Results of fifth survey

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.

Results of fourth survey

Sankaty Advisors vs DEShaw - MBA vs PhD Hedge Fund

Recently, I had an nice opportunity to attend company presentations of Sankaty Advisors (which is part of famous Bain Capital) and DE Shaw. These two companies are considered to be best Hedge Funds in their classes. Sankaty Advisors has very fundamental oriented investment strategy, whereas DE Shaw is considered to be purely quantitatively driven. Both companies generated superior returns in recent years.
I am writing about these hedge funds just to show how different opportunities Hedge Fund industry offers. Comparison of the profiles of these two companies shows that there is place in HF industry for both business major students with MBAs or CFAs (Sankaty Advisors) and also for those who have scientific background like PhD (DEShaw).
Sankaty Advisors invests in leveraged loans, high-yield bonds, distressed/stressed debt, mezzanine debt, structured products and selected equities. Sankaty Advisors puts great emphasis on fundamental analysis. They claim they always need to understand the business of any company they are investing in. If you would like to work in this firm, MBA or CFA would be highly beneficial.
DEShaw is mainly statistical arbitrage fund, so great deal of transactions is automated. Computers using sophisticated trading models are speculating on various markets and are exploiting subtle mispricings. Your mathematical background may be very useful in the process of preparing this models.
As the example of these companies show, hedge fund industry is not a solid entity. There is a number of different opportunities you may pursue if you want to work there and each of these opportunities may be prestigious and rewarding.

If I were to decide between these companies I would have a great problem. Both seem to be really nice. The presentations were on comparable level. However, I believe what I would learn in Sankaty Advisors would be more transferable. I could learn a lot about the business and "fundamental oriented investing" and then apply this knowledge somewhere else later. The same with DEShaw would not be that easy. There are not so many places in which you can use cutting edge quantitative skills. Maybe some statistical arbitrage desks of Investment Banks, but still the market is not that big for that. So, I claim that in fact Sankaty Advisors is a safer option for those willing to go for Hedge Fund industry.

If you know something more about various hedge fund please write about this in comments to this post.

Results of third survey

Best career choice for CFA Charterholder is:

CQF - Certificate in Quanitiative Finance

CQF is a specialized certificate for all those who are interested in becoming Quants in Investment Bank. This certificate was launched by Paul Wilmott, who is considered by some as a guru in this field. The company that is organizing the exam and classes (which are integral part of the certification process and you cannot be awarded CQF designation without spending many weekends in the classroom) is 7City, which is also preparing students for CFA and other certificates.
CQF designation is not very popular, but due to the fact that it is very focused it is quite prestigious in the quant environment. It has simply no competition. CFA or CAIA are by far more general and do not cover asset pricing (etc. Ito's Lemma, Interest Rate Models) deep enough to prepare a candidate to very technical field of quantitative finance. If you are thinking about becoming a Quant CQF certificate (or more broadly - a CQF Course of Studying) will prepare you to that role. You need to remember, however, that you need very good prior math preparation in order to catch up with the course of studying.
And should you do CQF if you already have PhD in Finance or in Economics? I think that it will not be very wise choice to do that. PhD is already very useful degree for Quantitative Finance. CQF is expensive (~10k pounds) and it takes time to finish it. On the other hand, if you have PhD in other discipline (like Chemistry, Mathematics) and you never did anything with finance, getting a CQF will probably open a lot of doors in IBanks for you.

Which degree/certificate for specific division in Investment Bank?

If you want to have successful career in the investment bank you have to carefully tailor your education to your goals. Some degrees/certificates may be useful in certain division and completely useless in different ones. Below, I created a list of the certificates/degrees that are most useful in various IBank divisions. [You can find detailed information about various certificates under: examhub.org]. Of course the list is subjective - if you have suggestions please let me know.

Investment Banking Division: MBA should be considered as a top choice for all who target this division. IBD is mainly about general business knowledge, and MBA is great for that. I've heard about some IBD people with CFA, as CFA is quite prestige designation, and you need prestige if you are willing to work in IBD.

Sales: No specific degree or certificate is required. What counts most is your energy and ability to talk with people. MBA may be quite good for this division anyways (as MBA is about networking, and in Sales you may use your network/contact to market the products). In Hedge Fund sales CAIA degree may be desirable.

Flow Trading: Most useful certificates for flow trading are ACI (ACI Association) or FSA certificates. This certificates are focused on very specialized knowledge (how to make deals in the market, how to book the deals etc)

Prop Trading: Prop trading (including Stat Arb.) is nowadays very quantitative discipline. PhD in highly quantitative discipline (physics, economics etc) is preferred, but in this business there are many people, who are self made men - without special degree etc.

Research: In economics research EconPhD is extremely useful. In equity research CFA is a good choice (better than PhD)

Wealth Management: CFA or MBA are very useful

Risk Management: FRM or PRM are good choices. PhD may be useful as well.

An interesting article for all MBA applicants

http://www.insidecrm.com/features/mbas-are-overrated-081307/

Results of second survey

Qualifications of Investment Banks' CEOs

For sure there is no easy and universal way to the top positions in investment banks or similar institutions. Each success case is entirely different. What is more, most of us will never become a CEO or even a Managing Director (what a pity ;) ). Getting on the top of the financial world is not just a matter of qualifications and hard work. What counts most is the luck. Luck of being in the right place at the right time. I think, however, that it is still worth to study the qualifications of people, who currently rule the financial world. I collected all available data about education of the top managers in financial industry in the table below.

First conclusion of this analysis is that qualifications of top managers differ a lot. We have guys, who completed MBAs at Harvard, but at the same time many of CEOs graduated just with BA degrees. This indicates that a degree is probably not the decisive factor for the success in the Investment Bank. Degree seems to be only entry level requirement...
What is more none of these great CEO's had any of these fancy certificates (like CFA, FRM or CAIA). The reason for that may be the fact that all these certificates were not popular when current generation of CEOs began their careers. Maybe CEOs of future, who begin their careers now, will have these qualifications.