Which M.A ideal for Finance PhD (Wall st. trader jumping to academia)

[basir]

Hi all - please excuse the erudite nature of this post. Have done a good deal of scouring, and had a few idiosyncratic circumstances I'd love to glean some perspective on.

 

I'm currently an interest rate derivatives trader at large investment bank, four years out of undergrad (econ/social sciences dbl major). I have a very strong/nuanced understanding of the markets, pricing mechanics, etc. The caveat however: my math acumen is limited to calc (1-3 undergrad) and one intro level stats course. However, I did get a 170 on my quant GRE.

 

I've been fostering a several-years-long desire to jump into finance/macroeconomic academia, which I can't shake. My goal, therefore, is to try my best at a PhD in a top 10 b-school/finance program. With this in mind, given my lack of math coursework, which type of M.A program do you think would give me the math/stats coursework needed to be a competitive applicant to a top finance PhD program? Stats (with electives in linear alg,ODE, etc.)/Mathematics of Finance (anyone familiar with the program at Columbia? heavy on stochastics, etc)/M.A in Financial engineering (more practitioner focused it seems/options pricing, programming, etc.)

 

Really appreciate all the help!

[TraderJoe]

Columbia has got a Masters in Financial Economics and Stanford also has a PhD prep program. These would be the absolute best preparation for a Finance PhD. The MFE / MAFN programs at Columbia, the MFE program at NYU, or Chicago / Stanford / Berkeley, etc. would set you up nicely with both Math and Finance knowledge for the Finance PhD at a top 10 B-school. But they are a bit pricey, plus you will lose 6-7 years salary (Masters + PhD duration). Have you thought this thing through carefully. A lot of the initial enthusiasm disappears after you go sleepless for a few months and you are struggling with the PhD coursework. Any Masters in Economics would also be great preparation.

[snickers]

. A lot of the initial enthusiasm disappears after you go sleepless for a few months and you are struggling with the PhD coursework.

 

This. Ah, yes struggling and not sleeping.

[PhDPlease]

Do not go sleepless for months!! Unless you are someone who just doesn't need much sleep, you won't be productive if you don't sleep. Personally I've given up a lot of social time/going out during my 1st semester of PhD, but sleep as much as I need most nights and am doing well and completed all of my assignments on time. I am not in finance though, so I cannot comment on people in the finance program's sleep habits.

[basir]

Columbia has got a Masters in Financial Economics and Stanford also has a PhD prep program. These would be the absolute best preparation for a Finance PhD. The MFE / MAFN programs at Columbia, the MFE program at NYU, or Chicago / Stanford / Berkeley, etc. would set you up nicely with both Math and Finance knowledge for the Finance PhD at a top 10 B-school. But they are a bit pricey, plus you will lose 6-7 years salary (Masters + PhD duration). Have you thought this thing through carefully. A lot of the initial enthusiasm disappears after you go sleepless for a few months and you are struggling with the PhD coursework. Any Masters in Economics would also be great preparation.

 

TraderJoe, you raise a great point. I'm actually thinking about doing the MFE/MAFN progams in the evenings while working, so as not to make the opportunity cost that steep. So what I give up in time, I make up for in not-lost income. But yeah.. the M.A will likely take me 2-3 years to finish part-time vs 1-1.5 years full-time. The other option I have is to forego the M.A altogether and just take individual courses (4-5 math classes) 1-2 years that would round out my math coursework. Also, can I apply for a PhD while still pursuing an M.A or is it really best to wait until the M.A is completed?

 

Ideally I'm hoping to ask for 1-2 year sabbatical from work while I finish the PhD coursework, and then go back to work while I finish my thesis (is this unheard of?)

 

Ah wow, just looked more closely into this Financial Econ program; do you think completing it could substitute for coursework in a PhD if admitted? (i.e. 2 years of Financal econ M.A then 2/3 years of thesis PhD work afterword)?

