Passion for finance

[Kavita]

As a part of my MFE/MFin pre-application process, I have been reading the past threads on quantnet and the formal admission requirements on various school websites. One common theme of advice is 'apply only if you have a true passion for finance'. This has got me wondering about the nature of this 'passion for finance'. I dont mean to sound cynical, just trying to find out a best way to understand my own motivation for finance. How many of those applying for MFin/MFE (or working on Wall street) possess a true passion for finance? Would they have the same degree of passion if financial work paid, for instance, 48 k/year (w/o bonuses) instead of (say) 480 k/yr?

Is it necessarily bad to embark on a career with compensation-related motive? Do the schools view such a motivation badly? I find it hard to believe that successful applicants to competitive MFin programs all have the said passion for finance and compensation appears only as a secondary (or a tertiary) motive. My own motivation follows something like this: True passion for Mathematical modeling and programming --> Finance offers real-time, rapidly changing environment for developing and adapting complex mathematical models + high compensation.

On a related note, how does one with no prior finance-related work experience or internships demonstrate a passion for finance?

 

[sjain]

My own motivation follows something like this: True passion for Mathematical modeling and programming --> Finance offers real-time, rapidly changing environment for developing and adapting complex mathematical models + high compensation.

This sounds good.

 

[bigbadwolf]

As a part of my MFE/MFin pre-application process, I have been reading the past threads on quantnet and the formal admission requirements on various school websites. One common theme of advice is 'apply only if you have a true passion for finance'. This has got me wondering about the nature of this 'passion for finance'. I dont mean to sound cynical, just trying to find out a best way to understand my own motivation for finance. How many of those applying for MFin/MFE (or working on Wall street) possess a true passion for finance? Would they have the same degree of passion if financial work paid, for instance, 48 k/year (w/o bonuses) instead of (say) 480 k/yr?

You are right. Personally I think it's the abuse of language that's to blame (all too common in the USA, alas). It would be better reworded as "Can you demonstrate an abiding interest in finance?"

Is it necessarily bad to embark on a career with compensation-related motive? Do the schools view such a motivation badly?

No and no. If the answer to the latter is yes, it's the height of hypocrisy: the reason they're charging sky-high fees is because they assume a lucrative job lies at the end of their program -- or at least they want you to think that. It's a logical absurdity if a school is charging $50,000 in tuition and expecting you the student to not be motivated by subsequent compensation.

I find it hard to believe that successful applicants to competitive MFin programs all have the said passion for finance and compensation appears only as a secondary (or a tertiary) motive. My own motivation follows something like this: True passion for Mathematical modeling and programming --> Finance offers real-time, rapidly changing environment for developing and adapting complex mathematical models + high compensation.

Again I would reword it as: "Do you know what you're getting into in wanting to pursue quant finance? It would help if you already knew something about it as it would decrease the odds of your dropping out because of lack of subsequent interest or aptitude. Just going into it for lucre might not work -- you need to have an authentic interest in quant finance and some aptitude for coding and math. If you can demonstrate any, it would help us decide if 1) you will complete the program, and 2) the qualification you gain will do you some good in the real world."

On a related note, how does one with no prior finance-related work experience or internships demonstrate a passion for finance?

As I said above, "passion" is an ill-chosen word. Just demonstrate some understanding of the area, some insight, some thinking about the subject matter.

 

[Andy Nguyen]

As a part of my MFE/MFin pre-application process, I have been reading the past threads on quantnet and the formal admission requirements on various school websites. One common theme of advice is 'apply only if you have a true passion for finance'. This has got me wondering about the nature of this 'passion for finance'.

This has more to do with filtering out folks who mention on their essay that "I know becoming a quant is my true passion after I read Derman's My life as a Quant (or after my friends working in finance told me about it)".
More importantly, programs like to admit people who have done proper research and have a more realistic view of the career prospect. Had they admitted folks coming straight out of undergraduate and expect to make $500K as a trader out of their MFE program, they will have plenty of unhappy alumni.
There is nothing wrong by itself but when competing against a thousand other people who can demonstrate in more concrete terms, it does not seem too convincing.
Understand the profession is the important first step before you can say you have passion for it. Consider these questions

• Do you know how many professional societies for your industry?
• Are you a member of any of them? If no, why not?
• Do you religiously read everything on the web about this degree and career?
• Do you subscribe/read any industry trade publication?
• Do you attend any seminar/conference/talk that are offered for free or a minimal cost?
• Do you understand the problems facing this profession and what have been done to address that?

