Forget IBD, get your PhD

The Nobel Prize. Once an everlasting testament to human intellectual innovation.
A beacon of hope, a searchlight though the clouds over our mind's eye.

Today, more akin to an online diploma from a for-profit university . A lifetime achievement Oscar for the likable fellow who never quite shone brightly enough on his own merit. A ferris wheel with a jammed lever. A comically, self indulgent world of the theoretician guffawing over his own perceived brilliance.

Why not get your piece of the action? $500,000, a lifetime of juicy consulting gigs, because you quantified that "buyers and sellers have a hard time meeting in the marketplace"? Sounds like a pretty sweet deal.

In the past, PhDs were reserved for only the most rigorously inquisitive of academic minds. Salaries were far inferior to the private sector and options beyond academia were minute.

No longer.

In times of crisis, the human fear of the unknown leads to reflexive mean reversion. Or to put it in non-eggheadese: we crawl back into our holes. Looking for answers to current questions in the cave wall scribbles of our ancestors. This is a great time to be a researcher, so many topics to dissect and blame on someone, place or thing.

About a decade ago a guy I knew went for his PhD at a top school. Everyone laughed at his choice, as he was making mid-six figures only a few years out of undergrad. A top BB internship and a graduation day gig at an infamous hedge fund were his first steps towards definite BSD-dom. One day,however, he simply packed his bags and wormed into a book for half-a-decade.

Today, he works about 150 days per year pulls, down $150,000 and does about a month on the speech circuit, on someone else's dime. He's written a couple of books, published a bunch of papers and bills out his consulting expertise at ridiculous rates.

His all-in-comp at the end of the year is not MD status but you couldn't get him to budge from his perch with any sort of parachute bonus. His stress level is nil, he's always at his son's baseball games and confesses that the biggest struggle he has is warding of cute hedgette hopefuls looking to perform a grade boosting service.

The PhD is wide open these days for those with excellent undergraduate academic records. Certainly it is a career path worthy of more attention than it receives.
With the proliferation of math and engineering advanced degrees, there are less and less Finance PhD candidates throughout the country's doctoral programs.

With our changing regulatory environment, doctoral level expertise on a multitude of subjects will blend well with the expanding compliance, transparency and informational demands of the finance industry at large.

Though a PhD curriculum is by no means light and the compensation for your 5 years (or more) of effort will be quite paltry, the freedom and luxury of living it can afford down the road should not be ignored.

Comments (25)

Oct 11, 2010
Midas Mulligan Magoo:

With the proliferation of math and engineering advanced degrees, there are less and less Finance PhD candidates throughout the country's doctoral programs.

Source? Not doubtful, but would like to see the numbers.

Thanks

Oct 11, 2010

Or you can get a Masters and become a business fellow at a University. You won't get tenure, but you can carve a nice niche out for yourself. I have done some light research work and if you are smart enough you can do research and get it published.

FAJ is a good start, lot of CFA's get published.

Oct 11, 2010

One important caveat: don't underestimate the cut throat competition to get a tenure track position (especially at a top ranked university) and the quality of life while you wait in post-doc limbo.

Oct 11, 2010

This is a pretty weak post in my opinion.

You are making a lot of assumptions. First off, PHD's rarely take 5 years from what I have seen from my friends. Think more like 7 or 8, and those are some really lean years where a splurge night out will involve something like Chili's. Second is that your PHD will be economically useful. This you have control over, but even in hard science roles like chem/bio/physics, there is no guarantee of a well paying job at the end, even if you don't choose academia. When you are 21, making 80k a year sounds awesome. When you are 28, and most of your friends are already there, and have been living pretty well while you have been scraping by... its depressing. Staying in academia is apparently more politics than talent, and getting a job at a BB or hedge fund might be easier than getting a tenure track spot.

I don't know what your friend did or where he went, but he sounds like the exception, not the rule. I know about 10 people that have gone the PHD route, most are just graduating, and none at this point are wealthy, and I don't think any of them have prospects of ever becoming anything like the guy you are describing.

Oct 11, 2010
someotherguy:

This is a pretty weak post in my opinion.

