Can someone give a honest and well argumented opinion of why most of the positions being advertised for Quants take only PhDs?I have bee really thinking about this and don't find a very strong objective reason. A person who has done a PhD in Physics has probably chosen a field that is not very related. Even if he had done Quantum Mechanics.. he still has to learn a lot about the financial intuition. Let's say there is a candidate with a strong knowledge of Stochastic Modeling (numerical methods) and all that stuff plus the financial intuition. Let's say that both of them were acquired in a strong MSc Program (Fin math). Why is the PhD candidate better suited?The above, of course, is my case. However, I do not intend to work as a Quant but to go for a position in Sales. Nevertheless, the topic has really bother me for I have not been able to find anyone who can give me well argumented answer.Everyone mostly say that you have to have one. That is the way the system works. Or that a PhD is a proof that you can do reasearch and learn on your own, etc.. those are valid point but does not make the requirement a must....

There are lots of candidates out there. And if a company has to choose between two candidates, and the only difference that the company can tell is that one has a PhD, the company will generally choose that candidate.Now in reality, the two candidates are never the same, however the interview game is never one of complete information, and the existance of a PhD is one of the few very objective elements of a CV (c++ programming experience is another). For this reason, they are given more weighting in an interview situation than they probably deserve in a lot of job situations.And the situation becomes even more extreme when you are dealing with recruitment firms.

let me just give you the three i consider the most importantoriginality (whereas masters is much more about understanding what others have done with minimal scope for originality)duration of study (1 year+ is unlikely to match 3 years+)perseverance (masters don't have to tidy up all the loose ends when solving a problem)

Because we are smarter than other people. Well, no, that's not the realreason. Ask your question about a doctor -- is it really neccesary to go to all thatschooling and residency programs just to be able to prescribe a little medicationor perform simple surgery? Couldn't a really clever person with a little trainingwho has read up on the techniques and dosages and stuff do just as good a job? Or what about a lawyer? Is it really neccesary to go to law school and passthe bar just to do most of the really simple pedestrian stuff that legal work entails?Wouldn't it be just fine to have somene who has worked as a paralegal (and whoprobably knows more than the lawyers anyway) just look over the forms? A PhD is a professional degree, not just a skill set. A PhD should be requiredfor positions that require not merely a certain set of skills, but someone whosework can be trusted and relied upon. It is expected that a professional will beable to recognize when a cookie-cutter approach will not work or is not workingand can adapt the standard techniques and/or innovate new techniques whenneccessary. Of course, I recognize that it doesn't always work out this way and sometimespeople -- even PhDs themselves -- do consider a PhD to be nothing more thansuper-sized skill set [or a super-sized brain. ]

probability of passing interview is higher if the candidate has a phd, you have 100 cvs on your desk, 15% have phds, 85% do not.you compute expected no. of successful candidates is > 1 if you only interview phds so you only interview the phds.

QuoteOriginally posted by: gjlipmanThere are lots of candidates out there. And if a company has to choose between two candidates, and the only difference that the company can tell is that one has a PhD, the company will generally choose that candidate.Now in reality, the two candidates are never the same, however the interview game is never one of complete information, and the existance of a PhD is one of the few very objective elements of a CV (c++ programming experience is another). For this reason, they are given more weighting in an interview situation than they probably deserve in a lot of job situations.And the situation becomes even more extreme when you are dealing with recruitment firms.BTW having a PHD in maths or whatever does not necessarily mean that you are a better programmer in C++ than someone with not a PhD. C++ programming has to do with computer science, another discipline/skill that just-finished PhDs have to learn. Becoming a real good C++ programmer can take between 2 and 5 years.So IMO once you get the PhD, that's when life starts and then you realise how much you do not know. Get ready for the culture shock (I had mine in 1979).

