GUEST COMMENT: The 3 main benefits of having a PhD if you want a job in finance

21 September 2011

2 minute read

GUEST COMMENT: The 3 main benefits of having a PhD if you want a job in finance

If you're a student who wants to go into financial services, you may be wondering whether it's worth spending the extra time and money to get a PhD.

During the financial crisis two or three years ago, I would have unequivocally advised staying in school. Redundancies, downsizing, and hiring freezes made it a very difficult environment to land a good job. However, the tide has (or at least, had) turned and many financial institutions are gong back to their normal hiring modes.

So should you do it? Well...

Independently of the economic environment, the decision to do a PhD often comes down to the opportunity cost of spending another three years' in education. Personally, I believe a PhD is financially worthwhile: starting compensation packages for PhDs are generally higher than for non-PhDs. However, I strongly advocate participating in as many internships as possible to gain experience, network, and possibly even land some job offers before you finish your degree.

I also believe that a PhD really does separate you from the rest of the pack. Employers are generally keen to hire PhDs for a variety of reasons. These are the main three:

(1) A PhD proves that you can do independent research This is a huge positive. Even those with the best grades do not necessarily have the ability to conduct independent research. Having a PhD is an excellent indication that you can start and finish a large project with minimal supervision - a quality employers strongly desire.

(2) A PhD topic can demonstrate competence in a particular field In-depth academic research is probably the closest thing someone can get to experience without actual experience (though I reemphasize the importance of internships!). Moreover, if your thesis is closely related to the career path you are planning on, then this also shows some interest and initiative that a prospective employer will appreciate.

(3) Perception There is no doubt that many people believe that PhDs are smarter. Finance attracts all types of people but PhDs generally attract more respect. Admittedly, there are many people who could have achieved a PhD but chose not to. However, there are also others who might not have been up for the challenge. Getting a PhD removes all doubt.

Aaron Brask is a former banker at JPMorgan and Barclays Capital with a PhD in mathematical finance. He's also the author of the Wall Street Primer.

AUTHORAaron Brask

Insider Comment

An
Anne
23 September 2011
Sorry for the mumblejumble...
The quant area has felt the brunt restructuring over the last years. The roles left are often back office and not well paid at all.
In any other discipline (M&A) a PhD is worth nothing and may even be counted against you (you must be really old).
The only upside of a PhD: you can try to move into consulting after it once you have sobered up to the fact that banking is on its way towards a lost decade.
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Da
Daniel
22 September 2011
it is true but this article is incomplete because it only provides the positive side of doing a PhD, God knows that there are many negative aspects in doing a PhD and I think it is important that people knows about ithem...
(1) PhD doesnt teach much about social interaction and team work this might be important in banking
(2) PhD drives u nuts
(3) PhD is a life style and takes a long time to complete
(4) PhD makes you sometimes choose a topic that is completely irrelevant to the industry such as behavioural finance and many others...
(5) PhD can be painful sometimes especially if you find a gap in an area that you dont really enjoy I know lot of PhDs who have this problem....doing a research for 4 or 5 years in a topic that you dont like (just because your supervisor forced u to do so or because gaps are easier to find there) can really impact your productivity.....
(6) to be continued...
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Hu
Hungry
22 September 2011
A PhD is 4 years degree not 3 and in the US it is 5 years. So if you are not lucky enought to get a scholarship then the cost could be very high....I am doing a PhD in Quant Finance and I am in my 4th year now......I have lot of debt and with this economic environment I am not sure about the prospects that could offer me this degree...the ratio cost/benefit is quite high........another important point...you would never get accepted in a phd program in London if you tell them that you wanna end up in the city
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An
Anne
22 September 2011
The quant has felt the brunt restructuring over the last years. The roles left are often back office and well paid at all. In any other discipline a PhD is worth nothing and may even be counted against you (you must be really old).
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Co
Comeon
22 September 2011
Finally, I read something that makes sense. It seems that Finance is the most important and respectful workplace in the world. Banks have the really appreciable ability to buy people, to shake their minds. Ops... I said Banks, well I should have said money. Bonuses after a financial crisis caused by people who think of being smart are the example of how stupid is this society and its politicians. So, what should the ones who send people in the space think to be? And people who master, for instance, surgical brain operations? Traders, Delta one people, Quants, Traders, Bankers... make me smiling.
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