Full ride at a low rank program versus full pay at a top program

[am8]

I have two choices for masters programs: American University ( would cost me 10k over 2 years) versus columbia, GWU, UVA, and BU. The latter schools have offered no funding.

What is the smarter choice if I wanted to continue pursuing a PHD? What's the smartest choice for job outlook after graduation? My gut feeling is that the actual knowledge I would acquire would be marginally different, but there is a price to pay for a name brand such as columbia. I would ideally want to work in a hedge fund as a quant in the future.

 

Any advice would be appreciated!

[GoPackGo89]

I would think your chances of being hired as a quant will come from the training you receive during your PhD and where you got your masters won't matter much after you have your PhD but I could be way off. Columbia's masters churns out like 400 graduates a year so don't get too attached to the name

[bayessays]

As pack says, Columbia's program isn't that great, so save the money. American's program looks pretty flexible and it'll matter where you got your PhD, not master's, if you go that route - and from the looks of it, American's program would probably leave you on better shape for the PhD (thesis option, flexible coursework).  If you leave with just a master's, having Columbia's name might help for some jobs as there will always be people who are impressed by Ivy names, but most good companies won't care.

[FinStat]

Sorry, but if you want to be a quant working hedge funds, a PhD is not the way to go. Yes some PhD's do end up going that route, but you would be better off doing a MFE/MQF/MMF at a top tier program than doing a stats masters now and a PhD later. A stats MS plus a PhD will take you 6-8 years to complete and if you are lucky you will receive 35k per year in funding while doing the PhD. A MFE or similar degree will take about 1.5 years,  and a quant finance masters from a top 10 or even top 20 masters (check out quantnet's rankings) will start at about 90-110k plus bonus and at five years out of the masters -roughly the same time you would be completing the PhD- it is not uncommon for salary plus bonus to be in 250k+ range, and 500k+ is not unheard of. The salary for a fresh PhD in stats working in quant finance is usually less than that. On top of that, the stat PhD programs with significant quant finance faculty are very good at sniffing out the students who are not interested in the PhD for a research career and just want it to become a quant. 

A number of quant finance masters programs are still before their deadlines for fall admissions and you could still apply, though the deadline for a number of them is March 15. 

Edited March 14, 2018 by FinStat

[statscan9]

22 hours ago, FinStat said:

Sorry, but if you want to be a quant working hedge funds, a PhD is not the way to go. Yes some PhD's do end up going that route, but you would be better off doing a MFE/MQF/MMF at a top tier program than doing a stats masters now and a PhD later. A stats MS plus a PhD will take you 6-8 years to complete and if you are lucky you will receive 35k per year in funding while doing the PhD. A MFE or similar degree will take about 1.5 years,  and a quant finance masters from a top 10 or even top 20 masters (check out quantnet's rankings) will start at about 90-110k plus bonus and at five years out of the masters -roughly the same time you would be completing the PhD- it is not uncommon for salary plus bonus to be in 250k+ range, and 500k+ is not unheard of. The salary for a fresh PhD in stats working in quant finance is usually less than that. On top of that, the stat PhD programs with significant quant finance faculty are very good at sniffing out the students who are not interested in the PhD for a research career and just want it to become a quant. 

A number of quant finance masters programs are still before their deadlines for fall admissions and you could still apply, though the deadline for a number of them is March 15. 

https://www.quantstart.com/articles/Why-a-Masters-in-Finance-Wont-Make-You-a-Quant-Trader

https://www.wallstreetoasis.com/forums/what-do-you-think-about-the-mfe-degree

https://www.quantnet.com/threads/is-phd-the-only-route-to-becoming-a-real-quant.5670/

First few links that come up regarding why an MFE is the complete wrong degree to get for becoming a quant, although still potentially a ticket to a lucrative career in finance at a trading job. However, I totally agree that one shouldn't do a PhD solely to become a quant, and that a stats MS likely won't be much help on its own. Just thought its important to note that pretty much every quant job is filled by a PhD.

