Macquarie University Applied Finance Centre - Student Review - Masters of Applied Finance

I've seen a few posts on MSF/MFin degrees and the like, and thought someone might find this useful...

ABOUT ME

I am from a non-banking/non-finance background with a liberal arts undergrad from small, fairly selective mid-Atlantic/Southern college in the U.S. I currently work in sales a climate technology/clean-tech business, so I have had to teach myself how to 1) manage a profit center (basic management accounting) and 2) build fairly complex financial models to support the sale of capital business cases to key clients—including cash flow modelling, DCF analysis, some real option analysis etc. I also have experience working through regression analysis as part of the M&V process for energy efficiency projects-- all self-taught so I am sure there are some holes in my skill-set. In any case what I have learned has been invaluable from a sales perspective.

I completed two semesters at Hopkins Carey School of Business in their MS Finance program (part-time) where I made it through only three classes (due to work travel) before taking a transfer to Australia for work, where I re-started a degree in Applied Finance at Macquarie University (MAFC). The Admissions Director at Macquarie reviewed my CV and wanted to know why I was taking finance (I am interested in working in Corporate Development down the road). Ultimately, however, I don't think Macquarie wanted to turn down international fee-paying students (tuition is 2x for international vs. Australian students).

I was a part-time student in the Melbourne Centre, which only offers a block format (which is the only thing that would fit my schedule in any case).

PROGRAM REVIEW

THE PROS

The Faculty
The program is taught by practitioners or ex-practitioners, many of whom also hold advanced degrees and have published in the academic world. Generally, I found the faculty to be a highlight of the program. They were able to provide sound theoretical/academic perspective coupled with insight form their practical experience. They all had a good number of “war stories” as well, which kept the course engaging while also pointing out the practical applications of the course material. Of particular note I enjoyed Stephane Chatonsky (Private Equity), Tony Carlton (corporate finance), Bernd Luedeke (Financial Risk Management) and Rob Trevor (Financial Instruments). My grades in these courses ranged from a 50 (Pass) to a 75 (Distinction). More on grading below…

The Material
Supplementary material was interesting and well-selected. Text books for Core courses were comparable to the US courses I’ve seen (Investments by BKM, Derivatives Markets by McDonald).
The range of electives is excellent.

THE CONS
Grading Transparency
A particular note to Americans- in several respects the program is less transparent than you will be used to. This is particularly true of grading and attempts to review grading with instructors. The grading process is obscure and the overall philosophy is very different to U.S. undergraduate and graduate programs. As the program progressed a key difference (in my opinion) that I was able to work out was that on assignment and individual exams you are “marked up”, rather than “marked down”.

In other words the implicit feel is that you start with a 49% (Fail) and you slowly work your way up to a better grade, and each point becomes exponentially harder to earn. There is no formal curve at MAFC, but the grades seem to fall into a normal probability distribution none-the-less, with the mean somewhere around 57-63%. I would contrast this to my experience in the US, where the implicit feel is that you start with 100%, and as you miss key answers or insights, you lose points, with each point getting progressively harder to lose. In a US context this typically left me somewhere between 85-90% in a graduate school setting.

Additionally, final course grades are done by committee and are not a mathematical function of your individual assignment or exam grades. As stated previously, there is no formal curve. Neither is there is any discernible grade inflation (beyond the occasional courtesy “pass” at a 50). Whereas you might expect As and Bs in a U.S. program, be ready for Passes and Credits at MAFC. Grading opportunities are also very concentrated. In electives you get one case study and one final. In Cores you get 1-2 case studies, a mid-term and a final. So you can’t afford to screw up even once and expect a good grade. As a rule of thumb my course grades were 25-30 percentage points lower at MAFC than JHU. From a GPA perspective I carried a 3.71 at Hopkins, and a 2.65 at MAFC.

More importantly from an educational perspective, you should also note that you will not receive a final exam grade and (more importantly) you will not get your final exams back or see how the exams have been graded. If you ask to see your exam this requires an appeal to the Academic Director and if granted the review can only be done in person, at a MAFC Centre, under supervision. I found this totally bizarre and a major program drawback for two reasons:

1) Learning. Grades and certification aside, the primary objective of any masters program should be to teach. As a rule, I’ve found it much easier (and I believe more important) to learn from failure than success. I dislike failing/getting a question wrong and it leaves an impression on me. If exams are not made available to students this learning process is short-changed. It’s important to be able to review exam questions, study the ones you got wrong, and learn from this process. This is taken for granted in a US context. It is not common in Australia. In my case, the value of this learning process was evidenced by the change between my mid-term results and final results in the Core courses (only the Cores have mid-terms and these are handed back). I have on several occasions done poorly on a mid-term, learned from the results and gone on to score well on final exams (as best I can tell based on my final course grade and my perception of the final).

2) Error Checking. I also found grading errors on 3 of my 5 midterms (2 small, 1 significant) over the course of the program, which leads me to believe these same errors are likely occurring on the final exams as well. There are dozens of exams for each instructor to grade each semester and mistakes happen. Without getting the exam back, there is no way to double-check the grading process.
In my opinion the inability to assess marked exams is a significant program weakness from a pedagogical perspective.

