Getting an MBA vs. a Master's in Finance or Economics: Which Option is Right For

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Getting an MBA vs. a Master's in Finance or Economics: Which Option is Right For You?

                                                                                                                                     
Guests include:                                                                    
               

Joe Fox, Director of MBA Programs and Co-Director of the Masters in Finance Program at the Olin School of Business of Washington University in St. Louis
Jeffrey Ringuest, Associate Dean, Graduate Program at Boston College’s Carroll School of Management
Fiona Sandford, Director of Careers Services at the London School of Economics and Political Science

More than 100,000Americans graduate each year with an MBA degree. While it’s the single mostpopular Master’s Degree to get, depending on where you are now and your futurecareer goals, a Master’s in Finance or Economics might be the better choice foryou. It might even be a good idea to get both. We’ll explore the reasons tochoose one degree over another, we’ll also go over some important things toconsider while sorting through your options, we’ll hear from directors at twoschools that have both MBA and Master’s in Finance programs, and the Directorof Career Services at a prominent university.

Like anything else in life, there isn’t a single road to acareer in Business and Finance. Getting a Master’s in Finance or Economics is,of course, one way; getting an MBA is another. Fiona Sandford is Director ofCareer Services at the London Schoolof Economics and Political Science. She says the MBA track or the Master’sin Science track can lead to the same career but using different approaches.“The traditional MBA course exposes you to a wide range of managementdisciplines, and gives you a way of thinking about management and a career inthat area. An MSc in Finance or an MSc in Economics gives you a very rigorousacademic approach to finance disciplines or to economics. But it doesn’t, byany stretch of the imagination, preclude you from going on to developing acareer in Management as many students do. So I think it depends on individuallearning styles.”
Sandford says a Master’s in Economics will open the doors ina wide variety of fields. “Certainly, if you want to become a professionaleconomist, you only have one choice, and that’s to do the MSc inEconomics—although it doesn’t limit you to becoming a professional economist.And many of the destinations that our students go on to are very similar tothose destinations that you would see from an MBA. Some of them go on to doDevelopment Economics and NGO’s. The majority of them go into investmentbanking—many, many of them go on to becoming professional economists. And asubstantial proportion—varying from year to year between 15-25% will go on todo a PhD in Economics.”

Jeffrey Ringuet is Professor and Director of GraduateCurriculum and Research at BostonCollege’s Carroll School of Management. The Carroll School
offers MBA degrees as well as Masters in Finance and Accounting. He saysconsider your background and experience if you’re deciding between an MSF orMBA. “If you’ve got someone who has some management background—they want to bea financial analyst or they want to be a CVA—then clearly, the specializedMaster’s Degree is the direction for them to go. But if you’ve got someone whodoesn’t have management training prior to coming into the graduate school, thenthe MBA will provide them with that management training that they haven’t had.I think they really need to pick a degree that’s going to build on what they’vedone prior to coming to graduate school and help prepare them for whateverchange or whatever new direction they want to pursue for when they leavegraduate school. So I think it’s a real match from what you’ve done and whereyou want to be going when you’re leaving.”Joe Fox is Director of MBA Programs and Co-Director of theMasters in Finance Program at the Olin School of Business ofWashington University in St. Louis. He says choosing which degree to get canalso be a matter of timing. “It has to do with the time of your life—kind ofwhere you’re at. It has a lot to do with your ambitions and whether you’retrying to follow an ambition that has a shorter-term objective or a longer-termobjective. And then, ultimately, it has to do with what fits your long-termgoals. So let me give you an example. It wouldn’t be surprising at all to findsomebody who gets an MS early in their career to get them started on thatcareer path, and later on, comes back to get an MBA degree to enhance or toembellish the flexibility of their career progress. So I think it would be afair thing to say—and we hate to make generalizations—that younger studentsearlier in their career often look at an MS program as being more relevant tothem at that point. Slightly older students—or younger students with a broadervista, I guess—find that an MBA might be more relevant. Now, again, that’s agross generalization, and you hate to say it because the minute you do, itdoesn’t apply to somebody. But it’s a pretty fair assessment in a biggerpicture, I guess.”
A lot of Masters in Finance programs have no workrequirement at all. Fox says that’s also why younger students go for MSprograms. Oftentimes, they don’t have the work experience necessary to apply tomany MBA programs, and MS is a good way to get your foot in the door.“Traditionally, MBA students have been out of school for three to five or sixor seven years. Most MBA students at most of the top schools on average wereout for four and a half, five years. They were 27, 28 years old when they cameback. So they’ve kind of been out there; they’ve done something; they’ve triedsomething; they’ve made a move in their career. And they’re either coming backto try to jump start a movement in the same career path—we call those careeraccelerators, so they’re looking to accelerate their career—or they might becoming back to be a career switcher. I’ve been working in Marketing but I wantto go to Finance. Or I’ve been a high school teacher and I want to go in toMarketing. So there’s switching that goes on. And there’s some number of peoplewho have been out long enough to realize what they don’t want to do—and that’susually what it is that they’ve been doing. But they’re not 100% sure what it isthey do want to do, so we call those career seekers. And all of them can bevery well accommodated by this general-management approach. All of them cantake advantage of the fact that the majority of them, anyway, have been workingand have done something, and are either looking to use that to move ahead, orto move in a different angle. The MS students are almost all career starters oraccelerators. They’re either the very young who are just getting started, andthey’re trying to get the best set of qualifications and skills for the jobthey want to do, or they’re people who are trying to get into that field andhaven’t been successful yet and are trying to find the right package to bringto get them a chance to get into that field.”
Time and cost are also factors in deciding between the twodegrees. MS programs are typically one year; while MBA programs generally runfor two years. MS and Finance programs focus on increasing your understandingof finance and financial markets. A Finance Degree can lead you to positions ininvestment banking and corporate finance—much like MBA degrees. But MBAprograms have a broader focus with an emphasis on leadership and leadershippotential. Fox says you can gauge which degree would suite you better by whereyou want your career to go. “Whether it’s an MS in Finance, or in Accounting,or Marketing, or in Operations, or anything; the primary purpose of gettingthat MS degree is to enhance your knowledge and skills in a very specific areawhich then, enhances your career and job potential in that specific area andgives you kind of a rocket boost, but in a straight line—kind of straight up inthat particular function or field. At some point, people find that theircareers are either in need of a boost to get beyond that function itself andget more into the managerial role maybe related to that function, or they findthat their interest in starting to veer off into a different direction. Andit’s often that point in time when a student decides an MBA is the right optionfor me. The MBA—by the fact that it is not disciplinary-based; it’s not asingle discipline, but rather a broader set of disciplines that arestudied—tends to have greater options, greater flexibility, a wider array ofpossibilities coming out the back side. So even if you got an MBA and focusedsome of your elective course work in a particular field, you still have taken avast majority of your coursework across a wide variety of fields and havereally been trying to develop your general management skills along with tryingto enhance some specific skills.”

