Road to Finance PhD

Question

I want to be a finance professor. I’ll be just as happy at a small liberal arts college as a major research institution. And prestige doesn’t mean a thing to me. (Read – I don’t care where I work, as long as it’s in finance)

Here’s the problem, my profile:

Undergrad: BS Sociology from good regional university, 2.3 GPA
Grad: MBA - Finance concentration from local college, 3.9 GPA
GMAT: 610 (I’m certain I can do better. When I took it I had been out of school for several years and did nothing to prepare.)
Math background: nada, other than some basic stats as an undergrad (never even took calc in high school) BUT I have done well in my MBA stats, econ, and finance classes. The easiest and most enjoyable part of each of the classes was the math. Each of my professors has assured me that I can succeed in a PhD program, and my finance prof thinks I should apply for next year.

I realize that I have no real chance of getting into any PhD program at this point. So, I’m looking at another masters. My options are MS Econ from a decent flagship state school, or MS Applied Stats from a local university. I’ll finish my MBA in the spring and plan on taking Calc 1 & 2 next summer to prepare for the MS.

My question is, which program will be more beneficial when I go to apply for a finance PhD? Also, which will be more manageable given the fact I’ll only be able to take Calc 1 & 2 before starting?

Thanks!

Kumbaya · Answer

I'd say MS Econ. A good solid grounding in basic economic concepts will do well for finance, although there are still differences. Most economics programs these days are quant heavy anyway, so you'll also be getting plenty of training in that area. Just don't go policy heavy on your economics course load, since policy is very, very light on quant.

However... why not just apply for a PhD? Your MBA GPA is certainly good enough. If prestige doesn't matter, then that opens up a lot of doors for you. If you have time, maybe boost your GMAT in a month or two, and if your professors are very supportive, then they should also be able to recommend you into some decent programs.

fedge · Answer

Thanks for the input Kumbaya.

I am going to apply to some finance programs. My main concern (other than getting in) is that I'll be so swamped learning the math that I'll miss out of the finer points of the finance. But, I figure if they admit me then they must think I'm capable. I certainly think I am.

Anyone else think I have a shot at a PhD program?

Praetorian · Answer

Your lack of math background will be the deal breaker. You will be swamped with math in ANY Ph.D. program. 

You should be looking at getting admitted to a school where you can do a MS + PhD in Finance. PhD Finance is the most competitive. If you dont care about the reputation of the school, that is upto you. But I really think you should. This is a lot of sacrifice and you want to make sure it will be worth something more than a teaching position. Brand of the school has a strong correlation to the quality of faculty, academic industry projects and your future in general. Who you work with in your PhD will have a strong influence on your research.

The best type of Ph.D. program will completely transform you. It will be challenging, difficult and insanely demanding. For this, you should be ready to go from day one.

Kumbaya · Answer

I'll admit, the quant will be a killer. But it also depends on what kind of learner you are. If you're the Deep-end-of-the-pool type, then learning by doing might actually work. I'm also assuming that your finance concentration in MBA exposed you to a decent enough level of stats.

rsvoss posted in the "Quant maze" thread stickied on top of this forum about what kind of quant might be expected for each discipline, which I will shamelessly steal and post:

1. Accounting. Stochastic differential equations.
2. Finance. Stochastic differential equations.
3. Human Resource Management. Differential calculus.
4. Management. Differential calculus.
5. Management Information Systems. Differential calculus.
6. Management Science. Differential calculus.
7. Managerial Economics. Differential calculus.
8. Marketing. Differential calculus.
9. Operations Management. Stochastic processes. 

I'd recommend you take a look a the thread itself, which is full of very good advice.

At the *very* least, you'll need to be familiar with the regulars of research methods: factor analysis, regression analysis, SEM, etc...

mamo · Answer

I feel and share your frustration though from a different angle.

I on the other hand have an MS in Math with most of the courses listed above. What hinders me is this bs called GMAT. I took it while back when I was doing my MS and I got a dreadful 540 and postponed the application for a year. It was again postponed for another and this season is an absolute must! But I do not seem to improve on the exam. I took the gmatprep practice tests and scored 630 and 640 while many schools these days have lots of applicants well over 700. I used to worship ranking but when I see the application hassle that I have to cope, I lowered my expectations and started to think otherwise.

If you are satisfied teaching at small liberal art college with minimum research requirement, I think you should apply to both a PhD program and an MS in Econ/Stat. That way you will have a safe bet if things don't go to your favor.

Good luck,

btw: Can someone point me schools that will not weight heavily on GMAT?

fedge · Answer

I'm definitely a "Deep-end-of-the-pool type" and I really like a challenge. But, the more I think about it, I don't feel prepared for a PhD at this point. I want to "be ready to go from day one." So I think I'll target the MS Econ. They have a concentration in Financial Economics which should be great prep for the PhD. I spoke with the graduate chair and he indicated that I'd be competitive for both admission and financial aid. 

Kumbaya and Praetorian - thank you for the advice

 

Praetorian - This is an opinion held by many (most) people I've come across in academia. (Including my mother and sister who are both profs) What's wrong with wanting to be an amazing teacher working in a faculty position that focuses more on teaching than research? We have all had amazing teachers in our lives that have played an important part in our intellectual and personal development. If we hadn't, none of us would be here discussing graduate study.

For me, I love both research and teaching. I'll be just as happy teaching 2 classes a semester and having major research responsibilities as I will teaching 4 classes a semester with less research requirements. And for someone that has a desire to be an effective teacher, a 25-50 student class size is much more appealing than 100+

Kumbaya · Answer

I think the main thing is that there is only one PhD training focus: research. Teaching is learned somewhere along the way via TA-ing. The days of the lecturer are almost gone, instead professors are faced with tremendous pressure to publish, or ultimately perish. In order to secure a position from where you can teach comfortably, you have to be able to conduct research to obtain that position, no matter what school you go to. You could also become a gypsy scholar, but faced with tremendous instability, I don't think you'll have the impact you want on students.

It doesn't hurt that of all the professors I've listened to, the most lively ones are those that are able to talk about their own research. Let's face it, lecturing from the book gets old, and boring, very fast. If you're extremely lucky, the research itself will be a pleasure. I had a Medieval History professor who's "research" consisted of touring castles in Europe every summer and writing about their architectural details. Each semester she would have a new batch of slides to entertain the class with. Had another for whom research was constructing ballistas and trebuchets...

Alas, as aspiring business PhDs, we have to find what fascinates us within the business realm.

EDIT: Small colleges do have small classes... except they also tend to be very selective about their staff. If you're not careful, you could end up in some state or city college and lecturing to 200+ in a lecture hall. Going to a bigger, more famous university, you might actually be able to get smaller classes.

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