Edited December 16, 2014 by basir

[basir]

Also, is starting a PhD at 29/30 pretty rare? Do adcoms look particularly (for better or worse) at older candidates?

[eventualprof]

Working during some masters programs is doable, so you may be able to continue earning money while getting the MA. I did this at the end of my masters degree. However, I can't imagine working any other job while getting a PhD. It is forbidden in my program and I think it is a pretty universal understanding that you don't work outside the university during your PhD.

[wittmic]

Ideally I'm hoping to ask for 1-2 year sabbatical from work while I finish the PhD coursework, and then go back to work while I finish my thesis (is this unheard of?)

 

Actually, I think this is unheard of. What's your end goal? If it's not to be a tenured finance professor, I'm not sure you need a PhD?

[PhDPlease]

The other issue with working while in the MA is that grades are really important for the PhD, so if you won't achieve as high grades due to working, that is definitely a concern. Of course doing a FT MA before entering a PhD program where you will be on a low stipend for a long time rather than continuing to work and saving $$ is also a concern.

[basir]

Also, any thoughts on an M.A in Statistics as far as signalling to adcoms?

[basir]

Also, any thoughts on an M.A in Statistics as far as signalling to adcoms?

[XanthusARES]

Ideally I'm hoping to ask for 1-2 year sabbatical from work while I finish the PhD coursework, and then go back to work while I finish my thesis (is this unheard of?)

 

I'd be really surprised if any program allowed you to do this. While there is certainly a gain in flexibility after you complete your coursework, there is still a lot of work to do. I don't see it being possible to work any outside job (full or part time) and still complete your degree in a "reasonable" amount of time. If you found a program that would let you do it, it would almost certainly not be a top program. I know people in other fields (not business) who work during the dissertation phase of the program. They normally take 4-7 years to complete their dissertation if they complete it at all. This is definitely not the norm in business schools.

 

That being said, I do think that it is not necessarily unheard of to return to industry after a PhD in Finance. So if you can accept the opportunity cost of making only a little money for 5 years, you'll be making bank afterwards.

[wittmic]

That being said, I do think that it is not necessarily unheard of to return to industry after a PhD in Finance. So if you can accept the opportunity cost of making only a little money for 5 years, you'll be making bank afterwards.

 

I'm not positive that the difference in salary between going into the industry with a PhD in Finance from a T10 program is statistically different than going into the industry with an MBA from a T10 program. When including opportunity cost, I'm nearly positive it's not.

 

OP: If you want to go back to the industry, why not get an MBA from NYU, Columbia, Chicago, Wharton, etc.? What's the advantage of a PhD?

[basir]

Point taken - for what it's worth, my ultimate goal would be some tenure track position, but just trying to minimize opportunity cost. Really appreciate all the help, everyone.

[wittmic]

Point taken - for what it's worth, my ultimate goal would be some tenure track position, but just trying to minimize opportunity cost. Really appreciate all the help, everyone.

 

Please disregard my last post then.

 

I'm not positive there is a way to lower opportunity costs too much. Work your butt off so you don't need a 6th, 7th, 8th year in the program and so that you get a good job. Although, at times it seems that there are MBA tutoring opportunities that can pay fairly handsomely. (>$100/hr.) This of course takes time away from coursework, research and down time.

[evergreen]

Point taken - for what it's worth, my ultimate goal would be some tenure track position, but just trying to minimize opportunity cost. Really appreciate all the help, everyone.

 

Every hour spent working while doing your thesis part time is an hour spent not working on getting research published.

 

Research published being the only real metric (once you have chosen your program) that affects if/what kind of tenure track job you will get.