You are making a lot of assumptions. First off, PHD's rarely take 5 years from what I have seen from my friends. Think more like 7 or 8, and those are some really lean years where a splurge night out will involve something like Chili's. Second is that your PHD will be economically useful. This you have control over, but even in hard science roles like chem/bio/physics, there is no guarantee of a well paying job at the end, even if you don't choose academia. When you are 21, making 80k a year sounds awesome. When you are 28, and most of your friends are already there, and have been living pretty well while you have been scraping by... its depressing. Staying in academia is apparently more politics than talent, and getting a job at a BB or hedge fund might be easier than getting a tenure track spot.

I don't know what your friend did or where he went, but he sounds like the exception, not the rule. I know about 10 people that have gone the PHD route, most are just graduating, and none at this point are wealthy, and I don't think any of them have prospects of ever becoming anything like the guy you are describing.

Ph.D's usually take about 3-5 years depending on how long you take to write your dissertation. Most schools have cutoff periods (time requirements) that stipulate a specific number of years one has to finish their dissertation after passing qualifying exams. Some schools have time requirements as to how long you take to finish both your coursework and dissertation. 7-8 years is a really long time to finish a ph.d....I can't think of a school that allow this.

Oct 11, 2010
back_that_thang_up:
someotherguy:

This is a pretty weak post in my opinion.

You are making a lot of assumptions. First off, PHD's rarely take 5 years from what I have seen from my friends. Think more like 7 or 8, and those are some really lean years where a splurge night out will involve something like Chili's. Second is that your PHD will be economically useful. This you have control over, but even in hard science roles like chem/bio/physics, there is no guarantee of a well paying job at the end, even if you don't choose academia. When you are 21, making 80k a year sounds awesome. When you are 28, and most of your friends are already there, and have been living pretty well while you have been scraping by... its depressing. Staying in academia is apparently more politics than talent, and getting a job at a BB or hedge fund might be easier than getting a tenure track spot.

I don't know what your friend did or where he went, but he sounds like the exception, not the rule. I know about 10 people that have gone the PHD route, most are just graduating, and none at this point are wealthy, and I don't think any of them have prospects of ever becoming anything like the guy you are describing.

Ph.D's usually take about 3-5 years depending on how long you take to write your dissertation. Most schools have cutoff periods (time requirements) that stipulate a specific number of years one has to finish their dissertation after passing qualifying exams. Some schools have time requirements as to how long you take to finish both your coursework and dissertation. 7-8 years is a really long time to finish a ph.d....I can't think of a school that allow this.

I tend to agree. The only time I have ever heard of it taking someone 7 years (granted I don't know a huge number of PhDs) is when my brothers roommate got a PhD and a Masters in a related field. Biology and an MPH or something. The opportunity cost for 7 years would be almost impossible to make up and I can't see more than a handful of people being willing/able to sacrifice over half a decade for a PhD. Just my 2 cents.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Oct 11, 2010

It is much more difficult to get a tenure-track research position at a decent university, which is what you described, than to become an MD. Just do the math: about one tenure-track position per department is created every year at the 200 or so institutions around the world where the above lifestyle is possible. That kind of competition is insane. Just look at the number of Harvard PhD's grinding away at unknown liberal arts schools.

Oct 11, 2010

There are obviously pros and cons to every career decision and obtaining your PhD is not without exception. There are plenty of options people available to people with PhDs. Academia is just only one of them, but it essentially allows you to be your own boss and pursue whatever intellectual subject you find curious. It's an amazing job and while very competitive has endless perks.

Yes, you don't get paid well as a PhD student but I found that one of the most depressing things about the program is that your projects tend to go on and on and of course don't work the way you planned. There are plenty of grants / fellowships that allow you to do travel to different countries, live on your own and enjoy a decent lifestyle (NYC probably not as easy). I obtained a Masters of Sciences and backed out of the PhD program but that's because I knew what I wanted. If you want to do venture capital and/or want to pursue a subject matter of passion, I don't see why you should be dissuaded from getting a PhD.

Academia is competitive, but if you truly want to be a professor and you are reasonably intelligent you will find an university that will give you a job. It may not be a top 20 program, but doesn't mean you can't get that job you want.

