Is Switching to a Financial Economics Major Worthwhile?

[Shaun_W]

What you will find that people with technical degrees in finance tend to have lower status than people with business and sales background. The people with engineering background run the machines, but they get orders from people with people and social skills. If you think that you are God's gift to business because you are smarter than the people around you, then you will go nowhere, even if you are smarter.

I disagree with this very much. These top business and financial institutions only select the top graduates form the perceived hardest degrees, such as STEM and the traditional arts degrees. These graduates all go onto the same graduate schemes and do the same work based training. The degree they have is/was irrelevant, as long as it is one of the perceived hardest ones from a top rate institution. They simply don't want business graduates, and other perceived easy degrees. Having one of those is a good way to get your CV binned immediately, and that's what I always hear time and time again from those who do work for these top London business and finance institutions.

If you are an electrical engineer that gets hired by a bank and you just rely on the skills that you learn in your degree, you will go nowhere. You'll just stay where you are until your job gets sent over to India to be done by someone that can do it five times as cheap as you can, and its the business people that will be making the decisions about whether you get fired or not.

It is the business people that make the decisions, but these people will have studied STEM or something traditional at undergrad.

What you will *need* if you want to advance in your career are business, social, and political skills, and that often means learning those skills from a business major who is just better at that sort of thing that you are. Personally, I think this is cool, since I like learning new stuff. But there are a lot of engineers that look down on business majors and then get extremely resentful when they find out that it's those business majors that are making the decisions, because those majors have skills that the engineer just doesn't have.

If firms believed that business graduates had these skills and that engineers don't, then they'd actually employ business graduates. As it stands here, they don't.

Something that I've had to learn is when not to look like a Ph.D. Sometimes it's a good thing to look like a technical person. Sometimes it's not. Personally, I think it's sort of fun to act like someone else, so I do enjoy putting on the three piece suit, getting the powerpoints ready, and then pretending that I'm an MBA. But I'm really not that good at it.

The top firms all want the brightest and most innovative candidates. That is why they have so many assessment centres and interviews, and that is why they only select from the brightest undergraduates doing the hardest degrees.

Every hear of the term "overqualified"?

Doesn't exist for the most sought after graduate jobs, unless we're talking about a PhD grad.

Something that you have to understand is that often employers are not looking for graduate of the highest calibre. Being "too smart" can get your application passed over, and it gets you passed over for good reason. A lot of jobs in business just amount to pushing papers, and people who are too smart often quickly get bored with these jobs.

All employers here are looking for the highest calibre of graduates, even for paper pushing work, because of the status it brings. If you can say that X amount of your graduates come from Oxbridge or LSE then you'll have high status and clients will flock to you over your competitors whose status is perceived to be lower because they are seen to not be able to attract the top graduates.

Most companies don't try to get the "smartest" people. They establish a minimum requirement, and then they look at people past that threshold. Often they don't want to hire people that are too much over their minimum requirements because if you get someone super-smart for a job that you don't need to be super-smart then you are overpaying.

This totally contradicts everything I've heard from both the graduates that have been hired by these firms and what the recruitment pamphlets advise.

Also you need to look at numbers. There are a *LOT* more business graduates than engineering graduates, so looking at the fraction of STEM graduates that end up in finance is not that useful. One other way of looking at the stats is that STEM graduates end up in finance because there aren't enough jobs in traditional engineering. Finance was certainly not my first choice of careers. I think it's a blast, but one person's heaven is another person's hell, and I know no small number of physics graduates in finance that *HATE* their jobs. One reason I like my job is that I like learning new stuff, and learning how to wear a suit and talk business-speak is fun. It's like playing dress up.

I don't think there are that many business graduates than STEM graduates, if we add up all the different STEM subjects.

What attracts STEM graduates to finance and business is that it pays better and these companies much prefer them over business graduates.