[PhDPlease]

If you're aiming for a TT position at somewhere even moderately competitive, you will be up against candidates who are also very intelligent AND are spending all of their time focusing on their research. Even if you are very intelligent which you seem, the competition will also be very intelligent so you are giving yourself a major, major handicap by not going FT. Also I would be concerned that faculty/advisors would question your dedication and not take you seriously if you are not going FT. Some people work from home a lot during the dissertation phase, so most programs won't have an expectation that you will be in your office during business hours, but it would still be noticeable that you aren't working FT due to your progress likely being much slower than expected. The only FT "job" I think it would be reasonable to have is something like dissertation fellow at the Fed (where you are basically being paid to do your own research and occasionally go to seminars and events) rather than something where you are primarily working for the company rather than working on your research. In my program were are opportunities to take on an extra TA position for extra $$ (obviously less than you are making but combined w/the base stipend enough to live an ok enough life unless you have unusual expenses). And in programs that don't offer the opportunity for extra TA, I've heard of people doing stuff like tutoring or working for a test prep company for a few hours a week, but not anything that is full-time or almost full-time. Also when you are in the dissertation phase, you might or might not have to TA depending on your university and you'd be expected to attend seminars (usually not "mandatory" to attend every seminar, but if you don't attend at least sometimes you might not be taken seriously), and those things would be during business hours.

 

If I were you, I would think long and hard about what is most important to you. I understand if your job pays well and you like it and have a career history, it is a more difficult choice than someone who is not in a good job and therefore has a much lower opportunity cost of what they are giving up to enter the program. I would not say the chance of your plan succeeding is 0, but I think it is pretty low assuming you go to even a moderately decent program and want to be competitive on the tenure-track job market. I do not mean to be harsh, but since you are making a major life decision I think you need to think it through some more.

[YaSvoboden]

For the original question. It seems like you should get a linear algebra and a more advanced probability/stats class under your belt, maybe an analysis course too, and then a master's in economics or maybe MFE. The main things that you want in the program are advanced micro/macro, econometrics, and flexibility to take math or finance as available. A more prestigious program will obviously help more with admissions, but a part time econ program that is somewhat reputable and gives you a good skill set will still be quite valuable. You could also get those basic math classes out of the way and apply to masters programs along with good PhD programs and see what your options are. No real harm in applying to the master's programs as backups.

 

I am basing this on what I have seen in accounting and a few finance people I have interacted with.

[TraderJoe]

you'll be making bank afterwards.

 

This is unfortunately no longer the case. The days of the $500K bonuses are long gone. Nowadays, if people can manage to hang on to ther jobs and get a reasonable bonus, they are happy.

Do a PhD ONLY if you are genuinely interested in research and an academic career. At least give one six-year attempt at tenure.

If you do a Finance PhD with great hopes of making big money on Wall Street later on, you will be seriously disappointed with the outcome and will regret your seven years of lost salary.

Also, most of the Finance and Economics PhDs whom you see on Wall Street already got denied tenure at top Business schools or else they became disillusioned with academia during their PhD program. Not even a single one of them entered the PhD program with the intention of coming to Wall Street.

[basir]

Everyone, the advice and commentary here has been invaluable. Can't thank you enough for the input.

 

I can tell everyone from the perspective of someone inside the industry (if it helps anyone in a similar situation deciding between industry and academia), there is no more semblance of stability or big bonuses in industry. At least at an investment bank or even in a hedge fund trading proprietary strategies. You basically try to have a few big years, then do decently in the years in between. This is one of the primary reasons I'm attempting to make the switch to academia. Moreover, the research-centric is a vastly more edifying one than the five day work week grind (this isn't about hours or rigor, but rather the crushing grind of rote "clock pushing" the same hours each and everyday. I currently work 60-70 hours/week; I'm fine committing 100+ hours so long as it goes toward publishing, writing and research if it's on my time.

 

The one qualification I would make is the comparison/binary being drawn between doing a PhD and doing an MBA then heading for industry. There are several roles in finance industry that are more quantitative and research-oriented than any post-MBA role; i.e. algorithmic/model-driven researchers/portfolio managers, roles which need a higher-level analytical/quantitative background, i.e. a PhD or at the very least a rigorous M.A. These aren't the types you'll find with an MBA.

