Business School / Masters career question

So, I graduated from a target school and have since worked in a CMBS / Real Estate Finance group at a BB for a couple of years before transferring to a research / strategy role in Structured Credit / Swaptions at the same bank as an associate. The new role isn't permanent so I'm looking for options (no pun intended). While I have thorough interest in real estate / CMBS & fixed income, I'm also quite fond of quantitative finance (barring option pricing and stoch calc). So target roles on the buyside would be fixed income / real estate / cmbs analyst, or quant trader / asset allocation (if I choose the quant fin route).

Given my career aspirations, I have the following choices:

a) MBA - Would only go if I get into a top 7-8 school, all else seems to be a massive waste. This hopefully would open roles on the buyside in Fixed Income / Real Estate / CMBS

b) Masters in Statistics - I have a decent statistics / programming background and hoping that this opens roles in both fixed income and quant fin. However, from what I've seen going to the buyside from a Masters' program seems difficult, even if you have 3-4 years of experience. Most roles seem to be analyst roles at banks - which kinda defeats the purpose.

c) Continue looking for jobs without a higher degree

I would have 4 years of exp before I enroll in either of the programs. My core question is whether it's worth going to a top MBA program with my background (if I get it), and would it open better opps, especially cos I don't have a real estate investment banking background (it was capital markets). Would be great if anyone of here could share their insight if they've faced a similar quandry, or know someone who did.

Thanks very much in advance!

 
Best Response

Interesting that you'd go for an MS in Stats rather than an MS in ORFE or MFE.

Are you in the US? UK?

Coming from the front office, you'd have at least 20% odds at Princeton and probably 40-50% at Cornell, Columbia, CMU, and NYU.

For an MBA I think you'd be a strong candidate at the lower M7 schools at a minimum.

What you need to do right now is find an interesting hobby where you can cite tangible accomplishments. Something that most people would spend 10-15 minutes asking you about at a dinner party. Like skydiving. Or running marathons. Something a stereotypical quant wouldnt do. It seems like your career is going well, but you just want to make sure your résumé has some cool factor to it. This will increase your odds at a HBS, Stanford, Chicago, or Princeton MFin admit, whether you decide to go for an MBA or something more quant related.

Going to the buy side- at least to a hedge fund- is not that difficult from a quant background. I'm also not sure who told you that. Princeton places a little more than half of its graduates at quant hedge funds. NYU, CMU, and Columbia probably about the same. Prior FO quant work on the sell side increases your odds.

 

Thanks much Illini. I'm in the US. The reason I'm choosing a masters in statistics is that I've been doing a PT / online program at a top school in Stats, so a quarter of my program would be complete before I even get there (if I get in, that is). Also, I'm not really interested in option pricing per se which is a huge focus of MFE programs. I like time series analysis and machine learning. Also, my math background isn't exactly spectacular, so I don't think I'd do well in stochastic calc based courses. Just a couple of follow ups for you:

a) Do you think either an MBA or Masters make sense for a shot at a structured credit / CMBS / real estate hedge fund? I realize it's a gamble in a way, but my worst nightmare is coming back to the sell side after b-school. Alternatively, I can just keep looking and networking for those jobs while continuing here on the sell side.

b) I'm more of a sit-down, think deep about a problem consider, all aspects kinda guy rather than quick on the spot thinking / seeing trends types. I've visited a couple of desks on the credit side and they're definitely less flowy than what you'd see in FX / Equities, but it's still a lot of relying on your instinct it seems. Any advice if a trading career is a strict no-no for people with my personality type?

 
a) Do you think either an MBA or Masters make sense for a shot at a structured credit / CMBS / real estate hedge fund? I realize it's a gamble in a way, but my worst nightmare is coming back to the sell side after b-school. Alternatively, I can just keep looking and networking for those jobs while continuing here on the sell side.
On that front, I'm afraid you may know more than I do. At a stat arb fund, I can't imagine a Master's in Stats hurting, but many of the folks I see either have PhDs or MFEs. Also, to be fair, it's easier to move into the PM roles if you have a PhD. Given the higher pay and somewhat reduced stress of being a research quant at a hedge fund relative to being a desk strat at a bank serving 30 equity traders, I am not complaining.

My experience with structured credit is a bit more limited. Before I was a desk strategist, I worked in CDS analytics at Lehman Brothers. I remember a lot of people moving to the buy side, more in analytics-oriented roles, after the crash. A lot of MBS Analytics guys in particular. I think that boom in the buying and analytics build out for hedge funds is mostly over. It's been four or five years, and also while I wouldn't characterize Lehman Analytics as back or middle office, I'm not sure these kinds of buy side roles would be as appealing to a strategist sitting on the trading floor.

