What kind of positions need PhD?

[ChengG]

I heard from many people that there are many quantitative positions prefer very much a PhD degree to a master's degree or bachelor's degree. Is that true? If yes, then what makes a PhD more valuable?

Any answer is appreciated and answers from people with experiences in industry are extremely welcomed.

 

[WilliamY]

Welcome to QuantNetwork, szguocheng!

Please correct me if I misread your question but I think you want to know the value of a PhD degree in a "quantitative position". Because I'm sure you will agree that PhD>MS>BS. Or else we can engage in "education arbitrage".

Just look at the leaders of governments and corporations. (Oh, wait a second. What the ... )

In all seriousness, my short response to your question is: What do you want? What's your career objective? If you can share that with us, some of the members might be able to shed some light with respect to your personal circumstance.

Many experienced professionals and PhDs have addressed your question on this forum. You can simply search for it in the "search" field above. Up there (\nearrow)

Good luck and enjoy the readings and exploration!

 

[ChengG]

I just thought PhD and MS/MFE were not quite comparable. I am still an undergrad now so I don't know much about Master's study or doctoral study. But I heard that PhD is more research oriented and MS/MFE is more about professional education. Since in practice, those advanced math or some elegant finance or economic theories are not really used to make money, which are sort of what PhD's do, then maybe a MFE/MS is even more popular in the job market...

As for me, I am pretty interested in doing research. But I am still not sure about what to do after graduation. I just think if PhD is also more welcomed in a job market, then a PhD should be my choice.

Well, thanks for your reply WilliamY and I will try to find those post on this topic in this forum. This is really a fantastic forum.

Btw, my question is actually: What kind of positions need a PhD... Sorry for the typo

 

[IlyaKEightSix]

I just thought PhD and MS/MFE were not quite comparable. I am still an undergrad now so I don't know much about Master's study or doctoral study. But I heard that PhD is more research oriented and MS/MFE is more about professional education. Since in practice, those advanced math or some elegant finance or economic theories are not really used to make money, which are sort of what PhD's do, then maybe a MFE/MS is even more popular in the job market...

As for me, I am pretty interested in doing research. But I am still not sure about what to do after graduation. I just think if PhD is also more welcomed in a job market, then a PhD should be my choice.

Well, thanks for your reply WilliamY and I will try to find those post on this topic in this forum. This is really a fantastic forum.

Btw, my question is actually: What kind of positions need a PhD... Sorry for the typo

PhDs don't make money?

You've heard of D.E. Shaw, yes? Google also, yes?

Speaking from personal experience, most MFE programs don't teach you to make money, either.

(Then again, as I just blogged, and Sylvain Raines much better articulated, most MFE programs suck.)

 

[Connor]

A PhD is at least viewed as more valuable for some quant roles because you are trying to research and come up with new prices models for example. So the research experience gained getting a PhD is useful in the process.

But most PhD programs are geared towards preparing the students for academic research jobs (i.e. don't tell them you want a job in private sector).

Whether a PhD is ultimately more useful over a Masters is still being worked out in my opinion. MFE programs are now becoming more mainstream, but many quant jobs are advertised asking for PhDs.

 

[WilliamY]

Hello ChengG (szguocheng),

Since you don't know what you want to do, you want to do a PhD? Don't just settle for what the job market want from you or simply accept the popular consensus.

You are still young (g, I feel old saying that), so go out there and discover your interest. My best advice for you is to find something you enjoy studying/learning in this world before you get too old and weak. College is the perfect time for that.

A PhD should not be thrown around lightly. It's not a walk in the park. You should also discuss it with your advisors/professors.

 

[ChengG]

Hi IlyaKEightSix,

I am not saying PhD don't make money. Apparently they do. Talking about those very advanced mathematics or theories based on many assumptions that PhD studies, and that are not likely to be satisfied in reality, is this knowledge really the reason that firms like PhD? For example, CDO pricing use copula based on very unrealistic assumptions about correlation among people and because of the recent lesson that CDO taught the financial world, I guess companies won't trust the mathematics behind those complicated financial instruments as much as they did.

I think many MFE programs aim at a professional preparation for a career in financial industry, and making money is pretty much what those companies in financial industry, be it IB, commercial banks, hedge funds or insurance company etc., do. So, if MFE programs don't teach the techniques and skills of making money, then what is the value of those popular MFE programs? Is it networking or something else?

---------- Post added at 08:00 PM ---------- Previous post was at 07:03 PM ----------

Thanks for your advice WilliamY

Actually I have been talking to professors about this issue but seems not many professors really know much about the real financial industry.

I'd like to believe math and statistics are my strengths. I have also taken some courses about mean-variance portfolio theory, CAPM model and Black-Scholes model. Since math and statistics is heavily used in finance and there is still much research to be done about finance, doing research in finance sounds very exciting to me. But I am still not absolutely sure if academia is the right career for me. So I think if PhD is also popular in the job market, then PhD seems not a bad choice, since I can figure out if doing research is really fun in a PhD program.

---------- Post added at 08:05 PM ---------- Previous post was at 08:00 PM ----------

Thanks for your response Connor :D I think that's pretty objective.

 

[WilliamY]

ChengG,

If you are not sure, then PhD is not for you.