Also, I feel like I need to push-back a little on this effort to "sell" math and science jobs. Personally, if your goal is to make as much money as possible for as little effort as possible, then math and sciences is a stupid thing to study. You shouldn't study math, science, or engineering for career reasons. There are a lot easier ways of making more money, and it's likely that some of the business majors you are looking at are going to make more money and find it easier to get a job than you are.

Physics is not my job. Physics is my life. It so happens that I can avoid starvation by using some skills I learn in physics. But that's a poor reason to study it.

I'm not trying to sell STEM degrees; I am pointing out that in my country business degrees are useless. I think I did a pretty good job of explaining why they are useless in my previous post, too. Your whole argument is based around business degrees being the best degree for a career in business and management, but in Britain that is absolutely not the case. Here, people are not hired based on their degree type, but the university they attended, that their degree is a "respected one", and to a lesser extent their social class. It may seem a little odd that history and physics graduates are much preferred in the top London firms to business graduates, and it may seem odd that law firms are taking in chemistry and economics graduates. But that's the reality of graduate recruitment here, and I can easily show this from the recruitment leaflets I have.

 

[Ben Espen]

These top business and financial institutions only select the top graduates form the perceived hardest degrees, such as STEM and the traditional arts degrees. These graduates all go onto the same graduate schemes and do the same work based training. The degree they have is/was irrelevant, as long as it is one of the perceived hardest ones from a top rate institution. They simply don't want business graduates, and other perceived easy degrees. Having one of those is a good way to get your CV binned immediately, and that's what I always hear time and time again from those who do work for these top London business and finance institutions.

The top firms all want the brightest and most innovative candidates. That is why they have so many assessment centres and interviews, and that is why they only select from the brightest undergraduates doing the hardest degrees.

You keep bringing up the top business and financial institutions, but these are by definition atyptical. Most of us don't work at top businesses. I lack direct experience with the London business scene, so I will grant you your assertions quoted above. This is contrary to my experience in the US, but there are enough differences between the US and UK that I actually find what you say plausible, if unproven.

The truth is that even businesses at the top will have a large fraction of grunts with less remarkable degrees and grades, and that those with the right skills for business will rise up in the organization. Something that would answer this question conclusively are the CVs or bios of the leadership of these organizations you mention. What proportion of them studied STEM and what proportion business?

I suspect that the proportion of those who did study business is higher than you think, because even if the average business student is far less capable than a STEM student, there are many more of them, so the number of exceptional business students could actually exceed the number of STEM students with the same level of ability.

 

[Shaun_W]

You keep bringing up the top business and financial institutions, but these are by definition atyptical. Most of us don't work at top businesses. I lack direct experience with the London business scene, so I will grant you your assertions quoted above. This is contrary to my experience in the US, but there are enough differences between the US and UK that I actually find what you say plausible, if unproven.

Definitely. That is why I am primarily (in fact almost solely) applying for either American, European or local companies.

The truth is that even businesses at the top will have a large fraction of grunts with less remarkable degrees and grades, and that those with the right skills for business will rise up in the organization. Something that would answer this question conclusively are the CVs or bios of the leadership of these organizations you mention. What proportion of them studied STEM and what proportion business?

I think a more important question is: what proportion of them studied business vs those who studied STEM or other traditional degrees. I'll try and see what I can find out, though, once I dig out the recruitment booklets and do the appropriate searches.

Edit: It's becoming more and more apparent that many of these business leaders studied at institutions that do not offer undergraduate business degrees.

I suspect that the proportion of those who did study business is higher than you think, because even if the average business student is far less capable than a STEM student, there are many more of them, so the number of exceptional business students could actually exceed the number of STEM students with the same level of ability.

Possibly. I also think that a lot will not have attended university either, as they were lucky enough to get into the workforce before a time when a degree was needed to staple papers.

 

[twofish-quant]

I need to mention that I work for a major financial firm.

These top business and financial institutions only select the top graduates form the perceived hardest degrees, such as STEM and the traditional arts degrees.