Oct 11, 2010

I've just finished my PhD in the UK (after 3.5 years) and will now be starting at Goldman Sachs (London) as an Associate - Front Office Desk Strategist (i.e. Quant). A PhD is in my mind worth it - you get to enjoy being a student for a few more years and get to skip being an Analyst!

Oct 11, 2010

Having done a PhD after IB, I'd say that getting a tenure track job at a decent school (e.g. top 100) is much harder than going through the ranks to MD. Getting a job at a top 25 school is even more competitive than getting into DE Shaw (which, incidentally I was rejected to both.) And teaching at a university often pays less than teaching kindergarten.

I went to the top-ranked program in my field and the prospects were dim for my cohorts, and myself, if I actually took academia seriously.

I would never recommend a British PhD. They are looked down as easy in the US.

While going to grad school there are plenty of ways to make extra money on the side. Grad school isn't too hard (though about a million times harder than professional, MBA programs)--only comp prep time is--and assuming you get into a good program, you'll have tuition, stipend and HI and you can make money on the side with ease. I did everything from operate an SAT tutoring company, to running a small fund to teaching math, to laying the groundwork for my company. So you don't need to worry about only getting a 28k stipend and living in Boston.

It's a great time to have a low-paying, but highly stressful, part-time job with lots of vacations. You can use that time to sharpen your critical thinking skills and hopefully demonstrates that you have the intellectual curiosity better hiring managers look for.

I rich, smarts, and totally in debt.

Oct 12, 2010

I have enjoyed WallStreetOasis for a while and have never posted anything but I was wondering.

What about professional economists with PhDs? I would assume that every Fortune 1000 company would have at least one economist on hand and that financial firms be it investment banks, hedge funds, etc. would need quite a few. Wouldn't they all have PhDs. I hear Jan Hatzius quoted on CNBC as Goldman's "chief economist" all the time, I'm sure he is far from impoverished.

Oct 12, 2010

I have to agree with you buenretiro but Hatzius has his PhD from Oxford and was a fellow at LSE. I don't think he qualifies as your run of the mill PhD type candidate. That being said, he also isn't in academia which is apparently just as difficult a row to hoe even with its lower earning potential but better job security. I feel like he's the exception more than the rule. Kind of like saying dropping out of Harvard is a good idea, just look at Zuck, Gates, etc. Good point though.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Oct 12, 2010

The Econ/Biz PhD is no easy road, let me tell you. Within the past month, I just left an Econ PhD program, because I'm not sure it's such an attractive path. Sure, if you're brilliant, then maybe you can live the kind of life you're discussing. But generally speaking, that's not how it turns out for people. The median prof winds up in some small college town, making $70K-$90K. And in order to get there, that same person had to spend 5-6 years in grad school, busting their ass, making $15K-$25K. If that sounds awesome to you, then fine, I'm just saying that doesn't appeal to most people. Not to mention, just getting into a PhD program and earning the degree is really difficult. In my program, which is by no means a top-10 program, we had 600 people apply, and guess how many offers were given out? 30, that's it. 5% of applicants were admitted, and you'd be surprised how qualified many of these rejects are, I'm talking people with solid GPAs, who majored in Econ, Math, Stats, Physics, etc. I'm just rambling now, but if anybody has any specific questions, feel free to ask (either in this thread, or through PM).

Oct 12, 2010

Econ, what are you doing/going to do now?

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Oct 12, 2010

Fellas, you're missing the point. Perhaps I didn't explain it, well enough. The link in my post is my attempt to point out that the intellectual rigors placed on today's upper level academics are nowhere near as rigorous as in the past.

Precisely due to the valid points you have all mentioned, advanced academia is becoming less and less popular for American students. That having been said, times change and foresight can be far more valuable than skill or intelligence.

I am not saying that a PhD is a free lunch for all, far from it. I am saying that for those with a genuine intellectual interest in a subject, the professorial track can provide a far more balanced lifestyle. It is very true that academia is political, but then again...so is banking and pretty much every other industry in life. That having been said, an academe with innovative ideas WILL get lots of attention and quickly. There is ( IMHO) a great divide between "brilliance" and "innovation". Most academics are analytical bookworms, this is precisely why I think a great many IBD, S&T prepped minds can do extremely well in academia ONCE they snatch that doctorate up.

