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What is a Masters in Finance and Why Should You Pursue It?

Kavita Singh, who has a MBA degree from Columbia Business School charts out what sorts of careers you can typically build, armed with a Masters in Finance or Masters in Quantitative Finance degree under your belt.

New Delhi - The MSc in Finance is intended to prepare students for a wide range of careers both inside and outside the financial industry. It aims to produce finance generalists, whereas these other programs aim to train "quants" – namely specialists in derivatives, fixed income, alternative financial instruments and risk analysis.

Many MSc in Finance programs have no work requirement at all enabling younger students to apply for MS programs. However, as this is not true for all programs -- London Business School and Cambridge University requires that MS applicants have relevant work experience in the finance industry – make sure you understand the requirements in advance.

MSc in finance or MBA?

MBA programs have a broader management focus with an emphasis on leadership, while an MS degree enhances your knowledge and skills in specific areas which then, in turn enhances your career and job potential in that specific area.

Some people are confused as to whether they should pursue an MSc in Finance or an MBA with a specialization in Finance. Both degrees can lead you to positions in investment banking and corporate finance. MBA programs have a broader management focus with an emphasis on leadership, while an MS degree enhances your knowledge and skills in specific areas which then, in turn enhances your career and job potential in that specific area. There is some overlap but the Masters in Finance program focuses more tightly on finance and financial markets, while an MBA, is more diverse, covering general aspects of business not dealt with in the finance program, such as human resource management and operations management. Some universities offer a MBA and a Masters in Finance as a joint degree.

Talk to people in the industry to understand the difference in these job functions, to help you assess what career path you want to pursue. And start planning early in college, so that you have time to explore which career and degree is most suited for you. The MSc is generally a one year degree and so it is approximately half the cost -- a significant advantage.

Top 10 Quant Schools according to Wall Street

  • Carnegie Mellon University
  • Columbia University
  • Cornell University
  • New York University (Courant Institute)
  • Princeton University
  • Rutgers University
  • Stanford University
  • University of California at Berkeley (Haas School of Business)
  • University of Chicago
  • University of Michigan

Even if you decide to pursue a more ‘quant’ degree, you could still end up with a more generalist finance career. Amit Sanghani, who holds a Masters in Mathematics of Finance from Columbia University, says he leveraged the program as a “springboard to get into the finance industry”, joining Bank of America after graduating to work in structured finance. However, if you do want a ‘quant’ job, then an MSc in Finance will not get you there. If you have a computer science background, are strong in mathematics and are interested in finance, a more ‘quant’ based career may well be right for you. If the rest of this article makes your head spin or puts you to sleep, a career as a quant is probably not the right one for you.

What is quantitative finance?

So what exactly is Quantitative Finance? It is broadly about the mathematical aspects of Finance. It is a study of the mathematical theories that are used to price and structure the various sophisticated financial instruments used by banks and hedge funds. Although the original ‘quants’ were concerned with risk management and derivatives pricing, the meaning of the term has expanded over time to include those individuals involved in almost any application of mathematics in finance, for example, statistical arbitrage, algorithmic trading, and electronic market making.

An advanced degree is necessary for most entry level positions in this field.  After a Masters in Quantitative Finance you could pursue a career in the following areas:

  • A front office or desk ‘quant’ interacts with traders directly, and gives trading books an edge through different methods such as time-series analysis, and discovery of predictors/indicators. The objective is to determine prices, manage risk, and identify profitable opportunities.

  • Algorithmic trading or structuring desks in the sales and trading divisions of banks. As an algorithmic trader you would develop trading strategies that exploit the inefficiencies in the market to create wealth, while an algorithmic structurer typically builds the computational tools to model these trades.

  • In portfolio analytics and risk management you would design the mathematical tools to construct optimal portfolios and manage their risks. Risk management has grown in importance in recent years, as the credit crisis exposed holes in the mechanisms used to ensure that positions were correctly hedged.

  • A quantitative developer. You would develop robust and scalable implementations for the quantitative models that are created by the research guys.

  • A model validation quant independently implements pricing models in order to check that models are correct.

  • If you want to get into developing new quantitative models, then you will need a PHD to break in.

If you have a computer science background, are strong in mathematics and are interested in finance, a more ‘quant’ based career may well be right for you.

And the best universities to study at if you want a career as a ‘quant’? Having looked at employer surveys, blogs and forums the consensus seems to be the following (not listed in any particular order): University of California Berkley, New York University, Stanford University, Carnegie Mellon University, Columbia University, Cornell, University of Chicago, Princeton and University of Michigan. While the degrees are slightly different at each university, ‘quant’ programs typically run one to two years long, are heavily focused on math and have a programming element. Students usually enter these programs either right out of college or after a year or two in the workplace.

Kavita Singh holds an MBA degree from Columbia Business School and has a BA Honours degree from Oxford University. She has over 13 years of experience working in the United States and India and is the CEO of a leading admissions consulting firm called FutureWorks Consulting (www.futureworks.co.in).

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Comments:
Indiana Mailey
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29 July 2019


Meet Gandhi
Hi ma'am. Your article is too good and informative.I have done my Computer Engineering 2 years ago and also done many jobs related to many different backgrounds as per my family situations. Also while doing jobs, I had made a choice to do higher studies with my skills. As I am good in mathematics, I had decided to opt for MBA in finance. Now after researching much about MBA in finance and MSc in finance, i couldn't decide what to do. Kindly help me for the same if possible as I can see that MSc. in Finance is very good as per technical aspects.
21 June 2019


ranjeet
i want to mba digree i finance
24 November 2017


Sidhant Jain
Hi Kavita - the above article is really very informative. I am bit confuse to go with M.Sc in Banking and finance or M.Sc in data analytics. I am a commerce background student with a work experience of 2 years and one of the main drawback is I haven't opted mathematics in my 10+2. Could you please suggest anything that could help me in.
23 November 2016


Swati Bharani
Hi Kavita, very informative article. I have an actuarial science background, cleared 4 papers and working as an Actuarial Analyst (work ex - 1.5 years).I have an interest in Finance and want to pursue MSc Finance from abroad. Given my background,I do not know which specific area of Finance would be okay for me. Do you think I should go for a masters straight away or gain some work - ex before applying. By the way, I gave FRM Part 1 this May. Thanks.
15 June 2016


braingainmag.com
Hi Praful - Your course options depend on where in the world you want to study - and what exactly you want to do with your career after completing an MBA. It is usually suggested that working for 2-3 years before entering into an MBA program is a good idea. Best of luck!
13 January 2014


praful
i am a btech CSE 2012 passout rite now i am in banking n wanting to pursue MBA.which course should i opt n wat other options do i have .....pls help me.
09 January 2014


Kunal
Thanks Kavita for a very informative article. I am a Computer Engineer and done CFA level 2. I want to pursue a course in Quants. Do you know if there are good part-time/distance learning courses in the US or in India. I am from Pune, India. Thanks in advance for your help
28 December 2012


rahul agarwal
Hey kunal, i need an advice from you.. I am a Computer engineer, just finished with btech in may 2013.. I have not studied finance anytime in my academics. Am i eligible for applying for CFA L1 December? Plz help bro
20 June 2013


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