It's got nothing to do with hardness of degrees. My groups for example will not look at your resume unless you have some sort of math or science background, but that's because we program computers for a big financial institution, and if you can't program C++, we can't use you. There are other groups in which the ability to program C++ is useless or even counterproductive.

These graduates all go onto the same graduate schemes and do the same work based training. The degree they have is/was irrelevant, as long as it is one of the perceived hardest ones from a top rate institution.

They don't.

They simply don't want business graduates, and other perceived easy degrees. Having one of those is a good way to get your CV binned immediately, and that's what I always hear time and time again from those who do work for these top London business and finance institutions.

You are hearing the wrong thing. If you are applying for a job as a computer programmer, then your resume is going to get binned if you don't have computer programming experience. However, if you are applying for a job that doesn't require computer programming (and there are more jobs that don't than do), then it's going to be counterproductive to emphasize your programming skills. If you want to go into sales and trading, then no one cares how good your computer skills are.

It is the business people that make the decisions, but these people will have studied STEM or something traditional at undergrad.

Often no.

If firms believed that business graduates had these skills and that engineers don't, then they'd actually employ business graduates. As it stands here, they don't.

Firms hire a lot more business graduates than engineers. They hire engineers to do engineering, and once you get in, this causes some resentment once engineers find that they are often at the bottom of the totem pole.

The top firms all want the brightest and most innovative candidates.

No they don't. They say that they do but a lot of that is propaganda, that you shouldn't take seriously. Also, most firms will *gladly* take someone that is somewhat less smart or less innovative if they have better social skills, and if you are smart and innovative but lacking in social skills then you are doomed.

That is why they have so many assessment centres and interviews, and that is why they only select from the brightest undergraduates doing the hardest degrees.

If you apply for a job, then you need some minimal skill set. For example, if you apply for a job at my group, you just *have* to have some ability to program computers. Once you've chopped off people that just don't have the skills to do the job, then you aren't looking for the *best* technically trained programmer. Once you have two people that both pass the minimal skill set, then you start looking at social skills and personality.

This totally contradicts everything I've heard from both the graduates that have been hired by these firms and what the recruitment pamphlets advise.

They are trying to sell you something. There's nothing wrong with being sold something, but you shouldn't get all your information on how cars work based on what the salesman tells you. The people that are telling this aren't lying, but you aren't going to get an complete picture of what goes on by just recruitment pamphlets.

Also, if you are talking to recent graduates, they probably haven't going through a major layoff, or corporate knife-fight, and they are still in something of a honeymoon period.

I'm not trying to sell STEM degrees; I am pointing out that in my country business degrees are useless.

They aren't useless. Most people aren't Einsteins, and there are lots of people that have zero chance of getting hired by a top financial firm. What are you going to do if you *aren't* a top graduate?

Your whole argument is based around business degrees being the best degree for a career in business and management

No it's not. I don't think there is a best degree for career in business or management. If you love physics like I do, a business degree is awful. Part of the reason that I have the beliefs that I do is that I did a lot of teaching of business students. Most people just aren't Einsteins, and most people really don't want to be Einsteins. If you have someone that can barely do algebra, then what should they do with their life?

Also, not everyone wants to work in a "top financial firm." I think it's fun, but a lot of people just don't want to work 14 hours days under grueling stress.

Here, people are not hired based on their degree type, but the university they attended, that their degree is a "respected one", and to a lesser extent their social class. It may seem a little odd that history and physics graduates are much preferred in the top London firms to business graduates, and it may seem odd that law firms are taking in chemistry and economics graduates. But that's the reality of graduate recruitment here, and I can easily show this from the recruitment leaflets I have.

So what do you do if you aren't that smart? What do you do if you really *DON'T* want to work for a top financial firm or be a high powered lawyer?

All employers here are looking for the highest calibre of graduates, even for paper pushing work, because of the status it brings.

Caliber doesn't have anything to do with it. They are looking for hyper-competitive people that will take orders and work grueling hours to make money for the people at the top.