As for the turdburgers served en route...if they told you it was free, you should have been asking what the catch is.

The main point is that once past the early stages a creative and aggressive guy/gal can forge quite an impressive career for themselves VIA the academic route. It is a far more entrepreneurial option than many of you are giving it credit for being. Remember...the game is changing. I am hinting at something that I believe is coming...not necessarily something which is already here.

Feel free to digest with shaker of salt.

Oct 12, 2010
happypantsmcgee:

Econ, what are you doing/going to do now?

Trying to figure out what it really is I want to do with my life. I thought getting the PhD was it, but then I realized I was wrong, so now I'm trying to get a job and find out what I'm passionate about, that thing I can do for the rest of my life.

Midas Mulligan Magoo:

the intellectual rigors placed on today's upper level academics are nowhere near as rigorous as in the past

It's potentially the opposite. It seems like it maybe getting harder and harder to publish "good" research. Some say most of the low hanging fruit is gone. Lastly, what I hear from academics, is that the game is getting tougher and tougher.

Oct 12, 2010
econ:
Midas Mulligan Magoo:

the intellectual rigors placed on today's upper level academics are nowhere near as rigorous as in the past

It's potentially the opposite. It seems like it maybe getting harder and harder to publish "good" research. Some say most of the low hanging fruit is gone. Lastly, what I hear from academics, is that the game is getting tougher and tougher.

Not going to argue this subject with you as I think you both:

1) have more tangible experience than me

2) are a little jaded about the process

What I want to point out (again) is that once you're done with the initial "torture period" doors open up (naturally, like everything else in life, it's how hard you push, knock, kick, bomb those doors that will determine how far they open). I'm not going to try and school you, all I can say is that out of my circle of acquaintances BY FAR the most paid guys are ECON PHDs. If you're not in it for the $$$ please disregard, but also don't forget that there are more benefits to it than you're seeing right now.

Just a well intentioned suggestion. As a guy who's well aware of his own fleeting mortality, I'd say sitting on a beach netting shrimp is a great career choice if that's what's in your heart. Good luck, either way.

Oct 12, 2010

I think what everyone is missing is

1) The Stability
2) The Perks
3) Outside Earning Potential
4) Work/Life Balance
5) Intangibles of Being a PhD

Yes, it is not an easy road, but nothing in life is.

Oct 12, 2010

First, let me say, I'm not trying to be argumentative. What I'm trying to do, is share my experience, so some of you don't make the same mistake I did.

Anthony .:

I think what everyone is missing is

1) The Stability
2) The Perks
3) Outside Earning Potential
4) Work/Life Balance
5) Intangibles of Being a PhD

The thing is, you don't actually get that stability until you're older. During grad school, there's lots of uncertainty. Uncertainty about funding from year-to-year, uncertainty about ever actually finishing the PhD, uncertainty about when you'll finish, what jobs you'll be able to get, etc. Then, once you finally get that academic job, you have to try and get tenure, which means another 5-7 years of uncertainty. If you don't get tenure, then you go to another school, and have another 5-7 years of uncertainty. Sure, if/when you get tenure, you'll have a lot more stability.

The outside earnings potential is probably not as good as you think. Most academics don't do work that anyone in the private sector cares about, making it incredibly difficult to earn good money on the side. Again, you can't really do this stuff until you have tenure anyway.

Also, these people don't have as much work/life balance as you'd think. It's funny too, because academics always say that's why they like their career. But then, these same people tell their grad students that their lives should revolve around research/academics, they need to work harder, come in on weekends, etc. I was amazed at first how many grad students spend Friday/Saturday night at the office. Also, profs are there a lot, on weekends, at night, etc. It's not the cushy life that many people make it out to be IMO.

