Do you know that specialized master’s programs such as Master of Finance (MF) and Master in Management (MM) are steadily climbing popularity charts as their appeal to certain segment of applicants grow?
According to Graduate Management Admission Council’s (GMAC) 2015 Prospective Students Survey, the interest of prospective students in MBA and specialized master’s programs was as follows:
In 2014, 48% (22% + 26%) considered a specialized master’s program. That’s substantial. Moreover, the interest in these programs has clearly increased in the last few years.
They (MBA and master’s programs) appeal to different segments of applicants. Here are key differences between the two that will help you finalize the one which is more suitable to you.
(Note: Admission policies of schools and guidelines for standardized tests can change. Refer to their website for the most updated information.)
Program offering
Whereas an MBA program provides more broad-based skills in finance, marketing, accounting, organizational behavior, and leadership, a master’s program focuses on a single stream. They are even more specialized than the specialization (or major) track in an MBA program.
A Master of Finance (MF) program, for example, will cover topics such as quantitative finance, investments, markets, financial theory, risk management, financial reporting & analysis, and valuation. And an MF program has different flavors such as computational finance (ex: CMU) and financial engineering (ex: Columbia).
Likewise, a Master of Accounting (MA) program covers the subject of accounting in more depth – financial accounting, advanced analysis of financial statements, auditing, federal taxes, tax & business strategy, fraud prevention, and international financial reporting standards. MA too has variants such as Master of Accounting, Master of Professional Accounting, and Master of Science in Accounting.
Finally, a Master in Management (MM) program covers areas such as Finance, Marketing, Strategy, Statistics, Economics, and Operations Management. Depending on marketing strategy of the university and course design, an MM program, too, may come in different flavors such as Master of Management, Master of General Management, Master in International Management, and Master of Management Studies.
Eligibility
The application requirements of master’s programs are similar to that of MBA programs on most counts: GMAT/ GRE, TOEFL, essays, recommendations, resume, undergraduate transcripts etc.
The two major differences, though, are mandatory prerequisite courses and quantum of work experience.
Prerequisite courses
Whereas MBA programs typically don’t require any prerequisite courses in its eligibility criteria, master’s programs mostly do. Few, especially those offering master’s programs in finance and accounting – where quantitative skills are more valued than even an MBA program, go a step further in requiring particular undergrad degree instead of just prerequisite courses.
For example, Michigan Ross mandates following prerequisite courses in the eligibility criteria for its Master of Accounting program: Principles of Financial Accounting, Principles of Managerial Accounting, Intermediate Financial Accounting, Principles of Microeconomics, and Statistics. On the other hand, Ross requires only a pre-calculus course for its Master of Management program and none for its Master of Supply Chain Management program.
That’s generally the rule of thumb: more specialized the master’s program, more are the prerequisite courses, and more advanced the quantitative skills required.
As Martin Widdicks, director of the Master of Science in Finance program at University of Illinois, College of Business, says:
Prospective students with an undergraduate degree in a quantitative subject or finance, and some years of work experience, might have an easier time in a finance program. Softer skills students struggle a little bit more with the material.
Work experience
Almost all master’s programs are for applicants with 0-2 years of work experience. In fact, some prescribe a cap on the applicant’s age. For example, Michigan Ross has following eligibility criterion for its Master of Management program:
All applicants must have completed their undergraduate degree no more than two years prior to enrolling in the MM program. The program is designed for candidates with little to no full-time work experience. Candidates with some (e.g., one year to 18 months) work experience are eligible to apply. Candidates with more work experience are encouraged to apply to our other graduate degree programs.
Similarly, London Business School recommends its Masters in Financial Analysis program for applicants with one year or less experience.
There are few exceptions though where master’s programs are specifically designed for students with longer work experience. A case in point being Masters in Finance program at London Business School, which recommends its full-time format for applicants with 3-6 years of finance experience and part-time format for those with more than 6. These are exceptions, though.
The much-less work-experience requirement in master’s programs also explains why a strong academic background carries more weight here.
Duration & Cost
Whereas most MBA programs are two-year, most master’s programs are just a year long.