But that's the reality of graduate recruitment here, and I can easily show this from the recruitment leaflets I have.

I don't read recruitment leaflets. I write them.

Question what you read.

The reality is that while you have all these people looking for work at big name law firms and financial firms which end up collapsing, people end up making decent money doing plumbing or being electricians.

Management is a game in which you get someone else to do your work, take the benefits of that work, and then make them feel good about that. Remember that when you are reading the leaflets. What the purpose of those leaflets are is to make *YOU* feel good about yourself, that way they can get you in, work you to death, and then you are glad about it because it means that you are "special".

Then one day your job disappears when someone figures out that they can hire someone in India for half the cost of your job, at that point you figure out that you really aren't that "special."

Look, I work in one of those big name financial firms. I love my job, but one reason I love my job is because I'm a bit cynical, and I can laugh at what goes on. Also, I suppose that in some objective sense my firm does treat me badly, but it's heaven because I've been treated worse. Also, the fact that I could wake up with a knife in my back just adds to the challenge and makes things more "fun." (At a previous job at another big name firm, I did end up with a knife in my back. It really didn't hurt that bad, and I thought is was funny.)

If you really want to see what going on in a big company, read "Dilbert". It's a much more accurate portrayal or corporate life than a recruitment brochure.

 

[twofish-quant]

I think a more important question is: what proportion of them studied business vs those who studied STEM or other traditional degrees. I'll try and see what I can find out, though, once I dig out the recruitment booklets and do the appropriate searches.

Stop looking just at "top financial firms". If you structure your life around getting a job at Goldman-Sachs, you are likely to end up quite unhappy.

Edit: It's becoming more and more apparent that many of these business leaders studied at institutions that do not offer undergraduate business degrees.

Stop looking at CEO's. For every CEO, there are a dozen administrative assistants, and a lot more janitors.

Possibly. I also think that a lot will not have attended university either, as they were lucky enough to get into the workforce before a time when a degree was needed to staple papers.

If you want to be a CEO of a big investment bank than that's one thing. Most people don't. One of the things that I learned is that competitive is good, but when it becomes your entire life it stops being fun. You are getting brainwashed by recruitment leaflets into thinking that the world should be a way that it isn't, and I don't think this is good for you or the world.

One problem is that in the world of elite investment banking it's easy to fall into the trap into thinking that the only thing that matters is getting into the top jobs, and that people that can't get into the top jobs don't matter.

Also, *if* you what to be CEO of a big company, then what you need to realize is that a STEM degree will just get you in the door, and it won't get you much more than that.

 

[twofish-quant]

One lesson in sales is that when someone tells you something they want something from you. It's always a good idea to figure out what that thing is. It's also good to think about hidden and subtle messages.

The thing that I don't like about the financial-academic complex is that it teaches people to be passive. You get this degree and get this ticket stamped, and then you are made. Except life just doesn't work that way. It also teaches people not to ask questions, which I find annoying because I like asking question (although I've figured out that I don't have ask questions out loud if it will get me in trouble).

Two questions that people ought to always be asking are "so why are you in charge here?" and "so what's in this for me?" (The answer to #1 is often, I pay you money, and if you don't do what I say, you will starve to death.)

Part of the problem I have with the academic-financial-industry complex is that it encourages people not to ask those questions, which is a bit of a shame.

 

[fasterthanjoao]

From this it is clear that those on business degrees achieved generally lower grades than their STEM, languages, economics and history counterparts.

I don't really see how this is relevant. Not everything is about grades - a business degree is definitely less technically demanding, but I know plenty *plenty* of scientists that bomb every time they have to present something, and that are just awful at organising things. Don't be such an intellectual snob

So for the majority of jobs that a university graduate will apply for, it doesn't matter what they studied, just that they were successful at it.