Midas Mulligan Magoo:

Not going to argue this subject with you as I think you both:

1) have more tangible experience than me

2) are a little jaded about the process

What I want to point out (again) is that once you're done with the initial "torture period" doors open up (naturally, like everything else in life, it's how hard you push, knock, kick, bomb those doors that will determine how far they open). I'm not going to try and school you, all I can say is that out of my circle of acquaintances BY FAR the most paid guys are ECON PHDs. If you're not in it for the $$$ please disregard, but also don't forget that there are more benefits to it than you're seeing right now.

Just a well intentioned suggestion. As a guy who's well aware of his own fleeting mortality, I'd say sitting on a beach netting shrimp is a great career choice if that's what's in your heart. Good luck, either way.

Haha, I won't argue that I'm a little jaded. Also, I'd like to point out again, that I'm not trying to be argumentative, more like share my experiences, so anybody here can avoid my mistakes and have more info to go off.

The thing is, that "torture period" lasts a long time. You have to go through that torture in undergrad, grad school, and the first 5-7 years of being a professor. Best case scenario, you breeze through undergrad and that torture period will still last through grad school and early professor life. In other words, the majority of your 20s and early 30s under a best case scenario (supposedly the prime of our lives). And for what? So you can live in some podunk town, making little money, doing work that gets almost no recognition from your peers nor the public at large. If you do really well as an academic, it's an awesome life, but academia should be the textbook example of a superstar market (600 highly successful/intelligent/hardworking people apply to a school in the 20-40 range, only 30 are admitted, only 20 of them accept the offer, then 5 are kicked out after the first year, of the 15 remaining, only 8-12 of them will probably ever finish their PhD, and only 1-3 of them will get a "good" academic job).

Also, I'm very skeptical about your advice about doing it for the money. What every Econ PhD and Econ Prof has told us, is don't do this for the money. If you're in it for the money, you're making a mistake. They claim you should be doing it because you really want to be an academic, and that there's easier ways to make more money. Lastly, they almost always claim that they could have made more money, had they chosen a different career.

Look, I sound much more jaded than I really am. The truth is, academia is a great fit for a lot of people I met in grad school. However, these people are likely completely different than the participants of WSO. These people just like teaching/research, and they don't care about money. Seriously, these people would be happy with $60K-$70K for the rest of their lives. They honestly think that's a lot of money. These people hate regular jobs and working in the private sector.

May 28, 2012
econ:

First, let me say, I'm not trying to be argumentative. What I'm trying to do, is share my experience, so some of you don't make the same mistake I did.

Anthony .:

I think what everyone is missing is

1) The Stability
2) The Perks
3) Outside Earning Potential
4) Work/Life Balance
5) Intangibles of Being a PhD

The thing is, you don't actually get that stability until you're older. During grad school, there's lots of uncertainty. Uncertainty about funding from year-to-year, uncertainty about ever actually finishing the PhD, uncertainty about when you'll finish, what jobs you'll be able to get, etc. Then, once you finally get that academic job, you have to try and get tenure, which means another 5-7 years of uncertainty. If you don't get tenure, then you go to another school, and have another 5-7 years of uncertainty. Sure, if/when you get tenure, you'll have a lot more stability.

The outside earnings potential is probably not as good as you think. Most academics don't do work that anyone in the private sector cares about, making it incredibly difficult to earn good money on the side. Again, you can't really do this stuff until you have tenure anyway.

Also, these people don't have as much work/life balance as you'd think. It's funny too, because academics always say that's why they like their career. But then, these same people tell their grad students that their lives should revolve around research/academics, they need to work harder, come in on weekends, etc. I was amazed at first how many grad students spend Friday/Saturday night at the office. Also, profs are there a lot, on weekends, at night, etc. It's not the cushy life that many people make it out to be IMO.

Midas Mulligan Magoo:

Not going to argue this subject with you as I think you both:

1) have more tangible experience than me

2) are a little jaded about the process

What I want to point out (again) is that once you're done with the initial "torture period" doors open up (naturally, like everything else in life, it's how hard you push, knock, kick, bomb those doors that will determine how far they open). I'm not going to try and school you, all I can say is that out of my circle of acquaintances BY FAR the most paid guys are ECON PHDs. If you're not in it for the $$$ please disregard, but also don't forget that there are more benefits to it than you're seeing right now.

