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Physics BSc in Physics to Finance

  1. Sep 29, 2010 #1
    Hey there,

    I'm in second year of a physics/math degree. I've had some revelations over the past year and realise that I probably will not be interested in entering into the field of research or academia. I'm looking at the field of finance now (I hear that this is a common career path for people with a physics degree). I want to do an MSc in Quantitative Finance after my BSc (apparently they accept people with quantitative backgrounds, go figure) to maximize my changes of getting a job.

    The thing is finance is a very large sector and there are many different types of jobs so what types of jobs do physicist/mathematicians go for after their degree?
    Last edited: Sep 29, 2010
  2. jcsd
  3. Sep 29, 2010 #2
    I'm tend to be rather negative about Masters in Quantitative Finance degrees. If you want to go into finance, you are better off getting either a Masters in Computer Science or else getting an MBA or straight masters of Finance. The problem that I have with Quantitative finance degrees is that they are neither fish nor fowl.

    The problem with a masters of quantitative finance is that you are sunk if there are no jobs in quantitative finance, whereas with an MBA or CS degree, you are less bad off if quantitative finance isn't hiring.

    Also if your school has strong career services, you may able to get a job directly as a management consultant. There are management consultant companies that hire people with physics bachelors directly, but that usually involves a school with good relationships with those companies.

    Ph.D. physicist/mathematicians get jobs in heavy duty computing and numerical modeling, however, you aren't going to get that type of job without a Ph.D. since those jobs require research skills. People with physics bachelors do get admitted to MBA and CS postgraduate programs and that's another way in.

    One other thing. You need to be realistic about how much money you are likely to make. The salaries in finance are very good, but most people don't have yachts or private jets.
  4. Sep 29, 2010 #3
    One particular problem with Masters in quantitative finance degrees is that quantitative finance changes very quickly, and the problems that people are interested in at one moment are often completely different than the problems that people were interested in a year ago. MBA, Master of Finance, CS Masters, and Ph.D. physics degrees tend to teach things in a way that is less likely to be obsolete very quickly. If you get a CS Masters, then they will teach you things are that likely to be hopelessly obsolete in five years.

    What I've seen with quantitative finance programs is that they teach things that were useful last year, but are now obsolete. One reason that finance firms like to hire physics Ph.D.'s is that things become obsolete very quickly, and physics Ph.D.'s tend to be willing and able to be constantly learning new stuff because what they thought they knew six months ago is now wrong or hopelessly obsolete.

    Also physics Ph.D.'s tend not to freeze when no has written a book on something. For example, suppose it turns out that you need to write a computer model that prices offshore cross-currency forwards for Indonesian Rupiah and Malaysian ringgit. At that point, the natural reaction for someone without a Ph.D. is to look for someone who has written a book on Asian currency forwards or take a class on the topic. Guess what? There are no books or classes on the topic. Someone who has a Ph.D. has at least one in their life been able to deal with a similar situation. If you can figure out how to numerically model neutron star magnetospheres, then the odds are good that you'll be able to use the same skills to model the Malaysian banking system, and the fact that no one has done it before makes it more interesting. (I've changed the names slightly.)

    One thing that does concern me is that if you have decided that you don't like research and you don't like academia, then you may find it difficult to deal with physicist related jobs in finance, since you are constantly being forced to learn new stuff. Yes the money is good, but they do make you work hard for it. Banks like hiring physicists and mathematicians since physicists and mathematicians don't mind spending ten hours a day learning new mathematical stuff.

    The thing that I like about my job is that it feels a lot like graduate school. It may turn out that in order to model the Malaysian banking system, you have to rapidly invert a massive sparse matrix. If you don't know how to invert a sparse matrix, that's not an excuse. Learn. If it turns out that *no one* knows how to invert the sparse matrix in a way that lets you model the Malaysian banking system, that also not an excuse. Figure it out, and figure it out before the competing firm across the street does.
  5. Sep 29, 2010 #4
    Thanks very much for your reply.

    So basically you're saying that physics/math students have greater problem solving ability than quant. finance students or CS students. In this regard, would it be better if I stayed in physics until I finish my Ph.D. and then make a transition into finance or, after my bachelor's degree, I just head into a plain finance masters?

    I wouldn't say that I don't like the idea of research or academia, it's just that I've heard comments from some physicists (in my case some post-docs at my university) that they're not happy with their income. Now I wouldn't hate research or academia at all it's just that I'd also like to make a decent living (I guess a lot of people have different opinion on that matter).

    May I ask what area of finance you're working in? It seems pretty interesting and reading your description I now understand more of how physicist can be suited to finance.
  6. Sep 29, 2010 #5
    Not quite. I'm saying that the types of jobs that financial firms hire physics and math Ph.D.'s for basically involve the type of problems that physics and math Ph.D.'s learn to deal with in graduate school.

    Depends on what you want to do with your life.

    If you want to do physics problems for the rest of your life, then go with the Ph.D. If you don't, then don't. One rule about getting a Ph.D. is that you should get the Ph.D. for the sake of getting the Ph.D. The analogy that I use is that getting a Ph.D. is something like joining the Marines. Yes it will help you with your career, but you are going to be in serious trouble if you join the Marines and career is the only or even the main reason to join.

    Post-docs and graduate are underpaid, but pretty much no one else in physics is.

    The most annoying thing about finance is that I really can't talk about exactly what I'm doing. Changing the details a bit about what I did today....

    Remember the problem with currency forwards Malaysian ringgits and Indonesian rupiah. I'm not working on that. I am working on something similar, and right now it doesn't involve trying to understand how a possible CPU bug in floating point calculations would affect sparse matrix inversion algorithms causing some weird numbers, but it involves something similar.

    The bad news is that my job is going to be obsolete by the time you graduate, but the good news is that the job you get to do is likely to be something that no one has thought of yet.
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