 

I think the implicit fear I have is not really trying to lose out on foregone income, so much as it is the fear of finishing the PhD and coming up short without any TT job, or ending up in a very non-ideal locale (outside of NYC/East Coat, I realize I'm being picky). I guess my follow-up question is, what could be the potential downside of getting a PhD from a top 10? Is there really that much of a downside/does the downside really get nasty once you go to less decent programs? What tends to be the typical amount of time between finishing PhD and getting tenure (for those who make it)?

 

Lastly, any color on the average age of 1st year PhD students at these finance programs? Is 29/30 on the late end of the spectrum? Thanks again -

[basir]

Also, would something like this (http://ce.columbia.edu/certificates/quantitative-studies-for-finance-certificate) be a lot more useful than any of the M.A programs I mentioned?

[tradingplaces]

Everyone, the advice and commentary here has been invaluable. Can't thank you enough for the input.

 

I can tell everyone from the perspective of someone inside the industry (if it helps anyone in a similar situation deciding between industry and academia), there is no more semblance of stability or big bonuses in industry. At least at an investment bank or even in a hedge fund trading proprietary strategies. You basically try to have a few big years, then do decently in the years in between. This is one of the primary reasons I'm attempting to make the switch to academia. Moreover, the research-centric is a vastly more edifying one than the five day work week grind (this isn't about hours or rigor, but rather the crushing grind of rote "clock pushing" the same hours each and everyday. I currently work 60-70 hours/week; I'm fine committing 100+ hours so long as it goes toward publishing, writing and research if it's on my time.

 

The one qualification I would make is the comparison/binary being drawn between doing a PhD and doing an MBA then heading for industry. There are several roles in finance industry that are more quantitative and research-oriented than any post-MBA role; i.e. algorithmic/model-driven researchers/portfolio managers, roles which need a higher-level analytical/quantitative background, i.e. a PhD or at the very least a rigorous M.A. These aren't the types you'll find with an MBA.

 

I think the implicit fear I have is not really trying to lose out on foregone income, so much as it is the fear of finishing the PhD and coming up short without any TT job, or ending up in a very non-ideal locale (outside of NYC/East Coat, I realize I'm being picky). I guess my follow-up question is, what could be the potential downside of getting a PhD from a top 10? Is there really that much of a downside/does the downside really get nasty once you go to less decent programs? What tends to be the typical amount of time between finishing PhD and getting tenure (for those who make it)?

 

Lastly, any color on the average age of 1st year PhD students at these finance programs? Is 29/30 on the late end of the spectrum? Thanks again -

 

Former derivatives trader here. Used to be a quant at a firm that did about 8% of total FX volume globally and was also an investment banker (corp fin) at a bulge bracket.

 

I decided to do PhD (im a first year at a solidly top 50 program) in my late 30s after my MBA. Sure, there are those PhD quant roles, but honestly, don't do a PhD for that, just to get a job back in finance. Schools will weed you out pretty quickly. They are essentially investing 50K+ in you yearly (stipend + tuition) so that you may one day be their co-author on a paper.

 

PhD finance do not have any problems getting "a" job afterwards. Its just a matter of if you are good enough to get a TT position at a research oriented university or if you end up at a teaching school. If you are an int'l student, then that decision becomes more of US vs. back home professorship. In general, business PhD's are a tightly controlled supply market so there is no oversupply like economics. But there is a trend of MBA students taking less and less finance courses, for the reason you mentioned.

 

For you I imagine your choices would be at a SUNY Binghamton or Fordham at minimum, as long as you really try your best if you insist on a NY area job and you get into a top 40 program and you have a decent pedigree and actually can do research in an academic setting and you were not back office in your job (not sure yet if academics can differentiate between front and back office, but I digress)

 

If you can handle that then go for it.

