.

Off-topic, but I've been reading about this for donkey's years. Somehow the suggestion (in the literature) is that one is born alpha or one is not born alpha. But I can easily conceive of circumstances where a Napoleon and Hitler would have been nothing but a mid-ranking army officer and failed bohemian respectively. Put Gekko in other circumstances and he could well be nothing at all. Arguably our lives are governed by accident. Or by the stars. But not by ourselves, except for a relatively minor component. That relatively minor component is what is seized on by biographers to explain the success of the so-called "alpha."

 

[bluechimp]

Off-topic, but I've been reading about this for donkey's years. Somehow the suggestion (in the literature) is that one is born alpha or one is not born alpha. But I can easily conceive of circumstances where a Napoleon and Hitler would have been nothing but a mid-ranking army officer and failed bohemian respectively. Put Gekko in other circumstances and he could well be nothing at all. Arguably our lives are governed by accident. Or by the stars. But not by ourselves, except for a relatively minor component. That relatively minor component is what is seized on by biographers to explain the success of the so-called "alpha."

Yes, I do see your point. But a similar logic goes the other way around too. Suppose that you give two individuals equally incredible opportunities to succeed, but one is less 'alpha' than the other (in a sense that he/she is less likely to seize it to the fullest, be it by something inexplicable in the genes) -- then it might be the case that nothing ever come out of the opportunity given to the weaker person.

I've seen many examples of smart people with the world as their oyster early in their career.. yet they were left behind by their less smart colleagues that has other intangibles. (yes, I'm being vague here)

 

[CGiuliano]

We humans are governed by our own free will, yet God has always been a gambler.

(a)Genetics + (b)Free Will + (c)Chance of Environment + (d)Human Dynamic = A completely unique human experience.

 

[subhrain]

Andy & others,

I did reply to another post asking the same question, but haven't got any response yet, so decided to post it here instead.

My main intention is to be an investment banker and I think MSMF/MFE is a better way of doing it rather than traditional MBA Finance. And also since I dont have any work exp, I wont be accepted at any good mba programs with finance.

Do you think I am in the right track.

 

[Joy Pathak]

Andy & others,

I did reply to another post asking the same question, but haven't got any response yet, so decided to post it here instead.

My main intention is to be an investment banker and I think MSMF/MFE is a better way of doing it rather than traditional MBA Finance. And also since I dont have any work exp, I wont be accepted at any good mba programs with finance.

Do you think I am in the right track.

Lol No. Investment Banking = Top school MBA not MFE.

If you're thinking of doing MFE and then working and then going to MBA and then going to Investment Banking then maybe, but that's pretty intense. Try to find a job, work, and then apply to the top schools.

I am sure others will re-iterate that MFE is not the path to Investment Banking.

 

[young]

I know a friend who is in investment banking after she graduated from a MAFN program. She started as a senior analyst and made associate last year. She was always complaining how she never does anything relevant to what she learned at school lol. go figure.
Im sure that MFEs and MAFN people sometimes end up in IB, but that's prolly just a small minority. Anyone else?

 

[Joy Pathak]

Ok.

(Add random filler here for minimum characters)

 

[young]

Ok.

(Add random filler here for minimum characters)

Sarcasm? No need to be snarky. Im merely presenting a case in point; that it IS possible to go into IB from MFE/MAFN... just not a usual route.

Besides, Financeguy may be right about FE grads being promoted faster because they understand the real-picture behind the numbers. Who's to say that a recruiter interviewing IB candidates wont think the same and prefer an MFE grad over others?

 

[smjoneill]

A lot of posts here seem to be very narrow minded...

I know plenty of people with BSc degrees in physics, maths, biology, chemistry etc. that have walked straight into investment banking jobs in The City. The idea that one MUST have an MBA is pretty ridiculous and the thought that some can study MAFN or FE and be seen as unattractive to the IB recruiter is just plain stupid...

Sure you might not use a lot of what you have learnt but you will certainly be an attractive employee for any IB...

 

[Joy Pathak]

A lot of posts here seem to be very narrow minded...

I know plenty of people with BSc degrees in physics, maths, biology, chemistry etc. that have walked straight into investment banking jobs in The City. The idea that one MUST have an MBA is pretty ridiculous and the thought that some can study MAFN or FE and be seen as unattractive to the IB recruiter is just plain stupid...

Sure you might not use a lot of what you have learnt but you will certainly be an attractive employee for any IB...

As an investment banker, your work would involve advising companies on capital formation, mergers, acquisitions, investments and managing capital assets. You will have to liaison with businesses, governments, non-profit institutions and individuals. You will look into the financial aspects like advising a company or a client on financial transaction, selling and trading the securities, researching the company's background and the market before making any investments, etc. You also have to analyse and make recommendations to the company, based on the market and competitors. This is some of the work you will be doing as an Investment Banker.

Do you really learn much of that in an MFE program? If you have an undergrad in Finance/Economics etc then maybe. That is why undergrads from the top schools get into the IBD of companies as investment banking "ANALYSTS".

The top investment banks almost strictly recruit out of the top ivy league MBA's basically. Do you really think coming out of an MFE degree you can compete with them even if do your MFE degree at an ivy league? They usually recruit out of Harvard, Wharton, Dartmouth, etc. These are the top banks recruiting I am talking about. The MBA recruiting system is specialised and very well established whereas MFE is not. How do you plan to even score an interview for an Investment Banking position? Positions in IBD are strictly through connections almost always and internal alumni reference's etc. Investment bankers are over-represented in the MBA applicant pool. How are you going to compete with people who already are investment banking analysts and have top school MBA?

Now, if you're VERY outgoing, are willing to do an extreme amount of leg work, are willing to get some way to get into the MBA recruiting of Columbia, are willing to take some of the general management courses, have the general investment banking charisma that recruiters look from the top school MBA's, have relevant previous experience, then YES you might have a chance of going into investment banking at one of the BB.

If there are students who became investment bankers without any of the above; A) It might be a lie. B) It might be some for of investment banking at a very small firm if at all. C) etc

Anything is possible, some things a bit harder than others. If you want to go through MFE/MAFN route to become an investment banker, or whatever, please feel free to do so. I am just stating my OPINION.

You have to realise that many people on this forum are possible recruiters and work in the BB, etc. Do you really want to be calling them stupid?

---------- Post added at 09:05 AM ---------- Previous post was at 08:54 AM ----------

Just a small additional thing:

The other guy mentioned in another thread he won't get into a MBA because you don't have Finance experience. That is not true. You can apply to top MBA schools with any kind of experience and possibly get in. It is all about how you prepare your application and how you distinguish yourself from the rest. This is assuming you have competitive GPA, GMAT, etc.

Even if you get into investment banking without the general knowledge of the area you won't be able to succeed as well as your colleagues. Do you really want to be handicapped in terms of knowledge in the field?

A long route would be... get MAFN, work in finance, then apply to top school MBA and then enter IBD. You will start of at a higher position. This is a long way to do things, but just a suggestion although not something I would do necessarily.

 

[iddqd]

I've known people who majored in dramatic writing and became banking analysts.. you mostly have to prove that you're intelligent but more importantly motivated, which is because at the entry level the job is mostly about endurance, not being clever. Recruitment is usually through your school but there are headhunters that work in this area.

I'd say that it won't preclude you, but you are pretty foolish if you want to do an MFE in order to get into IBD.. you will have spent a lot of time/money learning things you won't really use.