To get a better answer for buyside options for a former structured credit strategist, I'd really steer you towards QuantNet.com and Andy Nguyen. I can say that generally a top tier MFE helps a lot with the transition to the buyside (however it is not a guarantee.)

You also have to think about what you want to do going forward. An MBA will box you in by your firm- all else being equal, it's harder to switch firms if you are a manager than if you're a rank and file employee earning the same as a manager. All else being equal, it's better to earn $X as a rank and file employee than to earn $X as a manager, and I would argue someone who could get into an M7 school and can also survive a top ten MFE program can probably earn the same over the long run with either degree and either career.

An MFE/ MS Stats will box you in by your industry and specialized education- it will be easier for you to switch firms but harder for you to switch industries. The story of my Dad's career and my Grandfather's career is that they were managers at firms, new management took over; this hurt their careers at that firm, and they couldn't leave. As an MBA's career progresses, it gets harder for him to switch firms, while that doesn't happen to a quant as his career progresses. He gets most of the manager's gold without the manager's golden handcuffs. That was a big part of my decision in going for an MFE over an MBA. However, with an MFE or MS Stats, you are tied to finance, data science, or specialized consulting, and you are ultimately competing with a bunch of brilliant Asians.

Another good rule to make the MBA vs MS Stats decision with is to make it based on your people skills vs your technical skills. To be fair, if your seat is surrounded by traders, you will think you have great people skills and your technical skills suck; if you are surrounded by salespeople, you have great technical skills and your people skills suck. Fortunately, you had another role before your current one. I looked at the Harvard MBAs I knew and the MFEs I knew, and I had a lot more in common with, and a lot more respect for the MFEs.

Also, an MBA is typically the last academic degree you get. This is not the case at all for an MFE or an MS Stats. An MFE leaves the door open for an MBA; an MBA does not. That said, if you're 26 right now, you'll be 28 when you graduate with an MFE or MS Stats (I recommend a 2-year program because it lets you do an internship). If you go to industry and work for 24 months before getting an MBA, you'd be 32 when you graduate with your MBA. An MFE or MS Stats provides you with more options, but only slightly more.

One last point is that you can pursue multiple options at the same time, and see which lights turn green for you in this game of Manhattan Paths. If you're already in the front office, I would not aim that low for MFE or MS Stats programs. I would aim higher than LSE's stats program, for instance. One of my classmates is now doing an MFE after an LSE Stats MS. He is landing offers that I don't think he could have landed out of LSE. Pehaps you may want to go Harvard or bust. On the MFE front, I would not aim lower than Princeton, CMU, Columbia, or NYU. And on the MBA front, I wouldn't aim lower than the M7.

Remember that you are giving up $120K + 2 years savings for an MFE/MS Stats or $160K + 2 years savings for an MBA. You already have a great job and you can probably find a better job if you've worked there for two years and hit the job market. So if you're going to give all of that up for grad school, aim high.

For me, the calculus on giving up a job as a desk strat for a Princeton MFE worked out. I did undergrad at a Midwestern state school with good but not amazing name recognition. I was in a role where my manager was amazing, could earn double his pay elsewhere, but was stuck on an L1 Visa and could not switch firms, and my pay reflected his pay. Every person I knew with a quantitative graduate degree was someone I looked up to; it wasn't the same case with the MBAs. And Lehman and my next firm had always drilled into my head "selectivity" on who they favor in recruiting, and the MFE programs were more selective than the MBA programs. Finally, I was suffering a little bit of burnout and PTSD from working on the trading floor for three years, working on all of this quantitative code while traders shouted stuff over my head, salespeople interrupted me for help with options strategies (which I was glad to help with), and all of this drama was going on in the background. And then you have to make sure everything works perfectly in the middle of all of this chaos. It is difficult to work on quant stuff if you are always getting interrupted, and it is even more difficult if your work needs to be perfect.

TLDR: it depends on what you want out of your career and what you're good at. You may not even want to go to grad school. Go ask the folks at QuantNet.com about stats programs and how a buyside transition would look like for structured credit.

 
b) I'm more of a sit-down, think deep about a problem consider, all aspects kinda guy rather than quick on the spot thinking / seeing trends types. I've visited a couple of desks on the credit side and they're definitely less flowy than what you'd see in FX / Equities, but it's still a lot of relying on your instinct it seems. Any advice if a trading career is a strict no-no for people with my personality type?