No, you're making assumptions - I'm not necessarily saying you're incorrect, just that you can't make that judgement. Just because there are positions (and there are many) that welcome applications from any degrees, doesn't mean they give the same weight to each. The important thing is about how you sell yourself and the skills that you have learned. The general skills are important - like twofish says with social skills, where technical graduates can boast problem solving skills, business type graduates can boast a huge focus of interpersonal skills and management. It's possible you can be a physics graduate with great presentation and selling skills, but it's more likely to be that guy if you've gone through a business degree.

One of these filters is that candidates must have achieved a certain amount of those UCAS points in their high school exams - 300 is the typical number; a fairly modest amount

Really? I've lived in the UK my entire life and (obviously) had all of my work and education experience here - I've never heard of using UCAS points to measure university graduates. Again, I'm not saying you're wrong I'm just surprised that I've never heard of this being nearly as important as you're suggesting. You do say financial/pure business firms, whereas my experience is only with technical companies that also have huge business divisions. Apparently I have a UCAS points score of 779, I should apply to business positions!

This is confirmed when the employment statistics for six months after graduation are looked at.

ehh perhaps, I've never been a fan of these figures.

 

[Shaun_W]

I had a long reply written out although it's pointless. twofish-quant, honestly, you are right.

You asked the question, "What are you going to do if you *aren't* a top graduate?"

From what I've seen, unless you have a STEM degree and can thus apply for a technical job, or unless you get lucky, or unless you have contacts, then there's not a lot you can do nowadays. You can work in McDonalds, I suppose, as even they want degrees nowadays for their business managers. There's not a whole lot of non-technical, non-mundane work in Britain outside of London and a few of the other major cities.

I'm just glad that I'm doing engineering and only want an engineering job. It's not the best paying compared to the elite financial or law firms, but it's not hypercompetitive and you're not driven into the ground. The work is often quite interesting and there is plenty of opportunity to travel (granted, some of these places may be quite dangerous, like Nigeria).

The elite London firms are the most applied to, and they also make up a significant portion of the graduate intake each year. They offer the best wages, which is the main reason why they are the most applied to. When 18-21 year olds think of investment banking and magic circle law, they tend to think of six figure salaries and exclusive London cocaine parties and not 80 hour weeks and backstabbing. Lots of these kids are from wealthy enough backgrounds that they've never had to actually work a day of their life anyway.

 

[twofish-quant]

From what I've seen, unless you have a STEM degree and can thus apply for a technical job, or unless you get lucky, or unless you have contacts, then there's not a lot you can do nowadays. You can work in McDonalds, I suppose, as even they want degrees nowadays for their business managers. There's not a whole lot of non-technical, non-mundane work in Britain outside of London and a few of the other major cities.

And the technical jobs are moving to China and India where the wages are lower. Where that leaves US/UK, I don't know quite yet, and I don't think anyone else does either.

McDonalds has a business model in which they can hire large numbers of low-skill people to do customer service, but this requires a huge amount of skill at the backend. Being a cashier at McDonalds or Walmart requires very little skill, but being a regional manager requires a pretty huge amount of skill.

I'm just glad that I'm doing engineering and only want an engineering job. It's not the best paying compared to the elite financial or law firms, but it's not hypercompetitive and you're not driven into the ground. The work is often quite interesting and there is plenty of opportunity to travel (granted, some of these places may be quite dangerous, like Nigeria).

Depends on the firm. I've worked for some startups which had longer hours than anything in finance. There was the time in which I spent two weeks continuously in the office (i.e. I was sleeping there). But there are some nice firms in engineering.

The problem is that you will go along for a few years, and then suddenly find your nice job disappearing because someone in India can do it for half the cost (and this isn't a hypothetical, it actually happened to me.)

At which point you need to step back and figure out what to do. Personally, you will *need* some business skills, since it helps to be the person deciding what jobs go where, than the person whose job is being moved around.

Or maybe you conclude that it's hopeless to stop the movement of jobs, in which case you want to be the person setting up the outsourced company in India. Or maybe you figure out some job (like being a plumber) that *can't* be outsourced.

