First Financial Coach

Article by Kavita Singh

If you have looked into pursuing an MSc in Finance, you may have come across other degrees that sound similar such as a Masters in Mathematics of Finance, a Masters of Financial Engineering or a Masters in Computational Finance. Several aspects of these courses overlap. So what’s the difference?

The MSc in Finance is intended to prepare students for a wide range of careers both inside and outside the financial industry. It aims to produce finance generalists, whereas these other programs aim to train “quants” – namely specialists in derivatives, fixed income, alternative financial instruments and risk analysis.

Many MSc in Finance programs have no work requirement at all and enabling younger students to apply for MS programs. However, as this is not true for all programs – London Business School and Cambridge University requires that MS applicants have relevant work experience in the finance industry – make sure you understand the requirements in advance.

Some people are confused as to whether they should pursue a MSc in Finance or an MBA with a specialization in Finance. Both degrees can lead you to positions in investment banking and corporate finance. MBA programs have a broader management focus with an emphasis on leadership, while an MS degree enhances your knowledge and skills in specific area which then, which in turn enhances your career and job potential in that specific area. Talk to people in the industry to understand the difference in these job functions, to help you assess what career path you want to pursue. And start planning early in college, so that you have time to explore which career and degree most suited for you. The MSc is generally a 1 year degree and so it is approximately half the cost – a significant advantage.

Even if you decide to pursue a more ‘quant’ degree, you could still end up with a more generalist finance career. Amit Sanghani, who holds a Masters in Mathematics of Finance from Columbia University, says he leveraged the program as a “springboard to get into the finance industry”, joining Bank of America after graduating to work in structured finance. However, if you do want a ‘quant’ job, then an MSc in Finance will not get you there. If you have a computer science background, are strong in mathematics and are interested in finance, a more ‘quant’ based career may well be right for you. If the rest of this article makes your head spin or puts you to sleep, a career as a quant is probably not the right one for you.

So what exactly is a Quantitative Finance’? It is broadly about the Mathematical aspects of Finance. It is a study of the mathematical theories that are used to price and structure the various sophisticated financial instruments used by banks and hedge funds. Although the original ‘quants’ were concerned with risk management and derivatives pricing, the meaning of the term has expanded over time to include those individuals involved in almost any application of mathematics in finance for example statistical arbitrage, algorithmic trading, and electronic market making.

An advanced degree is necessary for most entry level positions in this field. After a Masters in Quantitative Finance you could pursue a career in the following areas:

* A front office or desk ‘quant’ interacts with traders directly, and give trading books an edge through different methods such as time-series analysis, and discovery of predictors/indicators. The objective is to determine prices, manage risk, and identify profitable opportunities. * An algorithmic traders or structure in the Sales and Trading divisions of banks. As an algorithmic trader you would develop trading strategies that exploit the inefficiencies in the market to create wealth. While an algorithmic structurer typically builds the computational tools to model these trades. * In portfolio analytics and risk management you would design the mathematical tools to construct optimal portfolios and manage their risks. Risk management has grown in importance in recent years, as the credit crisis exposed holes in the mechanisms used to ensure that positions were correctly hedged * A quantitative developer. You would develop robust and scalable implementations for the quantitative models that are created by the research guys. * A model validation quant independently implements pricing models in order to check that models are correct.

If you want to get into developing new quantitative models, then you will need a PHD to break in.

And the best Universities to study at if you want a career as a ‘quant’? Having looked at employer surveys, blogs and forums the consensus seems to be the following (not listed in any particular order): University of California Berkley, New York University, Stanford University, Carnegie Mellon University, Columbia University, Cornell, University of Chicago, Princeton and University of Michigan. While the degrees are slightly different at each university, ‘quant’ programs typically run one to two years long, are heavily focused on math and have a programming element. Students usually enter these programs either right out of college or after a year or two in the workplace.

Article by ISBF Education

There are many things which come together to make for a successful business enterprise. These things are conveniently divided into four key managerial segments or functional areas of business including the production, marketing, human resource development and finance. All of these must be well geared in order for the business to work efficiently, without any problems. Finance is one factor which directly affects all the other functional areas of business. Therefore, the importance of well managed finances is quite clear. For this reason, the Masters in Finance is a much sought after degree.

It is not just for the management of the organizations that the knowledge of finance is desirable. It is also helpful in the setting up and running of own business enterprises. You come to know about the various sources of raising the finances. You also come to know about the cost of financing and how to cover the various risks associated with it. Further, the Masters in Finance degree ingrains you with the decision making capabilities on the management of finances. Therefore, one of the reasons for this degree to be much sought after is that it strengthens the knowledge base of candidates in one of the key functions of management.

For the candidates who are looking for jobs, this provides the opportunity to get one of the best paid jobs in the market for the deserving candidates. And, there is no limit to the number of opportunities in the different segments of finance which can avail of it. You can opt to move into insurance, treasury and FOREX management, merchant banking and many other fields of finance. These opportunities are not limited to the domestic sector but also exist for the foreign MNCs as well. If you take up internationally renowned courses in finance like the Chartered Financial Analyst (CFA) course, then the opportunities for seeking the jobs abroad are available in good numbers. The CFA course is provided by select institutes and this provides opportunity to the people to get enrolled in a world renowned finance course.

There shall not be any confusion between the MBA degree with specialisation in finance and Masters in Finance degree. The latter deals solely with finance. It does not with the other functions of business, right from the beginning of the full time course. These degrees are offered by institutes which provide education only in one field, i.e. Finance and not in the other functions of business. This degree could be offered by separate institutes dealing in only one field or the colleges along with the other masters-level courses.

Therefore, it is quite a confusing option for the institutes to determine which are the institutes where admission shall be sought? This choice has to be from the specialised institutes or the regular ones. They might even have to select the different mode of instruction that they might like to go for. Besides class room teaching, finance can also be learnt using the distance education programs as well as online tutorials.