We had a talk yesterday at lunchtime from an alumnus who graduated with a physics degree, got a Ph.D. in Physics, did a couple of post-docs, and then decided to give academia a miss, and went to Wall Street where he’s been a financial analyst for the last 12 years. He talked, mostly for the benefit of students, about his path to the world of finance, and what’s involved in financial jobs.
This was terrifically interesting, and really useful. Given the way academia works, people who manage to get tenure-track faculty positions almost never have any first-hand experience of the other career possibilities for students with a degree in physics, so even second-hand information is great to have when it comes time to advise students.
This was also an excellent talk, because he didn’t sugar-coat things at all. He talked about jobs in finance in a very direct and detailed way. Distilled to a few bullet points, what he said was:
- Wall Street has jobs for people who are good with numbers
- Finance jobs are very hard work
- Finance is not science
- There is compensation for all the hassle
Expanding on these:
Wall Street has jobs for people who are good with numbers. He laid out a bunch of different kinds of financial analysis positions, and noted that physics majors are suited to any of them, if they want. There are jobs for people with undergraduate degrees– generally entry-level analyst positions that only last 2-3 years– and jobs for people with Ph.D.’s– generally starting at a higher level in the company.
He noted that MS degrees in physics are still widely regarded as a consolation prize for not getting a Ph.D. When I asked whether that would be held against an applicant, he thought for a moment, then said “We would prefer you to come to us after succeeding at something than after failing at something.”
In general, he said that computer skills are absolutely essential. Most of their programming is done in C++, and most of it also needs to interface with Excel, so it can run in the background for people who didn’t write the code. There are also a fair number of tasks involving the Web-, such as automatically downloading data updates from government agencies, and that sort of thing. Students interested in finance jobs should emphasize those skills.
Finance jobs are hard work. He noted that people on Wall St. can expect to work 11-12 hours a day, plus occasional weekends. It’s not just entry-level people who do the 60-hour weeks, it’s everybody in the company. He said that students who have any ambition to do something else– community service, hobbies, generally having a life outside of work– should stay away, because that doesn’t fit with the job.
He said that at his last job, he would have no hesitation about calling an analyst on a Saturday morning, and saying “I know you had plans for the weekend, but we need you in the office today to work on something that will take you until late Sunday night.” His boss would have no qualms about calling him and doing the same thing.
Finance is not science. Relative to the computational problems in physics, the actual computational details of what financial analysts do are “baby stuff.” He said that unlike science problems where most of the work is in figuring out how to do a calculation, in finance the work is all in doing the calculation. The techniques they use are all pretty standard, and don’t vary all that much, the trick is getting through all the necessary steps in time to meet deadlines and make deals.
He said that what he does is challenging and interesting, but that the nature of the challenge is not at all like the intellectual challenge of doing science. It has a completely different feel.
There is compensation for all the hassle. The work is hard, the hours are long, there’s no job security, but if you’re good, you make shitloads of money. Period.
He said that there’s also a certain amount of thrill to the job, in knowing that code you write will drive decisions that make or lose millions or billions of dollars for people and companies. Working on Wall Street puts you at the center of the engine of capitalism, and it’s a kick to take a limousine home at two in the morning.
All in all, his talk confirmed that I could never have gone the Wall Street route. It did make the process a lot more clear to me, though, and some of the things he said will be essential information the next time I teach our senior thesis seminar (hence this blog post, as a permanent record…).
One final note: After the students had cleared out, I asked jokingly “At what point in the modelling process does one become convinced that giving subprime mortgages to people with no assets and no income is a great investment?” He rolled his eyes, and said “Look, I’ll have you know that the group I was with was shorting mortgage-backed securities last February.” He said that anybody with any sense knew this was a catastrophe coming, and that the whole mess had a lot more to do with psychology than financial models.