At the OlinSchool, and at many business schools, some of the MBA curriculum overlapswith a Masters in Finance classes. Fox says but, again, the Finance Degree ismuch more specialized. “In our MS and Finance Program, the MS and Financestudents will intersect with our MBA students in some number of classes. Thereare commonalities to the two degrees; whereas, the MS and Finance students aretaking almost exclusively those courses that are kind of hard-core in thefinance area or in the financial modeling or in the quantitative methodologythat supports the financial modeling. Their whole package is based around thatsomewhat narrowly-defined career and job path that they’re looking to take. Somost of the coursework is finance and finance-related. We certainly have theroom to embellish it a little bit, but that’s primarily what it is. In an MBAprogram, the majority of the coursework is across the various dimensions ofbusiness. So you’re taking marketing, and finance, and operations, and orgbehavior, and strategy, and economics, and all the other underpinnings. Andthen on top of that, you get to layer in some more specialized courses; butthat’s the minor element of what you do. The major element of what you do isthe broadening general management aspects of studying across the disciplinesand, quite frankly, learning how to apply and learning how to integrate all ofthat stuff into kind of a sensible, general-manager’s view of how to moveforward.”

At the OlinSchool, and at many business schools, some of the MBA curriculum overlapswith a Masters in Finance classes. Fox says but, again, the Finance Degree ismuch more specialized. “In our MS and Finance Program, the MS and Financestudents will intersect with our MBA students in some number of classes. Thereare commonalities to the two degrees; whereas, the MS and Finance students aretaking almost exclusively those courses that are kind of hard-core in thefinance area or in the financial modeling or in the quantitative methodologythat supports the financial modeling. Their whole package is based around thatsomewhat narrowly-defined career and job path that they’re looking to take. Somost of the coursework is finance and finance-related. We certainly have theroom to embellish it a little bit, but that’s primarily what it is. In an MBAprogram, the majority of the coursework is across the various dimensions ofbusiness. So you’re taking marketing, and finance, and operations, and orgbehavior, and strategy, and economics, and all the other underpinnings. Andthen on top of that, you get to layer in some more specialized courses; butthat’s the minor element of what you do. The major element of what you do isthe broadening general management aspects of studying across the disciplinesand, quite frankly, learning how to apply and learning how to integrate all ofthat stuff into kind of a sensible, general-manager’s view of how to moveforward.”
For those of you who feel you’d benefit from both the MS andMBA degrees, the Carroll School ofManagement offers a dual-degree program. Ringuet says you can also opt forthis route. “I think it’s good for someone who wants to keep theiropportunities open. You’ve got the depth of knowledge that a Master of Sciencedegree connotes and you’ve got the breadth of knowledge that an MBA speaks to.So I think it gives you more opportunities coming directly out of program. Thetrend is that degrees are maybe getting a little closer in that an MBA seems tobe to go to programs that allow students to get greater depth, and we’re doingthat as well here. And we’re going from a program where students could take sixelectives in an area of specialization to one where they might take eight oreven ten electives in an area of specialization. And some schools have reallypushed that even farther than we have in terms of the degree of specializationout of the MBA. But I think the risk in going too far on that path is that youlose that broad management context that an MBA brings. An MBA really has anunderstanding of the big picture—the broad context of the business. And I thinkif you lose that, you’re losing something important. But I think that there isstill the Master of Science—the specialty degree—that says depth even more thanan MBA with the kind of depth that we’re building into those programs now.”