OK, so I'm definitely getting your picture now. Quant burnout. You are surrounded by all of these type A+ trading personalities, and you're a bit more of a type A-/B+. (You can't be a total type B otherwise you would have never made it to the front office.) People want stuff done yesterday, but to do it right, you really need two weeks, and you want to get the whole picture. And instead of doing your work during business hours, you have to do it after the close when things are calmer. You are the lone ENTP or INTP personality surrounded by ESTJs and ENTJs. I get it. Perhaps you are demoralized, too. There's this big culture gap between you and your group. But you are quietly toughing it out.

You're definitely a candidate for grad school. And work on the buyside is calmer. I won't say it's easier, but the deck isn't stacked against a quant with his models and his ideas like it is on the sellside where traders rather than PMs rule.

I don't really want to be steering you too much on the MBA vs. MS Stats decision. I do want to make sure you also keep an open mind about an MFE or ORFE program. A Princeton or MIT MFin might be a really good fit for someone like you in that it would give you a credential probably as elite as an H/S/W MBA and build on your quant background without pigeonholing you as a quant and saving you $50K over an MBA. A Harvard Stats degree might do the same, but I'm less familiar with the stats programs. I think you'd stand a much better than average chance of admission at Princeton, but it's not a guarantee. I think you have as close to a guarantee as there comes of getting into a top 5 MFE/MFin program.

I will say that the buyside is a completely different world for quants than the sellside. You're surrounded by the same brainy personalities who like to think about things. It's more about ideas and less about execution than on the sellside. It is a place where an INTP or ENTP can really thrive.

 

Thanks Ilini, this is probably the most accurate description of myself that I've gotten from someone I don't know (except that I'm INTJ after cross-validating from a bunch of tests). Also very accurate on the prior job, that's exactly how I feel. I was told I was their best analyst ever by the MDs and they preferred working directly with me skipping the associates and VPs. To be honest, I'm still considering just hitting up my old manager and asking them to consider me for an associate position. The only problem with this route is that I would eventually want to work for a buy-side RE debt (loans / CMBS) investing shop and would probably need an MBA for that. It's hard to move from that Capital Markets Group to buy-side real estate debt investing, especially at a top shop like Blackstone, H/2 Capital etc. I had a good look at their alumni and they either have IB backgrounds or MBAs from the M7.

I'm definitely open to an MFE program I'm just not sure if I could get in without significant math. Also, as you said given the fact that I'd be competing with utterly brilliant Asians, I'm not really gun-ho about taking extra math classes to cover ground up - not really motivated to go the extra mile in math / programming for a role that eventually might be secondary to a trader / investor. I feel my value add is not in super efficient C++ code or pricing an exotic option better, but discovering a better hedge to some product I trade, making a CRE loan to a CCC type credit and discovering a novel way to hedge that idiosyncratic risk. I do miss my old group's deal oriented environment. Nothing that I can't live without, but my current role doesn't really get involved in any action except giving advice to hedge funds and asset managers. I realize it's a nice role at BB but I do want to get involved in some form of investing / trading capacity.

Another issue I saw with the MFE programs is best summarized by this: http://www.tepper.cmu.edu/master-in-computational-finance/your-career/r…

Seems to me most people end up getting an analyst job at a BB. And I've noticed this across schools and firms. That's totally not what I'd be aiming for. An analyst who sits next to me had her MBA before a Masters from Stanford. She couldn't even interview for an associate cos her latest degree was a masters. Stuff like this makes me really skeptic of giving up an associate role for a Masters. An MBA seems like a safer option in this sense - you'd at the very least be an associate at a BB.

However, I do have a time bomb ticking on me. I need to find a permanent spot within S&T here before end of August. So your advice at keeping all options open makes most sense. My plan right now is

a) Keep on looking within the firm for a role I like b) Try to get my ideal role at a HF / PE firm while doing this c) Apply to MBA / MS this fall as a hedge if everything fails

The tough part would be accepting a role at my current firm which I'm not 100% sure about and then deciding whether an MBA / MS is worth next fall. But again, considering the mass unemployment and reduced wages across the globe, I'd think this is a good problem to have.

Thanks a ton for your advice - really helped make things clearer. End of the day it's a gamble, no matter how much you calculate the risk / reward profile. Let me know if you had any comments - really appreciate em.

 

Hmm, now I'm very confused. I had always assumed strategist roles required more background in stats or probability and calculus than the average trading or sales role.

For an MFE, you really just need the engineering math sequence. Calculus through Multivariable calc, differential equations, linear algebra, and a calculus-based probability course. It's not that hard. Some people even come in with less, although I'd consider some form of calculus, linear algebra, and probability a fairly strict requirement.

 
IlliniProgrammer:

Hmm, now I'm very confused. I had always assumed strategist roles required more background in stats or probability and calculus than the average trading or sales role.

