Why isn't the Masters in Finance qualification taking off on Wall Street?
The Masters in Finance degree may be replacing the MBA in Europe, but it's less well-established in the U.S., and Wall Street firms have been reluctant to recruit graduates with these degrees – that still come in at tens of thousands of dollars.
Growing demand, at the junior end
There are signs that this is changing, albeit slowly. Of U.S.-based professionals in possession of an MSc in Finance on our resume database, just 4.8% working in M&A, while 7% work in a markets-related role. The biggest proportion (21.3%), however, work in accounting jobs and more people with the qualification work in corporate banking than investment banking.
MBAs are more prominent in the senior ranks of investment banking, but an MSc in Finance is gaining traction among the younger generation. 45.6% of the people on our database with the qualification in North America have three or fewer years of experience.
At the more experienced level, an MBA is preferable to any M.A. or M.S. degree, at least in the U.S.
“I mainly do recruiting for private equity and investment banking, and I rarely come across candidates who have the Master of Finance degree,” says Kristin Schroeder, an executive search and assessment professional in the financial services practice at Russell Reynolds Associates.
The internship problem
If you want to get a front office job, you need to start looking for investment banking internships almost from the moment you start college. Anyone who's late to the game and views a one-year Masters in Finance course as being their key to a banking is in for a shock. Most bulge bracket banks fill the majority of their graduate jobs with intern conversions.
Michelle Chamberlain, the director of external relations for the Robert Day School (RDS) of Economics and Finance at Claremont McKenna College, says that due to the difficulty of securing an offer-yielding summer internship, she often sees Master of Finance graduates getting attention from recruiters within firms that do not heavily recruit from their summer internship program. Specifically, middle-market investment banks, economic/litigation consulting and asset management opportunities are common outcomes, she said.
“If a Master of Finance student is interested in these roles, securing a summer internship before they begin their program is very important, which is why we support students in their internship search before classes start,” she said.
In terms of areas of growth for that degree, she is seeing more traction within Fortune 500 finance and treasury/treasurer roles.
The story at MIT
The Massachusetts Institute of Technology’s Sloan School of Management ranked third in our 2015 ranking of the best Master of Finance programs for getting a job in investment banking. It's the best ranked programme in the U.S., according to the FT.
Looking at MIT-Sloan’s class of 2015 Master of Finance employment report, 92.8% of last year’s graduating class had received an offer. Of those who accepted an offer, the mean and median base salary was approximately $80k, while the top earners got $130k.
30.5% went into asset management, far and away the most common landing spot, followed by consulting at 23.2%, quantitative analysis at 10.2% and research at 8.7%. Rounding out the list were transactions (M&A/securities issuance/advisory) at 7.2%, corporate finance & treasury at 4.3%, sales & trading at 4.3% and venture capital at 1.4%.
BlackRock, Fidelity Investments and Oliver Wyman Group each hired at least two MIT-Sloan M.Fin. graduates from last year’s class. State Street Corp., McKinsey & Co., Goldman Sachs and Deloitte also hired multiple grads last year and have done so for at least three years running.
To pursue or not to pursue a Master of Finance?
A Master of Finance program should be pursued with a fundamental understanding of the finance industry and some fairly specific post-completion employment goals.
When you combine the cost, narrow-focus and intensity of a quality Master of Finance program, it should be considered an investment made with the expectation of a practical return on that investment.
Especially given the one-year duration of these programs, students must be realistic about their strengths and weaknesses and how completion of the program should be expected to result in acquiring a quality work opportunity as a result, Chamberlain said.
“The challenge then becomes exploring graduate programs to differentiate program strengths and matching them with individual student needs,” she said.