Ringuet says recruiters and employers will have differentexpectations for the different degrees, and they’ll usually hire according towhat they need. “Typically, employers and recruiters that are looking forsomeone with a Master’s in Finance are looking for someone who’s got realtechnical skills; who’s got real deep analytical training. They’re going to bean analyst; they’re going to do heavy-duty analysis. They’re not as concernedwhether that—and this is typical but there are exceptions to all of these, ofcourse—individual has broad management skills; whether they’ve done the kind ofproject work that you think of that goes along with an MBA program and the kindof team exercises—not that someone doesn’t have to learn to be a teamplayer—but they’re going to really be more of an analyst. When someone comeslooking for an MBA, the expectation is that an MBA has had a broad managementfoundation. They’ve seen, besides finance, operations, and organizationbehavior, and marketing, and accounting, and information technology, and allthose other things. They’ve also had some work in leadership. They’ve had someteam-building coursework and project work in their program. They’ve got abroader set of management skills.”

In the US, MBA degrees are the most recognized Master’s Degree. In Europe,however, companies work differently says LSE’s, Fiona Sandford. “The MBAmarket has always been much more buoyant in North America than it is Europe. The approach in Europeis very much growing your end talent rather than employing someone as ananalyst for two years; then sending them off to business school, and they comeback as an associate. That part exists here in certain companies. But many ofthe major employers would prefer, or would be open equally, to taking onsomeone with an academic approach to work and teaching them the managementdisciplines in-house, if you like, and developing that on the job. So theEuropean market values the MBA—there’s no two ways about that—but is perhaps muchmore open and, historically, is much more used to developing those managementskills on the job and, therefore, very much values an academic, rigorousapproach to postgraduate study.”Salaries can vary between industries and positions. ButRinguet says typically MBA graduates make more than MS graduates. “I would saythat if you looked at average kinds of numbers, our MBA students would probablystart at a higher salary than our specialty Master’s students. And that’s asmuch because it’s very unusual to go directly from an undergraduate degree intoan MBA. It’s less unusual to go from an undergraduate into a Master of Sciencedegree. So students coming out of the MBA will have typically had more workexperience and will be a little bit older. And that, as much an anything,places them at a higher paid level than someone coming out of a Master ofScience program that had maybe only one or two years of work experience asopposed to four or five from the MBA.”
In 1960, fewer than 5,000 students got MBA degrees. Nowthere are more than 100,000 MBA graduates each year. With on-line, part-time,and executive programs making it easier to get that once elite degree, youmight wonder if MBA’s are as highly valued. But Fox says it’s not the end forMBA’s—not yet. “There are a lot of people out there getting a lot of MBA’s andthat does put the credential in a different light in some sense. But this is afree market—nobody’s forcing people to do this. And in a free market, themarket works itself out eventually. So given that there is still thisextraordinary supply of prospective students coming through and that there’sstill demand to hire and move those people out, I’d say that we’re not seeingthe end of the daylight for MBA programs. But it may be that we’re seeing aswitch, a shift. In some of these MS programs that are coming up now—some ofthe competition for international MBA programs—really is a shift in the playingfield, not a shift in whether or not MBA’s are a value or will continue to be.But I think there’s a shift in the competitive playing field out there. Andthat’s good; that’s actually healthy.”

zz1234567

Top firm only hire at top MBA. MS-Finance is pretty much useless degree in US except from Princeton & MIT.

In Europe, MS-Finance is a well recognized degree while MBA is not.

It's all about brand, not what you learn. Studying Finance doesn't mean you can get a job in finance.

violinlover

Just want to share this article with you guys~

lanyuatbard

强烈呼唤google translator