Just to name a few, PhDs, by definition, are trained professionals who have a proven record of reading and understanding highly technical papers and journals, conducting independent research, and coming up with and implementing new ideas. These skills take about 5 years (5000+ hours) to acquire. In the world of finance, you have to keep yourself relevant and constantly develop new strategies.

There are also plenty of discussions on this forum about this line of work. If you are interested in the salary, you could be in for a surprise. (e.g. Investment Banker Salaries Vs. McDonald’s: Hourly Pay)

You are asking the wrong questions.

You should ask yourself why you want a degree in _ _ _? What do you want? Be concerned with your own objective, not your neighbors. Focus on getting better and improving yourself, not cutting corners. If you are committed to invest 5000+ hours in anything in this world, I'm sure you'll be an expert at whatever you choose to do. When the opportunity comes, you'll be ready.

Read. and Ask the right questions.

 

[ChengG]

WilliamY, I really appreciate that you are trying to help. And I will think about your advices seriously. I tried to find other posts on this topic and I used 'PhD' as keyword but I couldn't find any matched result, not even this thread. So, could you please tell me what keyword I should use to locate those relevant posts? Thx

Still, I am looking forward to any objective comment on the popularity of PhD's in job market and the reasons that PhD's are popular or the reasons they are not, which I really want to know. I hope this time I make my question clear.

(Btw, if the manager of this forum can see this post, can you help me to change the title of this thread to 'What kind of positions need PhDs'? Or can anyone tell me how I can do that myself? Thanks a lot!)

 

[WilliamY]

WilliamY, I really appreciate that you are trying to help. And I will think about your advices seriously. I tried to find other posts on this topic and I used 'PhD' as keyword but I couldn't find any matched result, not even this thread. So, could me please tell me what keyword should I use to locate those relevant posts? Thx

Still, I am looking forward to any objective comment on the popularity of PhD's in job market and the reasons that PhD's are popular or the reasons they are not, which I really want to know. I hope this time I make my question clear.

(Btw, if the manager of this forum can see this post, can you help me to change the title of this thread to 'What kind of positions need PhDs'? Or can anyone tell me how I can do that myself? Thanks a lot!)

Your question is nonsensical. From one of the forum sponsors: QuantFinanceJobs.com

Is it "popular"? It seems like it. Why?

... reading and understanding highly technical papers and journals, conducting independent research, and coming up with and implementing new ideas.

Cool. I guess I got my point across again.





NOT!

 

[ChengG]

WilliamY, I don't think a question asking for a fact is nonsensical at all. It's like asking if MacPro is more popular over PC and why.

And you did get your point across again. I got your point already. Thanks, but I never asked anybody to answer my question twice.

 

[Connor]

From my point of view, if I work in HR at a hedge fund and have to choose between two candidates for a quant job, and all else being equal one has a PhD and the other doesn't I would go with the PhD. Society has a perceived value of PhDs.

ChengG, based on various threads here on the topic of PhDs, I don't think anyone here is going to tell you to flat-out get a PhD because it will increase your marketability for a job. Getting a PhD is a big decision, and many people aren't going to go that extra mile if they don't have. And just because you get a PhD doesn't mean that you will be able to get a quant job.

There are a number of PhDs (CS, Physics, Eng, etc) in the quant world right now because many of them moved from academia or other jobs into finance because it pays better. Whether a PhD is actually required for the jobs they do is a question open to debate, many people on this forum would answer no and this explains why they are pursing MFEs.

I understand your question and your frustration, but I don't think you will find the exact answer you are looking for.

 

[ChengG]

Thank you @Andy ! I have already gone through some of those threads. They helped. And btw, in that ranking of MFE programs, seems University of Waterloo's MQF is not there. But many people are saying MQF is better then UofT's MMF. Are there any particular reasons that MQF is not included?




Thank you for your reply @Connor

I agree that to get a quant job, PhD is not necessary. Sometimes a PhD maybe is more skilled then needed or possess skills not useful for a quant job. In other words, some jobs don't really need a PhD. It's just that when PhDs are also competing for these jobs. Seems there is no disadvantage of these PhDs. But a MFE/MS maybe can also do those jobs equally well, if not better, since they are trained for them although they may not know much about research.

At the same time, as you have mentioned, maybe some jobs advertise particularly for PhDs, like those jobs involving modeling or developing new strategies. So maybe these jobs, only PhDs can do. I hope I understand you correctly.

Then I am curious that how many such PhD jobs are out there and how important these jobs are. Because from what I read and heard, by the lessons from the recent crisis, companies tend to avoid those complicated financial instruments and so there maybe less jobs for PhDs to perform their abilities. I wonder if this is true.

 

[alain]

From my point of view, if I work in HR at a hedge fund and have to choose between two candidates for a quant job, and all else being equal one has a PhD and the other doesn't I would go with the PhD. Society has a perceived value of PhDs.

That doesn't make any sense. If you have a person with PhD and a person without one and both of them are equal, I pick the one who doesn't have the PhD. Why? Because the PhD guy either blows or the one without the PhD is a star. Think again about what you are saying.

Also, the one without the PhD will probably be cheaper as well.

BTW, society can think whatever they want. They are not going to make me any money.

 

[Connor]

Good point alain, I missed the part of cost/salary and didn't clarify what I meant by all else being equal. A bad choice of words on my part.