Wednesday, January 2, 2008

Slowdown - a good time for education

It seems it will take a while for the financial markets to get back to a healthy state. Currently, the banks have decreased their recruitment efforts significantly. It appears that getting IBank job may be a very difficult task at the moment. Probably this is good time now to go back to school. Doing additional certificate or degree, when the market is stagnant, may be an extremely good investment. Not only will you get a powerful credential when the market is back to healthy state again, but also you will NOT lose too many opportunities. The alternative cost of studying is now smaller than usual.
The big question is, however, how long will the current crisis last. If it is short, you’d rather not start PhD program for example. You don’t want to be stuck preparing your dissertation when the market is booming and all your friends are making big bucks.
If I were to guess I would say that it will take about 2 years for the financial job market to be hot again. This indicates that CFA or MBA may be good options. If you can’t afford halting your current job than go for CFA (or CAIA or CQF), otherwise think about the MBA. With additional credentials, when the market is booming again, you will be in much better position to advance your career.

14 comments:

Anonymous said...

Hello..I am first year economics student LSE external system..but later I want to consider in Accounting and Finance..

My questions are:

I am interested in Invesment Banking..What is your
advice for me to specialize in that job..what subjects
must I learn?and how to break as an analyst in
investment banking job?and is it possible break investment banking without superb maths?because I am weak in maths...
and in your previous thread about president in banking..Why do most banking presidents have law degree

Thank You..

Anonymous said...

Hi,

thank you for your email.
LSE is very good school if you are thinking about career in investment banking.
At the beginning you need to learn a lot what is Investment Banking all about. Different roles require different educational background. If you want to be quant you need to be highly numerate. Applied Maths degree or econometrics is very desirable. On the other if you become an Banker in IBD division you rather concentrate on Accounting and General Managment. Sophisticated mathematics is not necessary. (Many Bankers in IBD divisions have either CFA or MBA degree).

To your question about law degrees. It seems that at some level in Investment Bank (managment level) your mathematics or finance qualification are not that important. What is most crucial is your ability to understand how complex organizations work. And this organizations work is some legal environment. Knowledge of this environment is necessary for steering or managing big companies. That is why some Law educated people are managing big institutions.

Best,
P.

Anonymous said...

Thank you Mr.P. for your reply,

I want to ask you again,

How about CFO/finance director?does it require sophisticated maths?

I think I wannt to work in M&A(corporate finance) IBD division.What must I learn from beginning to perform in this well?does it require good maths?

In someone's blog, I saw that to work in Investment banking does not require maths.He told IBanker always use calculator & excel when they work.Is it true?and why does enter in IB job as an analyst difficult?

so,What is your recommend for me to get this kind of job?

Thank You

PhD Candidate said...

Neither CFO nor Finance Director position requires any advanced math.

If you want to work in IBD learn Accounting, Valuation and (maybe) basics of management. It is also very important to learn Microsoft Excel.

At some point think about MBA and CFA.

Work in IBD at analyst level is extremely straight forward. You just use excel all the time.

It's so hard to get this job because so many people want to get this job, not because it is so difficult.

:)

Anonymous said...

And why the salary of analyst is high if the job is not as difficult as other professions like accountant and risk management level?

Do you agree that FRM/PRM is tougher than CFA?I saw the maths in FRM/PRM is so hard..

As we know the demand in IBD is lower than the supply..why is the remuneration high?

and what do make an analyst have salary bonus if they only work with excel all the day?

Thank You..wish best for your Phd :)

Anonymous said...

Thank You for your post,

I agree with you that Economy in 2008 is not good after many analyst told that US economy now in recession/slowdown..

What is your solution for that?As we know,there are 2 policies that US government can do:
1.cut the tax so citizens can spend more money
2.Government spending

In case no 1,we know that if the government cut the tax so US budget will become deficit and now US budget is deficit after G.W Bush cut the tax.Budget deficit is not good.

In case no 2,US government will make policy to take high tax and the citizens will consume less and this is not good for economy but the Goverment can spend more money for that to build infrastructure make more vacancies,etc..

That all are related with keynesians' theory that people should save money more and automatically that the consume will be less.this is good for now but if this is continually,we all will be dead.

