What You Should Pick for Your Major, 2015 Edition: Is It Time to Start Learning Partial Differential Equations?
“What’s your major?”
It’s a familiar greeting if you’re in university, but it’s also a common way for bankers to assess you.
If you don’t choose carefully, you’ll have a much harder time breaking into the finance industry.
And if you do choose carefully, you might be able to break in even with other flaws, such as weak internships.
I addressed this question a long time ago (2010) in an article on the ideal major for investment banking, but there have been significant changes since then.
Last time around, I recommended gaining solid knowledge of accounting and picking a major that would allow you to earn a “good GPA” and that would also support your story.
But I also cautioned you against taking too many advanced, technical classes that might sink your GPA.
Today, though, the level of technical rigor in interviews has increased dramatically.
Students learn the key concepts earlier, interviewers have higher expectations, and math and computer science skills are more important than ever before.
So, should you now do the opposite and start learning partial differential equations?
What Has Changed Since Last Time?
Many of these changes correspond to the changes in interviews over the past five years.
First off, it has become much harder to do something unrelated to accounting or finance and then BS your way in at the last minute.
At the minimum, you need to know accounting quite well: if you can’t answer questions about the three statements, your chances are very low.
Second, the GPA requirements have increased. While I’ve mentioned a 3.5 / 4.0 under the U.S. system as a requirement in the past, today many banks are looking for more like a 3.8.
You might still be able to get in with a lower GPA if you’re at a top-tier school, but it’s still harder than it used to be.
I’m not sure if banks in the U.K. are now looking for first-class honors rather than a 2:1, but academic rigor everywhere seems to have increased.
Third, math and computer science skills have become more important.
No, you don’t need to know C++ to get into investment banking, but if you ever move into a more quantitative role like risk management or algorithmic trading, you’re going to need these skills.
In the future, you might even be viewed as “illiterate” if you cannot at least understand basic code.
In short, you need more technical knowledge, you need to know it earlier, and you need to get better results in your classes.
What Hasn’t Changed?
With that said, some things haven’t changed since last time.
For example, I still view double and triple majors with skepticism because of the time required and the negative impact on your GPA.
Yes, you need to know more, but this doesn’t mean you should triple major in Accounting, Finance, and Electrical Engineering: pick one, and take a few classes in the others.
Bankers also still view certain majors as being easier or harder than others, so they may be a bit more forgiving on your GPA if you picked a “harder” major (engineering and the hard sciences).
Finally, you still need a major that supports your story but which also gives you enough time for one good outside activity and sufficient time to network and recruit for internships.
The ideal major depends on your career goals, but for investment banking, private equity, or hedge funds based on fundamental analysis, you can’t go wrong with:
- A heavy accounting concentration.
- One or two finance classes.
- At least one introductory computer science class.
- And at least one writing-intensive class (as a banker, you are mostly writing).
I am NOT listing economics because it is, at best, marginally useful for most IB/PE-type roles.
And you spend most of your time in these jobs on financial statement analysis, so accounting is more relevant than finance.
Also, it’s easier to learn finance on your own than it is to learn debits and credits and journal entries on your own.
Even if you have no interest in IT or in working at a tech company, you should still take at least one introductory computer science class because software is eating the world.
Plus, this knowledge will open up some “Plan B” options such as project management and sales roles at tech companies.
What About the Liberal Arts? Or Engineering? Or Other Majors?
Yes, you could still major in something else such as the liberal arts or engineering and win internships and then full-time offers in finance.
However, I would only recommend this plan if:
- You are self-motivated, you’re excellent at self-study, and you’re confident you can learn accounting and finance via online classes, books, and other sources.
- You’re on the quarter system rather than the semester system, and you therefore get to take more classes.
If you’re going for more quantitative roles, such as algorithmic trading or risk management, you should think about a Math or Computer Science major and still take a few accounting and finance classes on the side.
What If You Got Started Too Late?
“OK,” you say, “All that makes sense, but what if I just realized in my third or fourth year of university that I want to get into the finance industry? I’ve already finished most of my major.”
First, I have to be honest with you: you stand a low chance of getting into the industry out of undergraduate these days if you got started very late.
So you have three main options if you’re in this boat:
- Delay your graduation and try to finish at least a minor in accounting or finance. This strategy also gives you another chance at internship recruiting.
- Pound the pavement and learn what you can on the side. You’ll get the inevitable questions about why your coursework is not relevant, which you’ll have to answer by saying that you started late and have been catching up on your own.
- Go for a Master’s Degree or MBA degree in the future. You need to consider both of these quite carefully because they are expensive and time-consuming; they should be methods of last resort, not your preferred solutions.
Example Paths to Follow
To put everything together, here are a few example “paths” of majors, activities, and internships you could follow:
Path #1: The Early Starter
You arrive on campus and know that you want to be an investment banker from day one. That means you may have some psychological problems, but we’ll ignore them for now.
Year 1: You start an accounting major right away, and you also take an introductory CS class. You complete a summer internship at a local small business and help them with bookkeeping tasks. You also join the student-run investment club and play football at school.
Year 2: You continue with your major, also throwing in a finance class or two. You network for a rotational summer internship at a large bank, but it doesn’t go anywhere and you do a private equity internship at a local firm instead. The internship mostly consists of cold calling.
