Masters in Finance course are, it could be argued, a big investment without a huge return. Students pay tens of thousands to study for an additional year after their undergraduate degree, getting a grounding in the fundamentals of investment banking and then are still hired at an analyst level through graduate recruitment schemes.
Longer term, however, it appears more like that having a Masters under your belt will enhance your earning potential. Figures from the eFinancialCareers 2014 bonus survey suggest that, on average in both the UK and U.S., finance professionals with a Masters in finance degree received around $30k more than those with a just an undergraduate degree.
Average bonuses for Masters students were $77.2k in the U.S. and $71.7k in the UK, compared to $49.9k and $40.3k respectively for undergraduates.
“Financial MScs turn students into something more useful for employers than single-degree candidates – they have the right blend of theoretical and practical knowledge and allow investment banks to focus on job-specific training rather than general industry concepts,” says Professor Andrew Clare, director of the MSc programmes at Cass Business School. “The bank could hire someone with a generic degree and train them up, but why would they when a university has done so at the student’s expense?”
Our own research suggests that the proportion of MSc Finance graduates who end up in a front office investment banking role is very high. Once they’re in, their skills make them more likely to progress up the ranks quicker than those with undergraduate degrees, argues Clare.
Nonetheless, this can take time, with the FT’s ranking suggesting that MSc Finance students earn between $36 and $94k three years after graduation, the top end of which is in line with average earnings for third-year analysts.
If you want to get the largest bonus, there’s a discrepancy between the UK and U.S. as to which qualification to target. In the U.S., the MBA is still king, with average bonuses of $121.7k. In the UK, meanwhile, those with a PhD – namely quants – have the largest variable remuneration of any educational level with an average of $201.5k.
In Europe, the proportion of MBAs going into finance is shrinking and those that do make it are having to work harder to break in, often gravitating towards strategy roles rather than traditional front office positions. In the U.S, while the financial sector has become less popular among MBA candidates, the likes of Wharton, Chicago Booth and New York (Stern) have continued to provide a pipeline of candidates.