In conclusion,case number 2 is good for US economy now to cope recession..

so what is your solution for US economy now?

Unknown said...

Hello

Thank you for a great blog.

I am a management consultant with Accenture, South Africa. I would like to study an MBA in the US in two years time and thereafter move into Investment Banking. Would it be worthwhile to study a Masters in Finance before an MBA?

Cheers

PhD Candidate said...

Hi Guy!

Thanks for your comments. First a comment for Gary. I think that doing Masters in Finance before MBA is not a good idea. In fact this program are pretty similar and there is a lot of overlap. Consider either MBA or Masters in Finance. If you have background from Accenture I would rather advice you to go for MBA as it gives you more universal education. Masters in Finance is in my opinion loosing a lot of importance (its role is taken over by Masters in Financial Engeneering). Comment to Jay: I agree with much what you said. I would rather say that recession in USA is unavoidable, and USA must go through. If FED fights with the slowdown by cutting rates significantly the only effect would be great increase in inflation.

Best,
Stud

Ria said...

I found your comments very informative as I am considering an MBA. I relocated to the US with a BA in Business & Finance, LLB(UK JD), LLM(Masters of Laws US) and I do not want the hassle tha lawyers go through in the US and as every other person I would like to work with financial institutions and not sure which of the MBA to embark on. Thank you PHD candidate for your clarification on MBA finance and the overlap with Finance engineering. My application for a one year MBA is in progress hopefully to start in July 2008 but I am noy sure which one is best. PHD can you please advice which option is best MBA general or specialized.
To anonymous my maths is not that hot now, nor was it when I had my BA but I found a way around statistics etc.

Anu said...

hey phdstudent, i found your article very interesting. consequently i was googling for MBA/CFA because one of my friends claimed that UK and US universities offer an MBA to follow together with CFA if you posess 2 years of working experience. But i can't seem to find any university courses like that. Can you give me any information about this?

and also i'm currently working as a business analyst in a software firm for capital markets. Meaning i have plenty of domain exposure. but the company is located in Sri Lanka. Could you tell me what opportunities I would have globally in my case? I want to continue in the capital markets domain and I am sitting for my CFA exams this june. I want to apply for a job abroad. How possible is that?

Anonymous said...

hello. Thank you for the opportunity to discuss this subject to smb professional in the industry. Sorry for my broken language, I am a foreigner.

You know, I don't like finance, economics, my grade in mathematic was C, but always A in Literature and native language. I like marketing,...

AND I LOVE MONEY!
simply because I don't have it at all, that's why I've decided to change the field in the future.

Could you advise, please, being honest to yourself also, is it really profitable and stable job?

They say 300.000 after 5 years is normal. Others say this amount is only for VP, Seniors with 15 years of 70 working hours per week. Who is right?

You know, several years ago in my country many people obtained Degrees in Economics. Then it was impossible to find a vacancy and salaries decresed because of that.

What about now? everybody's runing after cach. I am in the stream also(mentally). And hate myself for this reason.

Unkie Ken said...

Hi all:

I have an Engineering degree (Mech) and I am working as a Maintenance Coordinator, but I wish to make a career switch by pursuing an MBA. There is no money in Engineering and not a lot of motivation as I realized I am not here to work as an engineer, but more of a repairman and if it doesn't work, then it comes to the $. The company wouldn't care how much studies or investigation you did, all they cared is profit. However, I then realized doing an MBA is costy and it's time consuming. Then I heard about the CFA Certification, since I have no Finance background, I was under the impression that by doing one or all levels of CFA will leviate me to the door of Finance (IMs, IBs, and Portfolio Management, RM and others), but from what I am hearing, it won't be that easy. It's better to do the MBA from a Top/elite school then start from the bottom. Is it worth to make that career switch? Will there be any opportunities out there with a guy like myself even with an MBA at the age of 32? (I am already 28). What does the Finance/Investment field look like? Thanks. I am kind of lost too

Nick said...
This comment has been removed by a blog administrator.
boo said...

I'm in the CFA program, but I'm working in corporate finance. Will I be benefited by getting CFA charter? I'm 30 yrs old with a master degree in economics. what kind of jobs would I look for if I want to complete the CFA and be benefited from it?