OTHER STATS

Attrition/Retention-
The program attrition rate is not published anywhere, though anecdotally it looks like there are more than a few drop-outs. Faces that are in the Core courses don’t always re-appear in the Electives. As I mentioned, there is very little/no grade inflation in the program, so it is entirely possible to fail the Cores and the faint of heart may not feel inclined for a second go-around, especially if work won't pay for repeated subjects.

Students-
Most are from the Big Banks in Australia, namely NAB, ANZ, Commonwealth and Westpac. They all seemed to be having basically the same working experience. There were a few from smaller funds/advisory and few from IB operations, Big 4 accounting firms and a few from government. I met no one from general industry/industrial/corporate etc. I was fairly alone in that respect.

The Block Format-
This is a pro and a con. It made the program accessible to me from a scheduling perspective, but is not conducive to learning truly new material. Repetition is a key part of learning for most people, myself included. Block formats don’t provide that possibility- you need to be a motivated self-starter capable of getting your head around new material with minimal face-to-face instruction. I occasionally struggled with this, especially early on.

PROGRAM HIGHLIGHTS
corporate finance – this course was well taught and very interesting, but completely overwhelming. This was my lowest grade of the program; principally because much of the material was new to me and there was far too much of it to learn on my own in the timeframe demanded (at this point, two years later, I would love to take this course again simply to show the instructor I’m not as poor student as he might think). The course notes are easily 2x as thick as the next closest course, coupled with a full text book and extensive (dozens of pages) of additional reading on electronic reserve. I ended up on my own for both portions of the “group” case study and did not do well- solely because the material was new and demanded a solid grasp of financial accounting, which I did not have at the time (I undertook a similar case study two years later in Resource Investment Analysis and found it quite straightforward). All the material was fair game for the exam. I believe this course should be split into two parts, so it gives the students without a corporate finance or accounting background a better chance to master the concepts in manageable segments.

Financial Instruments (FI) – great course covering the basics of futures, forwards, options, swaps, stocks and bonds as investment instruments and portfolio components. Primary focus is on replicating pay-offs using various instruments and understanding risk/reward creation using a replicating portfolio. Rob Trevor is very sharp instructor with a good sense of humor. I should have taken this course much earlier. I can’t recall why I didn’t, probably a scheduling conflict.

Financial Risk Management (FRM) – my favorite course without a doubt was also the last and most quantitatively challenging. I wish I’d taken it sooner. The course is a natural and immediate extension of Financial Instruments (FI) and builds on the concepts and tools from that course. Bernd Luedeke instructed my class. He was quirky and a bit off-beat, and a great teacher who took what could have been a very dry, quantitative subject and effectively mixed an analytical/quantitative perspective with philosophical and behavioral perspectives of risk management. The quants in the class had a mixed view of this approach, but I found it both instructive and very interesting. This was my highest grade of the program.

SUMMARY& RECOMMENDATIONS
The program has a high level of assumed knowledge and coming from a non-financial background I found it very difficult (as a part-time student) to learn the material quickly and independently enough to excel. That said, I was not a particularly disciplined student. My work demands during this period were very high (I was responsible for managing a team that was launching a new business unit in Australia and I traveled frequently for work), and school took an intentional back seat to work. So I did not do the course-recommended study or homework program, which called for 4 hours of study outside of class for every 1 hour in class.

The only course that actually scared me into making time to do the recommended homework was FRM (derivatives!), and I scored a Distinction in this course. So I could have likely done better in the program overall had I dedicated more time to the outcome (though isn’t that true with everything in life).

ADVICE

DO THE CORES FIRST
My work schedule had me weaving through the course in a bizarre fashion, and I ended up taking three Cores my last two semesters. I would not recommend this. Financial Instruments and Financial Risk Management were truly foundation courses that I could have used to underpin my learning and performance in nearly every elective (the whole concept of the “replicating portfolio” changes the way you think about risk and finance and opened new conceptual doors for me). Unfortunately, I took both courses at the tail end of the program.

BE AGGRESSIVE, EXTROVERTED AND FRIENDLY WHEN GIVEN THE CHANCE FOR GROUP WORK
I am naturally introverted. I did not end up going out of my way to find a group in CorpFi and this was stupid and costly. There are a lot of interesting and friendly people in the program, and a lot of bankers and accountants. I could have made some new friends, developed a better network, gotten a better grade, and learned more if I’d joined a group.

PUT IN THE TIME – CLASS PREP
You get about 20 hours of face time with your instructor in a single block during an elective week (double that in a Core). It’s like drinking from a fire hose, particularly if the material is new to you. The best thing you can do is review the notes before class, make a list of questions, ask them in class when you cover that portion of the notes, then continue to study after class is over (using the online forum for any questions). If you just show up to class with your unstudied notes and try to learn on the fly, you will probably struggle, simply because in a block program you don’t have the benefit of weekly repetition. You have a single block of time with your instructor. The rest is up to you.

CONCLUSION
I found the program extremely useful and the teaching up-to-date and highly practical. It is not really a great option for someone with my background, since there is virtually no ramp-up. Your assumed knowledge is a BS Finance. That said, based on my experience it is manageable with some effort, though you will struggle from time to time.

I plan on continuing with a few post-Masters courses at the alumni rate (50% off). I am specifically looking forward to Project Analysis and Evaluation, which drills heavily into capital project valuation, EMV, real options (B-S and lattice) etc. and is particularly relevant for me. I would have taken it earlier, but couldn't fit it into my program schedule.