QuoteOriginally posted by: SkyhawkBecause we are smarter than other people. Well, no, that's not the realreason. Ask your question about a doctor -- is it really neccesary to go to all thatschooling and residency programs just to be able to prescribe a little medicationor perform simple surgery? Couldn't a really clever person with a little trainingwho has read up on the techniques and dosages and stuff do just as good a job? Or what about a lawyer? Is it really neccesary to go to law school and passthe bar just to do most of the really simple pedestrian stuff that legal work entails?Wouldn't it be just fine to have somene who has worked as a paralegal (and whoprobably knows more than the lawyers anyway) just look over the forms? A PhD is a professional degree, not just a skill set. A PhD should be requiredfor positions that require not merely a certain set of skills, but someone whosework can be trusted and relied upon. It is expected that a professional will beable to recognize when a cookie-cutter approach will not work or is not workingand can adapt the standard techniques and/or innovate new techniques whenneccessary. Of course, I recognize that it doesn't always work out this way and sometimespeople -- even PhDs themselves -- do consider a PhD to be nothing more thansuper-sized skill set [or a super-sized brain. ]I believe that most of the things that you guys have mentioned, are totally understandable. The problem is that that does not mean that the Master graduate does not have the skills as well. Those arguments only speak for a PhD, but not against a MSc..Now, when it comes to a candidate who has a PhD in Math Fin or Fin or any very related topic, It is clear that the difference in years of study makes a lot of sense. The same goes for the MD and the Lawyer.. you have the knowledge and intuition from the same field.Now, I also understand that for the manager recruiting, it could be an advantage to pick CVs of candidates with PhDs only. In that way he is filtering in a big way. Although he is taking the risk of not getting the best candidate.I really admire those who have put the effort and dedication to go for the very tiring process of going through a PhD program. However, that does not make them better. It makes them expert in their field of study though. But isn't it usually narrow?I have been reading a bit about the history of how mathematicians and physists and many other started to play a big role in Finance. Sources like Capital Ideas and other papers and have given me a view (although it could be the wrong one). One of my conclusions is that back then, there were no programs tailored to the field (for obvious reason). Academics started to introduce the concepts of Continuos Time Finance and all of that to the field and the field started to get very technical. Most of those technical concepts were not even being covered in undergrad. Advanced math, statistics (probably still a branch of math back then), physists and eletrical engineers were one of the few who knew how to work with the tools. Then you needed someone to be able to learn fast and keep up with the evolution of the field provided by academics. Someone who has done a PhD has (on avererage) the required skills in both, the techincal concepts and the ability to keep up with academia. However, the finance concepts and intuition needed to be picked up on the battle field.Nowdays, these tailored programs do exist. Programs like CMU, Courant, etc are doing a very good job at traning people within a master program to go out there and to my opinion do the job as good as a PhD in let's say Electrical Engineering, Physics.. etc.. this candidate with only a Master could have even picked up the C++ skills during undergrad, etc..One of the reason I have been thinking about this topic is the due to the fact that I have been seing young adults (let's say early to mid 20s) running around college looking for an advisor so they can get accepted as PhD candidates. You see then one day being down and approach them. What's wrong?? A: I have not been able to get a supervisor and my career is done. My question is always Why? Quants get a job only with a PhD. It really bothers me that the reason and motivation for these young bright adults to get a PhD is mostly due to a Job requirement (not really good argumented) and not due to the passion and love to the field. Then I ask them in what are they want to do research on and the automatic question (no joke about this.. it is almost 95% of the cases) you can take a guess!!! Credit Risk. Credit Derivatives.. Why? the market is hiring in that area like crazy.. that is their answer. Do they really know and love that area? I doubt it.Ok.. I agree with some of you who will jump now and say that their motivation to begin with was Money!!! that could also be true. But not all of them..Anyway, thanks for the post and just to make things clear. I am not against PhD. Quite the opposite, I admire them. What I am against of, however, is the "anti MSc good qualified candidate policies" out there. But then again.. who am I to be against that..cheers,

Xango, perhaps it's a remnant of history where long ago PhDs were hired and gradually become hiring managers favoring an at-par candidate. Trust, reliability, whatever, are the reasons. But psychologically, would someone having spent 5 years in PhD be easy on others having just a year of education to do the same job and make the same money? I might be naive though... but this psychological barrier may be the hardest to break, don't you think?

as far as I am concerned it is largely a matter of culture. In the anglo-saxon world the PhD is the highest academic distinction. Personally I agree very much with the point of view expressed in this thread that you simply can't compare a masters program with a PhD. It is just not the same thing. I would assume that almost any PhD in a quantitative discipline would be able to catch up the sort of course material that peoplestudy in masters degrees. as a matter of fact this assumption is a reality in the business world. now, cultural, because take France for example. In France PhD work is considered as a debilitating activity. There, people believe in the engineer's diploma only, and preferably from school A over school X. It is known that a PhD is considered as a handicap to enter a corporate position. The reason for this is simple, most schoolpeople don't have PhDs, but go straight from the ecole to a job, so obviously it is a lobbying thing to declare all PhDs as dreamers who don't know what work is and spend their time on academic problems. at the end of the day it is only about people, and that is the only thing that matters. it is so often sickening on this forum, how people tend to forget that it is the quality of an individual that counts, not so much the system she has been through.

Why only PhDs ? should be why MAINLY PhDs ?there are indeed some guys out there with MSc. Why don't you worry about the undergrad as well.I think one of the reasons that has not been said here is: An MSc thinks he knows while PhDs know that they don't know.

It's largely a matter of culture, yes, I agree. I myself helped interview a handful of candidates for a position. One of them was a fresh MSc in computer science (not even Math. Fin or Fin. Eng.), the others were PhDs from various disciplines. In my part, I tested them puzzles and math background, the MSc guy turned out to be SUPERIOR to others. Eventually about 10 interviewers of us converged to the common conclusion, each giving him absolute grade; he got the offer.

It is crucial for most quant jobs to have a firm understanding of stochastic differential equations and its relationship with finance. A PhD in math or physics has had to develop understanding of advanced and highly mathematical topics and thus is considerably more likely than a random master's graduate to be able to really understand the math enough to do well as a quant. I realize it's not an if and only if thing, but given the huge number of job applicants for these positions the companies might as well use a PhD as a criterion and sort the resumes further after that.

A couple of truisms, that are worth repeating in this context:- Some PhD graduates are absolutely useless.- Some people are naturally brilliant, and would easily achieve greatness in finance without a PhD.- There is no single (useful) skill or even outlook, that you cannot achieve without a PhDIt is just a probabilities game - I guess most employers feel that given two candidates, with no other means of telling them apart, the one with a PhD will be more likely to do well. From other people's comments, I think there is a lot of backlash against masters graduates, which is probably due to a large number of them out there that think that just because one owns a recipe book, one is a chef.

I am not scaring you, but here is the fact.

QuoteOriginally posted by: sammusI am not scaring you, but here is the fact. Facts? Come on, those are not facts...those are one guy's satirical - in a stupid manner - frustration with his life. We're talking strictly Financial Math here, not other science and computer science degrees. Let's compare green apples to green apples, not green apples to red apples How can a Financial Math M.S. candidate expose himself to be equally as attractive to HHs as a PhD? Perhaps if he takes a few stochastic differential equations courses, functional analysis courses, et al?If not, then what are the M.S. students good for? Bitch work?Cheers,Rafael