The point I'm making is that the notion that you can get a degree, then get a career, and work at the same job for the rest of your life is just not going to work. All those companies that are writing nice recruiting brochures will stab you in the back if they can make money doing it. At this point getting some business skills and respecting the people that have them becomes a matter of survival.

And if you don't like the world, then change it... However, it does get messy. I have a strong sentimental attachment to the United States, so it does bother me when a MNC moves jobs (especially my job) from the US to India. On the other hand, I know people that were born and raised in India, and then don't have a problem with that (and they really shouldn't). I have a sentimental attachment to the US, but most people in the world don't.

The elite London firms are the most applied to, and they also make up a significant portion of the graduate intake each year. They offer the best wages, which is the main reason why they are the most applied to. When 18-21 year olds think of investment banking and magic circle law, they tend to think of six figure salaries and exclusive London cocaine parties and not 80 hour weeks and backstabbing.

I have this annoying habit that I ask a lot of questions, although I've figured out that I can ask as many questions as I want as long as I don't ask them out-loud. The questions that needs to be asked here is "where is all this money coming from?" "how likely is it that I'm going to end up with any of it?" and "what happens when the money runs out?"

One reason I like and respect business degrees is that they give you some very simple math tools for figuring out if there is a problem. If you have X amount of wealth and Y people, then if you are promising more than X/Y to each person, then you are going to have a problem. With a few more easy math calculations, you can figure out when the crap is going to hit the fan.

Lots of these kids are from wealthy enough backgrounds that they've never had to actually work a day of their life anyway.

Sure. On the other hand, I wouldn't be too harsh against "rich kids", since to the average person in India or China, anyone that grows up in the US/UK is a rich kid that can get much more wealth for much less work.

 

[fasterthanjoao]

I wouldn't be too harsh against "rich kids", since to the average person in India or China, anyone that grows up in the US/UK is a rich kid that can get much more wealth for much less work.

I guess people just find it pretty easy to be bitter, it's unfortunate but I guess it creates aspirations as well as illusions , you're right though.

It isn't entirely related, but I have a little anecdote: I have two friends that work for one of the (as in the same as each other) major international accountancy firms, one based in the UK and one a Chinese national based in China. They have similar experience, work similar roles, but my UK friend is 9-5 and gets about £60k before any bonuses - some over time is given from time to time when there's a big project on, so you might have to work a few Saturdays every now and then.

In China, with the same firm, his regular working hours at 9am-10pm - 14 days on (sometimes more), 2 days off. For less money. I have no idea how typical this is, but I always think it's pretty remarkable.

 

[twofish-quant]

I was reading an interesting article online which said that MBA graduates can pay off their debts in two years’ time. Now that's a great ROI, if anything!

I'd be very careful about these sorts of articles. If someone is selling me a car, I'll listen to what they say, but I'll keep in mind that the salesman is more influenced by his interests at making money than in mine.

Same goes true for universities. Also you need to be skeptical about what you read online. You also need to be careful about "bait and switch." If you find out that a Harvard MBA can make you a ton of money, that information could be irrelevant if you have some other business degree.

 

[bleedblue1234]

I am currently a freshman at a top 15 university. We are very hard-science based, but I am currently an international studies major. I was thinking of switching into physics / math / econ but I don't know if that would be advisable (I'm a pretty good writer, but I did well on math (800 math II SAT, 5 Calc BC etc., 5 AP Physics etc.)) We also have a new program in financial economics that is gaining some steam and more firms look to be hiring here. Do you think it would be worth it to jump from a more generalized education in international studies (which involves history, poli sci, econ, and language - currently I am learning Russian) to a math / financial econ / econ major?

From everything I have read, it seems its best to be generalized and globalized. That is why I am trying to learn a new language and keep my options open. The world seems to be changing at such a rapid pace that sticking with one single field, unless you really wnated to be a research scientist, would be foolhardy. However, the environment for engineers / finance seems pretty attractive, especially the job security. I was wondering what you guys thought.