Let's get this clear: you don't need to study finance to work in finance
Not long ago, I was asked why an investment banking firm or hedge fund would ever hire someone who didn’t have a degree in economics or finance or some other supposedly ‘relevant’ subject. The better question is: Why wouldn’t they?
I responded, jokingly, that to address these questions I was going to convene a panel made up of some of my Point72 colleagues to address the question.
To assemble the panel I might start with my colleague Mark, a member of our senior management team who built a long and successful career as an investment research analyst at a major European bank before coming to our firm. Mark’s college degree was in modern languages. I’d also add David, who we recently promoted to become a portfolio manager. He earned his college degree in molecular biology. And I’d round out the group with some of our outstanding research analysts and Point72 Academy hires: James (history degree), Allison (computer science) and Kristin (environmental studies). And me, I guess. My degree was in physics. We’ll put together all the knowledge we’ve gathered from our respective modern languages/biology/history/computer science/environmental studies/physics degrees and see if we can work out what subject you need to have studied in order to build a successful career in the hedge fund or investment banking industry.
Here’s the point. How do we reconcile the following:
1. Finance firms keep insisting they want to hire talented people regardless of the subject they studied in college
2. Finance firms still seem to hire mostly finance and economics graduates (my examples above notwithstanding).
The answer comes down to numbers - and what finance employers are really looking for when they hire. You might imagine that banks are hiring at the entry level based on knowledge. They’re not. No one leaving college knows how to do the job already, no matter what they’ve studied. Employers are looking for something similar, but subtly different, which I think of as informed interest. In other words, have you taken steps to begin your investment education? You might do this through independent reading, optional courses, learning valuation techniques, participating in an investment club or starting your own stock portfolio (with real money or virtual). Notice that these are generally things that you do outside the classroom rather than in it. They don’t require you to be studying any particular subject. And they signal to employers that you are serious about this sort of work, you enjoy it, and if they hire you, chances are you’ll stay and succeed. Employers tend to like that.
But why are so many of those being hired by banks and the like nonetheless still coming from ‘traditional’ degree backgrounds? Because that’s who applies. Up to three quarters or more of the applicant pool for most entry level banking jobs are finance and economics students. Barely 7% come from arts and humanities disciplines. No surprise, then, that each year’s crop of new banking hires continues to tilt so heavily towards the traditional subjects. That’s correlation, not causality.
So if you’re studying a subject that you assume won’t make you a candidate for a banking or investing career, think again. The door is wide open, and the time to begin your investment education is now. If you end up at our firm, we’ll even put you on our panel.
Jonathan Jones is the head of investment talent development at Point72 Asset Management and a former senior recruiter at Blackrock and Goldman Sachs.
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