On a positive note, you get elected to a leadership position in the investment club.
Year 3: You continue with your accounting major, and you also add a writing-intensive class on medieval literature to improve your communication skills. Your GPA is on the low side (3.6 – 3.7), so you take a language class to boost your grades.
You recruit for and win a summer internship at a bulge-bracket bank after a significant networking effort.
Year 4: You convert the summer internship into a full-time offer. You’re almost done with your major in your first semester, so you spend the rest of the year relaxing and taking other classes you’re interested in.
Commentary: Besides the early start and the solid internships, here are a few other things this student did right:
1) Quality, Not Quantity, of Activities – It is much better to do one or two activities well than it is to put a half-hearted effort into ten different activities. This strategy also makes it easier to maintain a high GPA.
2) Strategic GPA-Boosting Classes – One benefit of starting your major early is that it gives you “cushion room” for boosting your GPA with easier classes later, if need be.
3) PE Internship to Investment Banking – PE internships at smaller, local firms are a good “backdoor” into investment banking because there’s less competition and a lower technical bar, and the work still looks relevant to bankers.
Path #2: The Undergraduate Career Changer
Now imagine that rather than going into finance, you want to do something useful for the world and become a doctor… so you major in biology. Oops.
Year 1: You’re not quite sure what you want to do, so you take a bunch of random classes in your first semester and join five different student groups. You settle on biology in your second semester, and then complete an internship in the university lab over the summer.
Year 2: By the end of the year, you develop an urge to decapitate all the other pre-meds with a bloody ax coated in cobra venom. Biology is not for you.
You get interested in finance via a family friend who’s a stockbroker. But it’s too late to switch your major, and to make things even worse, you’re working in a hospital over the summer.
Year 3: Your recruiting attempts for IB roles at large banks go nowhere since you don’t have relevant internships and since your GPA is on the low side (3.4) due to the crazy pre-meds (the ax just wasn’t effective).
The best you can manage is a private wealth management (PWM) internship at a middle-market bank; you also complete two accounting classes.
Year 4: You delay your graduation by a semester to give yourself enough time to finish an accounting minor and, more importantly, to give yourself another go at recruiting.
You network extensively but still can’t crack the bulge brackets due to your still-lower GPA (3.6); you land a summer internship at a healthcare-focused boutique bank.
Year 5: You finish your minor and decide to accept a full-time return offer from the boutique bank, understanding that it’s quite difficult to win a full-time offer at a different, larger bank. You continue to boost your GPA and get it up to a 3.7 by the end.
Commentary: A few things I’ll point out here:
1) Lack of Focus Will Come Back to Haunt You – Yes, pre-med classes are tough, but I would bet that some of this student’s lower GPA was due to so many activities.
2) Take What You Can Get – No, a PWM internship is not ideal for getting into IB, but it’s a hell of a lot better than working in a lab or doing nothing at all. Similarly, it’s often easier to use lateral recruiting to get into a large bank than it is to use accelerated recruiting.
3) Make a Delayed Graduation Serve Many Purposes – Notice how this student used it to complete a minor, win a better internship, and yes, boost his GPA. Yes, low grades may still hurt you even in the future.
Path #3: The Quant
Now let’s say you’re more interested in the trading side, and that your long-term goal is to work at a quant hedge fund.
Year 1: You take a bunch of CS, engineering, math, and finance classes since you’re not exactly sure what you want to do.
You get addicted to day trading midway through the year, and decide that trading might be for you. But you also feel like you’ve just sold your soul, so to gain redemption you volunteer to build orphanages in Belize over the summer.
Year 2: Now you decide you want to focus on programming and automated trading, so you declare a major in computer science and a minor in finance, with an accounting class or two on the side.
You join the stock trading club at school and practice Brazilian jiu-jitsu in your spare time. You do a summer internship at a small prop trading firm.
Year 3: You continue with your major, which takes up most of your time this year. But you have a “borderline” GPA of 3.5, so you investigate options to boost it before you graduate. Despite a lower GPA, you manage to win a bulge-bracket sales & trading internship via an aggressive networking effort.
Year 4: You receive a full-time return offer, but you decide to interview around at prop trading firms and hedge funds. You don’t have much success, so you end up accepting the return offer. And then you use some free time this year to boost your GPA a bit more.
In this case, technically the student did not achieve his goal of working at a quant fund.
However, it’s exceptionally hard to get in right out of undergraduate, and by going to a large bank he has set himself up to do execution trading at such a fund later on.
Actually becoming a quant there would probably require a more advanced degree, so this is the best result for his education level.
How to Pick Your Major: Got Partial Differential Equations?
While the main principles behind major selection haven’t changed that much, bankers’ expectations and the most useful skills have changed.
You need to start earlier, you need to take classes that are more relevant to the job, and you need to earn as high a GPA as you can.
It’s not necessarily the end of the world if you decide on finance late in your degree, but you will need to change your tactics to have a good shot at getting in.
Should you start learning how to solve partial differential equations?
Is it time to start cracking open advanced math textbooks?
Do you need an in-depth class?
But it wouldn’t hurt to learn the basics.
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