PHD's Versus MBA's

The new CEO of Citigroup is a CBS alum.......... but he's a PHD and not an MBA. This is a trend to watch in Sales/Trading/Structuring Banking and Hedge Fund career paths. MBA's from finance (or from other disciplines) are the real quants of Wall Street. Even highly academic MBA's with quantitative degrees prior to b-school (former engineers, programmers) can rarely compete in quant software development or heavy-duty statistical programming.

We are also beginning to see them in other situations. I met a PHD candidate in chemistry who was trying for consulting and asked to do case training with us (if she got the job she would have finished 'All But Disseration' - ABD and got a Master's degree of some kind). There was a PHD in my internship program at Deutschebank willing to pursue the Associate career track with us MBA's.

I got to do a first year PHD course in Econometrics in CBS. I think PHD's are different. Not better, although often way smarter in an academic sense. They will run rings around MBA's in computer programming or statistical programming but are way more specialized. They tend to have less skills in sales, networking, public speaking, knowledge of marketing and strategy, group skills, market/product knowledge, behavioral biases and organizational behavior outside of their specialty. A Marketing PHD is going to have marketing knowledge but not the strategy.

A good MBA can have a very strong instinctive knowledge of a product or a financial modeling framework but may not be able to run models that take more than Excel or Visual Basic. Don't underestimate the value-add of the qualitative interpretation of aspects of using financial models, its worth more than the model itself in some cases.

As an MBA interested in quantitative roles, I would take roles with a qualitative or sales aspect to the role. It would be crazy for me to join a software development team for a quant trading package. It would make sense for me to do quantitative structuring for a client who will know me face to face and needs bespoke aspects to his package. If I was in Fixed Income, I would go in areas like Distressed which would require an understanding of restructuring which is qualitative. In Equities, figure out a way to play on your skills in the qualitative or strategic aspects of valuation. Equity valuation (because of the strategic component) is often an area that PHD's are challenged by.

It gets back to the big lesson of my strategy class. Doing everything is not a strategy. Trying to keep up with programming skills just to compete with PHD's is not the smartest thing to do once you are an MBA.