If you aspire to a career in finance, what’s the best program to help you achieve your dream? Two of the most common paths are an MBA (master’s in business administration), with a concentration/specialization/certificate in finance, and an MFE (master’s in financial engineering), which is sometimes called a master’s in financial mathematics. Although there is some overlap between the two paths regarding the coursework and career options available upon graduation, there are some important differences.
An MBA is a general management degree that exposes students to finance courses, but they are required to take a broad range of classes including strategy, accounting, operations management, economics, statistics, marketing, and—importantly—leadership classes. A typical MBA program lasts two years and includes a summer internship in between. In contrast, MFE degrees are finance focused, usually one year in duration, and heavily quant oriented, with a specialization in a certain type of finance such as risk management, options pricing, or programming.
Here are some things to consider as you weigh your options:
Ready to put all your eggs in one basket?
Do you know FOR SURE that you want a long-term career in the financial industry? Or, can you see yourself being happy working in another industry? An MBA is a very broad degree that gives you a safety net if a career in finance doesn’t immediately present itself or if you change your mind. With an MBA, you can also pursue a traditional post-MBA function such as consulting, banking, or entrepreneurship. On the flip side, the focused nature of an MFE will make you a compelling candidate for niche quantitative areas of finance such as options pricing, fintech, data analysis, and programming.
Are for loops and if-else statements your second language?
Honestly assess your programming ability. If you haven’t coded extensively, you will be at a disadvantage relative to your MFE classmates who have this experience. Several quantitatively inclined MBA programs such as Chicago Booth feature programming-oriented finance coursework, but these courses are typically optional and not as challenging as their financial engineering program counterparts.
Build it or sell it?
Consider what you would like your career to look like. Do you see yourself in a hands-on role within a finance organization? Alternatively, would you prefer to be more strategic, dealing with clients and marketing your product, or be more involved with building or selling the product? An MFE will prepare you well for the former, while an MBA—with its broader array of course offerings in marketing, competitive strategy, and organizational behavior—will prepare you for the latter. The more comprehensive set of leadership coursework offered in a business school program will prepare you for a strategic management role.
As with many decisions, there are opportunity costs and real costs to consider. An MFE program is typically much less expensive and shorter than its MBA counterpart. Are you willing to take on greater student loan debt, lose an additional year of income, and spend an additional year in an MBA program? Make an honest assessment of your savings, family resources, and willingness to incur student loan debt.
So, where are you from?
If you are not a US citizen or a permanent resident, you will face additional challenges when applying for graduate school—including financing your education and ensuring you will have a viable immigration status in the United States after graduation. Even just a few years ago, an MFE could make it easier for international students to stay in the United States, as many financial mathematics and financial engineering programs qualified for a STEM extension, but most MBA programs did not. Now, most MBA programs also have STEM tracks or majors that give graduates a STEM extension. Without a STEM designation, non-citizen graduates can stay in the United States for 12 months before needing an H-1B visa, while graduates of STEM-designated degree programs can remain working in the country for an additional 24 months.
It’s not necessarily either/or.
Most MBA students have four to five years of full-time work experience, and it’s difficult to be admitted with significantly less, while MFE students are often admitted directly from college. If you earn an MFE immediately after college, you can then work in a finance role for several years before pursuing an MBA to enhance your leadership and strategic skills. Working for a few years will enable you to take on leadership roles in the workplace or outside of work, making you a more compelling MBA applicant.
Both programs have pros and cons. Before you decide, do some serious introspection about your short- and longer-term goals, finances, and geographic preferences. Reach out and talk to people who have earned MBAs and MFEs, and challenge your initial biases and perceptions about both programs. Although you may be able to achieve similar goals with either degree, you will save yourself a lot of time if you choose the most appropriate option for you.