 

[bullion]

I second bigbadwolf and Andy's point. The compensation in finance is highly cyclical, and the true average compensation is often overestimated. If you factor in the long hours, job insecurity, repetitiveness, and turnover rate, finance/quant is really not that much better than any other job. MFE/MFin programs are not easy, and their graduates still have to earn their places after graduation. So admissions do want you to have a clear idea of what you're getting yourself into.

There are a couple ways to look at "passion."

1) It is an industry taboo to list compensation as your objective. Financial professionals are trusted with a lot of money and there are many ways to profit at the expense of your clients (you can over-trade an account for commissions as a trader, or overprice an IPO as a banker). So obviously we are hoping you can place client loyalty above monetary gains, especially when you're pulling 100 hr/wk and eating ramen for a month. There is nothing wrong with being compensated properly for the amount of work/risk you take at your job. But if you're doing finance for a steady paycheck, you're terribly mistaken.

2) There are many ways to establish passion, but they typically require long-term commitment. Taking you as an example, what have you done as a result of your passion for complex modeling/programming in the financial market? Have you designed trading algorithms for virtual trading? Have you tracked corporate announcements and their trading patterns? How has commoditiy price fluctuation affected market behaviors in the past four years? Passion can take many forms, and it is best demonstrated when you can point to something and say "I love it so much, I did XXX even when I didn't have to."

Passion leads to curiosity and will hopefully lead to actions. There is no right answer to passion, and what you think is significant might be completely trivial in the eyes of the admissions officers (ie many applicants will put a huge emphasis on passing the CFA.) But if you've done nothing more than taking a few extra classes in finance/stochastic calculus, then you probably have an uphill battle against people who have devoted their lives and earnings to the industry aka those with w/e.

 

[DominiConnor]

Following bullion, one thing that has bugged for for a while is why, for a given level of ability, finance has paid better than most other lines of work.
That arbitrage should have been traded away long ago, maybe we are in that phase now.

"Passion" or "enthusiasm" for the work is a critical term, good people have failed to get the job they wanted because it was felt to be lacking. Let's not pretend that money is not a factor, but recognise that it is not the only one.

As I have said elsewhere, you're looking at 30-40 years of this stuff unless you're very good/lucky or crap/unlucky.
That's around 80-100,000 hours, or put it another way, it's 1,000 times as long as the undergrad course unit you liked least or best.
Since most people on QN are at the start of their careers, it is right to be daunted by that sort of commitment.
Very few crimes, including murder will take as many of your remaining waking hours as finance, so don't kid yourself that in the long term doing it for the money will make you happy, because it won't.
A friend of mine is one of the most content guys I know; currently at Barclays Capital, he got the top 1st in maths at Oxford, the year Paul Wilmott (he of the books, courses and director of P&D came second). He's a committed Christian and expert Quant developer, he doesn't even work for BarCap, but is a contractor because he works to pay for his family's lifestyle, but has no need for more, so doesn't go for the more lucrative jobs that would take more of his time. He has substantial gaps between work because he enjoys the time, I guess he is off work about 10 weeks per year, not the 10 days many American bankers take. He outclasses me (bad pun) at C++ and is on the AISO committee that defines the language because he's really interested in it, so although he isn't passionate about banking is is really into C++.
The lesson there is that "passion" needs only to be part of your work, you will go to dull meetings, people will try and screw with you in various ways, you'll lose your job, you may even have to work at Deutsche bank, but the thing that will keep you going is a satisfying (to you) interest in some parts of finance. I have an interest in the technicalities of public debt policy from when I had real job, most people find that outstandingly dull and that subjectivity applies to most interests.

The ability to get really into a topic is a talent, it's not something driven by money, the cash merely helps you choose which things to get deep in. There is a place for people who do what they're told in the way they are told to do it and until they are told to do something else. I believe that not one person here wants that sort of job, you can expect there to be some of this work in your life, perhaps more than you want, but as a headhunter I will state as an absolute fact that what hiring managers want is poeple who will do a good job because they are the sort of person who does a good job, who is a professional.
Professionalism is a bit like love...
If you're merely trying to get someone into bed then your good actions will be only those that your partner sees. That does not make you a bad person, just someone with clear objectives.
But love is where you do things that your partner may not ever see or appreciate and therefore have no direct payback, a professional will (for instance) research an assumption made by his trading unit just to check that it is as valid as they thing, even if not asked to do so; or he will put in an error check in code even if he thinks it absurdly unlikely that it will ever trigger.

Happiness and success are not linked by simple causality, being happy in your work or "passionate" will make you better at it, which will usually lead to more success which may make you more happy.