Sorry if this has been asked before, but what kind of jobs do Finance PhDs get? I have heard that some work at investment banks or hedge funds, but what do they do there? Is it just quantitative research, or can they do other things like trading, etc?
Also, what happens if you don't finish your PhD? Can you apply for finance jobs while in the middle of a PhD (if you decide not to finish)?
Quite a large number of Finance PhDs come to Wall Street. Mostly in Quantitative Finance Research jobs. If you want a Trading or S&T job, the MBA is best.
You will get superb job offers from Wall Street after you complete the first two years of the PhD (after the comps). It requires a lot of discipline and endurance to stay in the PhD program on the PhD stipend for another three years. It would be a colossal blunder to drop out because of the huge amount of money offered and none of the schools will allow you to do the dissertation on a part-time basis. It would be impossible anyway.
Depends on what you are looking for. In academia in the top schools for new Finance PhDs they pay $180K-$200K for 9 months + $40K for summer. Salary will not increase much.
On Wall Street, they start around $200K-$250K. After 5 years when they reach VP/Sr. VP they are making $500K - $600K. If they are really good and reach MD / PM, then salary goes over $1M. But this may change with the new government regulations.
It is a HUGE blunder to drop out of PhD and go after $. In short term you will be happy. In long term, too many regrets.
I am curious if anyone has some perspective on the approx. proportion of PhD finance candidates from top ~25 departments that choose to go into the private sector rather than academia? These job placements are hardly ever advertised by these departments, obviously because the most beneficial and logical path from the view of the PhD program is always academia. For the candidate, however, I believe we all ultimately have some reserve price where we might be willing to reconsider our well intentioned SOP.
I wouldn't necessarily label it an automatic "blunder" to go the private sector route. The academic profession, pre-tenure, is very high risk, and it is entirely conceivable why one would consider taking a high paying private sector job after a few years under the pressure of a PhD program. I expect any PhD finance candidate is wise enough to make an informed decision and know the tradeoffs. We're probably some of the most rational optimizers out there after all.
Fortunately, finance academics are very well compensated and the prospects are likely to improve by the time this year's entering class is on the job market. Recently, I was surprised to hear that American University (private, but not at all a top tier business school) was offering around $250k to new Accounting professors (didn't ask if that included summer or not). Not Finance, but the comps in Accounting are usually similar to Finance. It is also worth factoring in that after tenure you can make boat loads doing consulting and/or serving on boards -- which can perhaps add a couple $100k's to your tenured professor salary.
The PhD degree will help you in the long run because the degree itself is highly valued on Wall Street. The additional three years of poverty is well worth it. About 40% - 50% of the Finance PhDs from the top 25 schools come to Wall Street. The salary difference with academia is just too great. But it may change with the new Financial sector regulations which have just been passed.
If you want to work on Wall Street make sure that you take all the Econometrics and Statistics courses which you can take. The Micro and Macro courses which you have to take anyway are not very useful. But Econometrics, Statistics, Stochastic Calculus, is invaluable. Also keep your dissertation in the Statistics area. Stay away from Behavioral Finance if you want to come to Wall Street.
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