For an MFE, you really just need the engineering math sequence. Calculus through Multivariable calc, differential equations, linear algebra, and a calculus-based probability course. It's not that hard. Some people even come in with less, although I'd consider some form of calculus, linear algebra, and probability a fairly strict requirement.

Oh, I do have that background and quite a bit more (Advanced econometrics, asset pricing, intro machine learning etc). I'm doing this certificate on the side right now - finishing it in a couple of months actually. http://scpd.stanford.edu/public/category/courseCategoryCertificateProfi…

What I don't have is amazing C++ skills, PDE background etc.And to be honest, at this point I'm not really motivated to learn those when I know there are roles in my current career path (RE debt, CMBS, structured credit) that don't need those skills and can make a ton of money without them.

 
oliver13:

What I don't have is amazing C++ skills, PDE background etc.And to be honest, at this point I'm not really motivated to learn those when I know there are roles in my current career path (RE debt, CMBS, structured credit) that don't need those skills and can make a ton of money without them.

An MFE really isn't about C++ skills. There are people who graduate from Princeton who only know how to code in R (many of them are going into banking and one or two into PE). I was a CS undergrad; I have not touched C++ in four years and have not coded in it since undergrad. CMU's MSCF is a different story. You probably at least want to be very familiar with imperative programming to apply there.

If you're not graduating into a quant developer role, you don't really need to know or learn C++. Instead, an MFE will have you pick up multivariable regressions, copulas and joint distribution analysis, GARCH, a lot of stats, MDPs, tail risk analysis, maybe some stochal. If you have a CS background, maybe another algorithms or distributed computing course. That's what a Princeton MFin gives you; that's what a Columbia or NYU MFE would probably give you too.

But you may already have much of this. So the decision would then be ORFE, Finance, Econ, or Stats PhD vs MBA. I don't think an MS Stats would help you more for finance than an MFE would.

Given what I am seeing, I think (I am not sure) you'd be competitive for HSWB for an MBA. If you go the some-sort-of-master's route, maybe you apply to HSWB, you apply for a Princeton MFin, Columbia MFE, maybe NYU, and to a few top tier stats programs. You will probably get in somewhere, although it's not a guarantee.

I do think that if you stay in industry, you need at least a month off between firms. This month should involve more exercise and less drinking and a lot of fresh air. You may want to spend some time away from NYC, or you may want to pick up a fun outdoor hobby (see sig). All of this time, you have probably been incredibly focused on your job at the expense of everything else in your life, and quite frankly you probably deserve a break. You may also have an inner critic that you want to silence and anxieties to get rid of, and a month off would go a long way on that front.

 
That makes sense. It might be wrong to club Princeton's MFE with CMU's. But the only reason I'm skeptic of those programs is the % of graduates placed as analysts as opposed to advanced roles. Three out of five of my co-workers have MFE/ORFE/MEng s from Stanford, Princeton and Cornell. Now while I'd have a hard time getting into any of those, I not 100% sure if those programs would take me there. Take for example NYU's program:
Idunno. I left as an Associate (actually the firm I worked for had a weird ranking system and my title implied senior associate/junior vp) at a decent BB, at least for sales/trading. I got hired as a QR guy at a hedge fund. They could have called me "R Script Janitor", "Stats Backoffice", or "Quant Administrative Assistant"; the title didn't matter to me. I like the work, I like the people, I get to do more with the markets and ideas, I have more of an impact on the business, and the pay is better.

You will hear a lot of similar stories from people at Princeton. Most people who were experienced admits are getting hired into better roles with more pay at better firms. It's not a guarantee.

There tend to be a lot of reasons that stack up to an MFE matriculation decision for an experienced person at a top tier school. Often, there is some burnout at work. Often, they have an excellent, technical undergrad without a lot of name recognition within finance or in the US. If you are a Harvard undergrad, there's less value in a Princeton MFin at least on branding and networks than if you are from UIUC or Georgia Tech. Often, they want to stay in finance, and they grudgingly admit that there is more to branding and being part of the club than they have been telling themselves for the past X years.

To answer your question, if you were an Associate before at an elite boutique or BB (I am not quite as certain about other firms), and you have a master's degree, recruiters will definitely have you apply for Associate roles. That was my experience recruiting. It didn't become an issue for me, though, because I wound up at a hedge fund. A lot of experienced sell-side guys who left the front office wind up at hedge funds out of an MFE program.

There are some caveats to Princeton for on-campus recruiting. It is a bit off the beaten path for associate recruiting. But the second they hear "I was an associate", the Recruiters have you apply for the associate roles.

 

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