Just a well intentioned suggestion. As a guy who's well aware of his own fleeting mortality, I'd say sitting on a beach netting shrimp is a great career choice if that's what's in your heart. Good luck, either way.

Haha, I won't argue that I'm a little jaded. Also, I'd like to point out again, that I'm not trying to be argumentative, more like share my experiences, so anybody here can avoid my mistakes and have more info to go off.

The thing is, that "torture period" lasts a long time. You have to go through that torture in undergrad, grad school, and the first 5-7 years of being a professor. Best case scenario, you breeze through undergrad and that torture period will still last through grad school and early professor life. In other words, the majority of your 20s and early 30s under a best case scenario (supposedly the prime of our lives). And for what? So you can live in some podunk town, making little money, doing work that gets almost no recognition from your peers nor the public at large. If you do really well as an academic, it's an awesome life, but academia should be the textbook example of a superstar market (600 highly successful/intelligent/hardworking people apply to a school in the 20-40 range, only 30 are admitted, only 20 of them accept the offer, then 5 are kicked out after the first year, of the 15 remaining, only 8-12 of them will probably ever finish their PhD, and only 1-3 of them will get a "good" academic job).

Also, I'm very skeptical about your advice about doing it for the money. What every Econ PhD and Econ Prof has told us, is don't do this for the money. If you're in it for the money, you're making a mistake. They claim you should be doing it because you really want to be an academic, and that there's easier ways to make more money. Lastly, they almost always claim that they could have made more money, had they chosen a different career.

Look, I sound much more jaded than I really am. The truth is, academia is a great fit for a lot of people I met in grad school. However, these people are likely completely different than the participants of WSO. These people just like teaching/research, and they don't care about money. Seriously, these people would be happy with $60K-$70K for the rest of their lives. They honestly think that's a lot of money. These people hate regular jobs and working in the private sector.

This is a phenomenally well thought out reply, thanks for taking the time to write it. Clicks well with what I've heard from both my parents as well as friends currently pursuing the route. It's a very different mentality.

Oct 12, 2010

Just to correct a few false points.

  1. "7-8 years is a really long time to finish a ph.d....I can't think of a school that allow this." and the agreement. I'm just going to assume that your don't know any grad students. This information is readily available. Take a look at the Duke or Yale grad websites. Median is something like 8.5 years in the US. Shorter in Europe, but Oxbridge are considered backup schools to people who couldn't make it into a state school PhD program.
  2. Econ: sorry to hear about that. You are correct. It is competitive. The acceptance ratio at my program was 2.8% and more than half of the students came from good schools, had 3.9's and relatively high GRE scores. And for people from targets and 2200+ GRE scores, the acceptance ratio was around 20-30%.
  3. Midas: You are very incorrect as schools have limited applicants spots in the last 10 years due to increased funding and less tenure-track jobs at good schools. The second and third tier PhD programs have picked up the slack with less promising students. This is absolutely not the case as top 5 programs. They are harder to get into now than it was 10 years ago.
  4. Anthony: Just start your own business. There's no cachet with a PhD. Everyone has one these days and 90% of them are from crap programs that dilute the efforts of a good program. It's like making it into GS and getting likened to cousin Ned whose a bank teller in the local supermarket. It's a little annoying in fact.
  5. Funding is usually not a worry if you are at a top 5/10 program. The fellowships are guaranteed or you get tossed. It sounds like you went to a big state school based on the numbers, where, I'd imagine things are a bit more cut throat between the students. That can be wearisome, I'd imagine.

I rich, smarts, and totally in debt.

May 30, 2012
MrDouche:
  1. Econ: sorry to hear about that. You are correct. It is competitive. The acceptance ratio at my program was 2.8% and more than half of the students came from good schools, had 3.9's and relatively high GRE scores. And for people from targets and 2200+ GRE scores, the acceptance ratio was around 20-30%.

I'm sure this was just a typo, but 2200+ GREs?
The analytical section is out of 6.

May 28, 2012
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May 31, 2012
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I rich, smarts, and totally in debt.