Edited March 14, 2018 by statscan9

[am8]

22 minutes ago, statscan9 said:

https://www.quantstart.com/articles/Why-a-Masters-in-Finance-Wont-Make-You-a-Quant-Trader

https://www.wallstreetoasis.com/forums/what-do-you-think-about-the-mfe-degree

https://www.quantnet.com/threads/is-phd-the-only-route-to-becoming-a-real-quant.5670/

First few links that come up regarding why an MFE is the complete wrong degree to get for becoming a quant, although still potentially a ticket to a lucrative career in finance at a trading job. However, I totally agree that one shouldn't do a PhD solely to become a quant, and that a stats MS likely won't be much help on its own. Just thought its important to note that pretty much every quant job is filled by a PhD.

Thanks statscan, I agree with you on both points. My goal to eventually pursue a PhD is to enhance my own understanding of the field; the job I get afterwards would only be a product of immersing myself in statistics.

[FinStat]

1 hour ago, statscan9 said:

https://www.quantstart.com/articles/Why-a-Masters-in-Finance-Wont-Make-You-a-Quant-Trader

https://www.wallstreetoasis.com/forums/what-do-you-think-about-the-mfe-degree

https://www.quantnet.com/threads/is-phd-the-only-route-to-becoming-a-real-quant.5670/

First few links that come up regarding why an MFE is the complete wrong degree to get for becoming a quant, although still potentially a ticket to a lucrative career in finance at a trading job. However, I totally agree that one shouldn't do a PhD solely to become a quant, and that a stats MS likely won't be much help on its own. Just thought its important to note that pretty much every quant job is filled by a PhD.

 The WSO link is over a decade old. Things change over time, and the quality of the top MFE programs has significantly improved over that time, especially due to the need to adapt after the '08 financial crisis. 

The quantnet link is seven years old, predates many of the changes the top MFE programs made, and anyway the consensus on that thread seems to be that the MFE is good/sufficient for a quant career and a PhD is not needed. 

Quantstart is a website selling a product that seems to be specifically targeted at PhD's who want to become what I would call "super day traders" and I would take their advice with a grain of salt.

I have lived my whole life in the NYC metro area, and did a BA in math and an MA in stats at good local schools. I have a number of friends who went to MFE programs in the NYC area and got jobs at top hedge funds and investment firms and a couple of friends who did math or CS PhD's and decided to take the money and become quants rather than go the academia route. They all do the same jobs and since it is a performance based industry they pretty much earn the same. 

There are a handful of top tier firms/funds, most notably RenTech and DE Shaw that are known for having a specific preference for PhD's over MFE's, but most firms do not have a specific preference.

1 hour ago, am8 said:

Thanks statscan, I agree with you on both points. My goal to eventually pursue a PhD is to enhance my own understanding of the field; the job I get afterwards would only be a product of immersing myself in statistics.

The upper tier PhD programs in stats, and also for that matter in math, CS, OR and finance know how to spot someone who just wants to be an industry quant a mile away. In fact two of the finance PhD programs I interviewed with specifically asked me questions that were designed to see if that was my goal. One even asked me straight out why I was applying to the PhD program and not to the top tier MFE program at the same school.  Even if they accept you it is unlikely that they will give you funding. If you don't get into an upper tier PhD program, then you will not get those top hedge fund jobs you obviously want and will be doing the same type of work MFE's from the second tier programs do.

 Most PhD quants are people who intended to become academics/researchers in their chosen fields, became disillusioned with academia while going for their PhD's and decided to go for the money in the financial industry, not people who intended from the start to become quants. And to be blunt, if becoming a quant is your goal, an OR PhD is a better fit than stats and since they are usually in engineering schools are also more likely to be willing to take on a student they know wants to go to industry from the start, though you probably would not receive funding.