Difference in overall expenses is steeper. Whereas a two-year and one-year full-time MBA programs cost you in the range of USD 200,000 and USD 110,000, respectively, a master’s program typically costs USD 70,000.
Career prospects
For whom
Whereas an MBA program is ideal for experienced (5-6 years) professionals seeking career change, a master’s program is typically for young graduates with little to no work experience who are seeking to start their career in a specialized field. The two programs, thus, cater to different sets of applicants.
A master’s program helps recent undergrads differentiate themselves in a competitive job market and get opportunities to work with reputed companies in the industry they already are in or aspire to join. It also generally helps them get higher salary than their peer group.
Compensation
Graduates from a master’s program typically start at analyst or equivalent level, as they mostly have little to no work experience. Therefore, their starting base salary is typically in USD 60-70k range in comparison to USD 120-130k for MBA graduates.
Network
A master’s program, though, offers a much more focused networking opportunity than an MBA program because in a specialized program your classmates are much more likely to stay in the same industry over the long run unlike an MBA program where your classmates will eventually join a wider variety of industries post-MBA.
Where do graduates of master’s programs work?
A graduate from an MF program can expect to work predominantly in industries such as investment banking, asset management, private banking, private equity, hedge funds, and commercial banking, and even in consulting. For example, approximately 70% of graduates of Masters in Finance program from ie business school join finance roles, but nearly 20% join consulting firms as well.
A graduate from an MA program can expect to work in accounting firms such as E&Y, Deloitte, KPMG, and PricewaterhouseCoopers; investment banks; management consulting; or pursue the CPA path.
However, graduates from an MM program can expect to work in a relatively less-skewed set of industries: management consulting, technology, consumer packaged goods, manufacturing, hospitality, retail, and public sector, to name a few. For example, graduates from Masters in Management program, London Business School, join consulting, finance, and corporate sector in similar numbers.
Popular rankings
MBA:
MF:
FT and Poets & Quants
MM:
Summary
Conclusion: which one is for you – Master’s or MBA?
Do you’ve more than three years of work experience?
If yes, then master’s programs are typically not for you. They are more for applicants with 0-2 years (most with less than one) of work experience.
Most graduates from master’s programs start at entry-level positions. You’ve to remember that most recruiters coming to campus specifically look for certain positions (entry-level in this case), and if you are more experienced, you might have to broaden your search outside the normal recruitment channels in order to land a job which leverages your significant work experience. And that’s not always easy. For the same reason, in fact, older students (10+ year work experience) in full-time MBA programs face challenges in finding jobs which build on their past experience.
However, there are master’s programs (such as Masters in Finance program at London Business School) which are specifically meant for applicants with substantial work experience. They are few, though.
Are you a recent graduate and want to work in a specialized industry such as finance?
The best option is to target a specialized master’s program.
Are you a recent graduate and are not sure about entering a specialized industry?
It’s difficult to get admission in an MBA program with 0-1 years of experience. Therefore, MBA should not be your target at least for few years.
In that case, are you satisfied with the job or industry you are in? If you are, then you may wait few years and do an MBA directly, provided you are willing to commit the amount and time required for it.
If you are not satisfied with your job or industry and you are eager to make a move, then the best course of action is to aim for an MM program, something that will provide recruiting options to a broader set of industries unlike, say, an MF program.
However, while taking these decisions, you’ve to first clearly outline your career goals, and evaluate which programs are the best for achieving those goals. And don’t limit yourself to research on just internet. Talk to members of the admission committee and, more importantly, the alumni who are pursuing the career path you want to.
Also, understand subtle differences between different variants of a master’s program. A Master in Finance, for example, can be very different from a Master in Financial Engineering (MFE) both in curriculum and fulfilling your career goals. An MFE is essentially an applied mathematics degree requiring much higher level of quantitative skills along with programming skills. On career opportunities front, MFE graduates play in a very niche, though highly coveted and hence super-competitive, market of hedge funds, quantitative financial groups, and risk management teams.
You’ve to understand these differences between different programs and evaluate their suitability based on your aptitude and career goals. And not on sexiness of the program.
