What kind of private sector jobs does Finance PhD get?

[seniorplow]

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)?

[seniorplow]

bump?

[TraderJoe]

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.

[genericname]

Are these post-comp offers greater than the salaries in academia?

 

The reason I ask is because you say that it would be a mistake to take these offers.

Edited July 26, 2010 by genericname
Clarified my question

[TraderJoe]

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.

[Ozzattack]

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.

[TraderJoe]

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.

[genericname]

Just curious, what source did you get your 40-50% number from?

[TraderJoe]

I believe that Kellog posts detailed positions of their Finance PhDs on their web site. For Kellog it is 60% industry and 40% academia.

 

Other than that it is just from people who I knew in the PhD program. I myself opted for industry.

[possible_phd]

UChicago has detailed info on graduates, I believe.

[mli]

Maybe off the topic a little bit, but how common it is for non-finance graduates to go to industry? My impression is that it's not common

[phdhope]

Well for accounting phds it is virtually zero. I mean CFOs, CIAs, and partners aren't exactly recruited from phd programs. It is one of the major drawkbacks of an accounting phd. There is no private sector benefits. (Ok someone can probably pull out an example but really it isn't nearly as common as finance) Even for those accountants who do switch to private sector, it usually doesn't result in a career more promising than one would have gotten had they simply had a Macc or MBA. I don't know about the other disciplines...

[possible_phd]

One of my old accounting profs has a PhD from UChicago and was a faculty member at two top 20-30 MBA programs. Now he's a Director at a management consulting/financial advisory firm.

[genericname]

I believe that Kellog posts detailed positions of their Finance PhDs on their web site. For Kellog it is 60% industry and 40% academia.

 

Other than that it is just from people who I knew in the PhD program. I myself opted for industry.

 

UChicago has detailed info on graduates, I believe.

 

Thanks for the info traderjoe and possible_phd

[EE570]

Well for accounting phds it is virtually zero. I mean CFOs, CIAs, and partners aren't exactly recruited from phd programs. It is one of the major drawkbacks of an accounting phd. There is no private sector benefits. (Ok someone can probably pull out an example but really it isn't nearly as common as finance) Even for those accountants who do switch to private sector, it usually doesn't result in a career more promising than one would have gotten had they simply had a Macc or MBA. I don't know about the other disciplines...

 

I think that accounting phds are quite attractive to the private sector. For example, Richard Sloan, Charles Lee, Scott Richardson, Ryan Lafond, Frank Zhang, plus more all have worked for top financial firms. Though these guys are, of course, focused on financial accounting.

[seniorplow]

Thanks for all of your comments. Going back to the finance PhD, do they typically do quantitative research in the private sector? Or is it possible to get into trading and other fields?

[EE570]

Anything is possible, though the training would be consistent with a research based role.

[sharma]

Well for accounting phds it is virtually zero. I mean CFOs, CIAs, and partners aren't exactly recruited from phd programs. It is one of the major drawkbacks of an accounting phd. There is no private sector benefits. .... I don't know about the other disciplines...

 

Does anyone have any information about the other disciplines? Are such options of joining the private sector open/relevant/lucrative for candidates from fields such as Business & Public Policy, Management of Organizations, Marketing etc.?

[phdhope]

Well, I still am going to push back on the idea that accounting phds are sought after in the private sector. I knew most of the people you mentioned ee570, but I really can't imagine more than 5-10% of accounting phds go that route. Especially ones without extensive experience. I would agree it is probably financial accountants who get these offers.

 

However, in response to sharma, I really don't believe that a phd is the best route if you want a career in business. There are far better, easier, quicker, less painful ways to get into the private sector than the phd route. I know you probably want some hope that if the academia thing doesn't work out there is an exit, but I think one has go into the game fully believing that they will never leave academia. Otherwise you might as well start your career early and leave those phd dropouts in the dust.

[Osondi]

In my experience (investment banking and Big 4), the finance PhDs were the guys at the top developing the different models and stuff that analysts worked on.