Edited March 14, 2018 by FinStat

[statscan9]

@FinStat Fair enough, that WSO link is probably useless, didn't realize it was '06. I was just trying to quickly find a couple links to confirm what I've been told by my professors who have worked as real quants both pre and post 2008 -- that is, the MFE is not much more than a cash cow for universities. Unfortunately it seems like people don't discuss being a quant on message boards much anymore.

The biggest reason these profs told me to avoid an MFE program is that a quant position requires creativity and the ability to perform independent research, which is the one thing an MFE can never provide. Quant jobs don't go to PhDs because they have different letters, it's because they have the proven track record of being able to come up with novel ideas, which is crucial to make your firm the profits needed to justify those eye-watering salaries you mention above.

The fact that you mention finance PhDs in the same sentence as math/stats/OR makes me wonder if we're using a different definition of quant, since a finance PhD won't come close to having the math skills required for what I consider a quant position. I don't doubt that your friends have gone into high salaried positions with MFE degrees, but I have a hard time believing that they're part of the team coming up with new strategies. What wouldn't surprise me is if they're C++ monkeys for the guys with PhDs, or in roles that you can get with an MBA. If @am8 wants to do a stats/OR PhD because he loves the subject as he says, there's no way a program is going to turn him down just because he doesn't want to become a TT professor upon graduation, since while he's there he has the same goal as everyone else -- perform original research. In fact, some of the very best stats PhD programs in the world actively encourage students to apply who wish to study financial mathematics, and have top faculty doing research in this area. I'm sure these schools don't naively think these students have no interest in industry jobs.

Edited March 14, 2018 by statscan9

[FinStat]

2 hours ago, statscan9 said:

The biggest reason these profs told me to avoid an MFE program is that a quant position requires creativity and the ability to perform independent research, which is the one thing an MFE can never provide. Quant jobs don't go to PhDs because they have different letters, it's because they have the proven track record of being able to come up with novel ideas, which is crucial to make your firm the profits needed to justify those eye-watering salaries you mention above.

True, but from what I have been told those types of jobs only go to a relative handful of PhD's from top tier programs, which for stats is something like top 20, or perhaps top 40 if they are coming from school with strong math finance faculty and they are one of that department's strongest students. If someone is currently trying to decide between a masters at American or Columbia, they are probably not going to get into a top 20 stats PhD after the masters. The PhD's from the mid to lower tier PhD programs are doing the same stuff the MFE's are doing.

 

2 hours ago, statscan9 said:

The fact that you mention finance PhDs in the same sentence as math/stats/OR makes me wonder if we're using a different definition of quant, since a finance PhD won't come close to having the math skills required for what I consider a quant position

This was true 30, or even 20 years ago, but as more math, physics, stat and OR PhD's entered the industry and started publishing papers in finance journals, the finance PhD's, especially at those schools with strong asset pricing and market microstructure faculty got more mathematically sophisticated. In fact I would argue that at the current time the median student at a top 10 finance PhD has a stronger mathematical background than the median student at a top 10 stats PhD, and are just as mathematically skilled at the end of their PhD.

 

2 hours ago, statscan9 said:

If @am8 wants to do a stats/OR PhD because he loves the subject as he says, there's no way a program is going to turn him down just because he doesn't want to become a TT professor upon graduation, since while he's there he has the same goal as everyone else -- perform original research. In fact, some of the very best stats PhD programs in the world actively encourage students to apply who wish to study financial mathematics, and have top faculty doing research in this area. I'm sure these schools don't naively think these students have no interest in industry jobs.

I was told otherwise by the DGS at a top tier OM department, and math/stats faculty at a couple of PhD programs. They have no problem accepting and funding someone who wants to do research in academia in mathematical finance who may do some hedge fund consulting on the side, or be one of those people who floats back and forth between academia and industry, but if your goal from the start is to be an industry quant they generally would prefer to use one of their limited funded slots on someone who think is likely to go into academia. They know that some students will end up in industry jobs, but they only want to fund students who they at least think is likely to become an academic. 

Edited March 15, 2018 by FinStat