Thursday, December 6, 2012

Getting into finance from the bench?

From the inbox, a organic Ph.D. who's thinking about getting out of chemistry and into finance:
My other passion is my retirement.  I love playing with my 401k and IRAs and began to read more on the finer aspects of finance, particularly the trade and research within the financial world.  I have a few questions about the profession: 
1)  How hard is it to get a job with no business experience, or a weak business acumen?
2)  Do companies overlook this when PhD's are applying with a scientific degree assuming they can undergo a short course?
3)  When applying for this type of job do you tailor your resume in a less scientific manner?  What should your resume/CV contain?
4)  Lastly how do you even get noticed for a position as an analyst/trader/researcher with a scientific PhD vs an MBA? 
I'm just now reading more into the profession as an analyst and I'm sure I'll have more questions in the future.  I was hoping that your readers might also shed some light on the profession and what advantage a PhD would have in the industry, and are scientific PhD's something that companies are looking for? 
I know that chemists do indeed go into finance; you'll see them occasionally in the comments here and especially at In the Pipeline. Finance seems to be relatively low barrier-to-entry (i.e. it's who you know, not necessarily what your degree or what your resume looks like), but I suspect it's relatively difficult to stay in the field (or at least, there's fairly high turnover.) I am sure that chemists get hired as financial analysts; I assume there's some sort of degree/certification that's needed.

But I'm basically talking ex recto. Readers, what do you think?

9 comments:

  1. 1) Hard.
    2) No. Wall St is chock full of PhDs and MDs in biotech/pharma/med devices. Not every analyst has one, but I'd guess at least 2/3 do. Initially I thought having a PhD would make me stand out, but it really doesn't. To be fair, most PhDs are in some biological field, but a few chemistry PhDs (maybe 1 in 10?).
    3) Don't know. Cover letter and meeting ppl more important.
    4) Know alot about the industry. MBA is a useless degree, but it makes it look like you're serious about business. To my mind, getting a CFA is actually much more worthwhile, and can be done on your own (just need to pass 2 tests). Plus, the CFA actually has value.

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    1. Thanks for commenting, boo. Just sent an e-mail to your corresponding account, btw.

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    2. I’d agree with most of that. I finished my organic chemistry PhD in 2000, spent 11 years working for investment banks and recently moved to a hedge fund to cover global healthcare. I would say the outlook is mixed. On one hand, I think the days of banks seeing how many Harvard MBAs they could rack up in the grad program are over, with the realisation that that fine body of men and women are not the answer to all the world’s problems, preferring a little more diversity of intellect. On the other hand, it is increasingly difficult to get a job without having first done an internship- I didn’t do one mainly because I’d never heard of them while I was an undergraduate.
      I spent many years interviewing graduate candidates and asked every single one the same question- pitch me a stock idea, long or short, any size, sector or region. The vast majority (>80%) could not, despite having professed to have read the FT or WSJ since the age of three. Weak business acumen is a killer, but lack of experience is not so damning. If you can demonstrate some aptitude in investment, that can really make a difference; constant references to my investing from the age of 15 undoubtedly helped in interviews. Also, boo is quite right about the CFA- sign up and start studying for Level 1 before you apply for jobs. Not only is it a useful qualification, but it has real currency in the industry and demonstrates real commitment.
      Two thirds of analysts having a PhD is a bit high, but they are certainly more widespread than when I started. Strangely, I knew of an oil industry team where half the analysts were PhD organic chemists, but if you are transferring from industry, I would not advocate going off piste like that. I would add that most of the PhDs in pharma and biotech are in the life sciences, i.e. they have no idea about the vagaries of small molecule drugs but plenty about mechanism of action. That ought to offer a point of differentiation….

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  2. Finance? Well, not quite but this is close: One of the times I got laid off, my supervisor did as well. He went into day trading. I got in contact with him a few months later to ask for a reference letter and he was quite happy with how things had turned out for him. He didn't care if the market was going up or down, just as long as it was moving.

    I heard that when the physics market took a big downturn after the Supercollider project was stopped, many of them went off to join Wall Street firms. I remember reading one letter-to-the-editor published after a downturn that was blamed on financial derivatives. It asked "Do we really want our smart physicists colliding derivatives together and not subatomic particles?"

    I'm sure we could ask a similar question of chemists, but I'm short on creativity right now. Anyone?

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    1. Some chemists are going into patent law for lack of research jobs. Do we really want our smart chemists helping big (and small) companies patent everything instead of making new molecules and/or advancing science?

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    2. I am actually thinking of both patent law and finance with my backgorund in Physical Chem. From everyone I have talked to, those two are very promising careers. :)

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  3. A former colleague of mine with a masters landed a job as an analyst. Within the first year, while in school to get his MBA, he was required to pass at least two different licensing exams and be working towards his CFA if he wanted to keep the job.

    Oh, and the hours? 6am to 6pm minimum, usually quite a bit more.

    During this time his wife got pregnant. Not even sure he saw his child much that first year, all for under six figures. The catch is that if you move up and up, you can get filthy rich, if the job doesn't kill you.

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  4. A low barrier for entry is pretty much wrong. Banking is a pedigree obsessed job market and organic chemistry isn't on their radar. Though wall St firms are getting rid of traditional MBA traders in favour of science backgrounds they want quantative sciences and or cs people to support the infrastructure behind their trading.

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  5. Is it possible to get into analyst program of BB IBD with a PhD in computer science? I know I can apply for associate role in Quantitative Research/Strategy group with my degree. But given my extensive community involvement during my PhD, I am more interested to work at front office in IBD/corporate finance. I would appreciate your feedback. Thanks much!

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