 

Downside is not really that bad at all even if you go lower ranked programs. You can for instance, look at University of Oklahoma finance placements and see that they placed rather well at like SUNY Buffalo and Warwick. Generally, girls tend to place better, native english speakers, and also industry experience as well. I think a PhD finance program is like a call w a strike price of about -20 rank spots of an Econ program, and you get better funding, less cutthroat atmosphere with a free put with no expiration date.

 

Me at some point, I realized that I have a very small chance at getting a chance to be a PM by moving up the ranks and I loved doing research and my best job ever was as an adjunct faculty for one semester during the financial crisis. So I packed my bags and jumped.

[tradingplaces]

Also, would something like this (http://ce.columbia.edu/certificates/quantitative-studies-for-finance-certificate) be a lot more useful than any of the M.A programs I mentioned?

 

You choice should include a combination of an actual degree, solid math background, with professors who will write recommendations for you. A continuing education program is kind of weird even if it is columbia, but if that helps you get into their ma finance program than why not. but a continuing education program without a degree is kind of weird to go into phd finance directly with.

[XanthusARES]

This is unfortunately no longer the case. The days of the $500K bonuses are long gone. Nowadays, if people can manage to hang on to ther jobs and get a reasonable bonus, they are happy.

 

Unfortunately my pun was not picked up on and trying to explain it now would make me look silly. I would 100% not advocate for doing a PhD unless you are certain academia is right for you.

[XanthusARES]

I think the implicit fear I have is not really trying to lose out on foregone income, so much as it is the fear of finishing the PhD and coming up short without any TT job, or ending up in a very non-ideal locale (outside of NYC/East Coat, I realize I'm being picky). I guess my follow-up question is, what could be the potential downside of getting a PhD from a top 10? Is there really that much of a downside/does the downside really get nasty once you go to less decent programs?

 

Yep this is a fear everyone has. Your geographic preference will limit your options after the program, but thankfully you have limited yourself to an area with a lot of universities. If you are only interested in a TT position at a top research university, you'll be extremely limited in choice, so you'll need to get into the absolutely best program and research like there is no tomorrow during it. Even if this happens, there is still a possibility that you won't get an offer from a top school. If you are more flexible on school level after the fact (even if you are completely inflexible in location), you'll probably be OK going to any program in the top 15 and doing a good amount of research during the program.

 

The downsides of lower ranked programs are that they place at lower ranked institutions. If you are OK with this, then you'll be fine. There are plenty of good lower ranked schools in the northeast.

 

 

What tends to be the typical amount of time between finishing PhD and getting tenure (for those who make it)?

 

So the tenure process, as far as I understand it, is that you'll go up for tenure after 5-6 years (depending on schools). You'll generally have a 3 year review where you'll find out if you are on track. This review does not guarantee tenure, but if the review concludes with the school telling you to start looking elsewhere, you should probably look elsewhere. So best case scenario timewise is 5-6 years after you graduate you can get tenure. Worst case scenario (absolutely worst case), the first school you are at suggests you leave at the 3 year review, so you go to a lower ranked school. At that school you go up for tenure at 6 years and you don't get it, you then move to an even lower ranked school. If they don't have an expedited process they make you do the whole process again. After going through another 6 years, if you've selected a school wisely and have done good research, you'll get tenure. Total is 15 years after graduating. Again this is my opinion of what the tenure process is like. The tenured professors I know mostly got tenure at the second institution they were at after spending 3-4 years at their previous institution. In my opinion I would say the average for tenure is 10 years (ironically). This may be different for finance and others may disagree, but in my experience, I would posit that is the average.

 

 

Lastly, any color on the average age of 1st year PhD students at these finance programs? Is 29/30 on the late end of the spectrum? Thanks again -

 

You can check online at the schools site, some schools list it, others have their student's CV's on there. If the CV's are there you can make some inferences about age. If you are really interested in a program you can get in contact with a current student and I'm betting they'll be more than willing to talk to you and answer any questions about the program they can, including average age. For my school, our average finance starting age is 24, but I get the feeling that is on the young end of the scale.

 

Good luck!