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Finance Vs. Economics Masters Vs. MBA

Author: Matthew Taylor

For many individuals looking to advance their career in business, earning an MBA may seem like an obvious way to get ahead. But if you work in the world of finance or economics, you'll have to decide whether getting a specialized degree in one of these two specialties might be a better alternative.

That's no easy decision. Experts suggest there are advantages and disadvantages to each path. What it comes down to is figuring out what types of skills you're trying to obtain and what job you see yourself pursuing once your diploma is in hand.

Specialist or Generalist?

The difference between MBA and non-MBA programs is the difference between a buffet-style business education – one in which you get a taste of every discipline – and one that's intensely focused on one area.

For example, pursuing a Master of Science in Finance means taking a deep dive into topics like investment banking and investment analysis, as well as financial policy and regulation. And in an economics master's program, students can expect to take on computational economics, monetary policy and applied research courses.

While most advanced degrees in business are going to require solid math skills, these more focused programs tend to attract students who are particularly strong in quantitative analysis and critical thinking.

Many finance graduates go on work at major corporations, global banks and mutual fund companies. Though graduates with an economics degree often work in the private sector, many also enter academia – some end up pursing an Ph.D. in Economics afterward – or go into research roles.

If you know you'll need these targeted skills to take your career to the next level, specializing might be the most rewarding path. However, shooting for a more comprehensive MBA degree has merits of its own.

Many employers actually prefer job candidates whose education has focused on the bigger picture. There's a benefit in learning something about a broad range of disciplines – from marketing to accounting and information technology. In a typical MBA program, students gain exposure to all of these areas and in the process gain an understanding of how different parts of an organization relate to one another.

On average, companies are willing to pay a premium for graduates with a well-rounded business education. A recent survey by the Graduate Management Admission Council, or GMAC, found that MBA recipients tend to take home more than those who follow a more narrow track.

A Shorter Path

On the other hand, "functional" programs have significant advantages, compared to MBAs. For starters, graduates develop a specific skill set. In addition, students can often complete these courses in 12 to 16 months, rather than the full two years required for most MBA degrees. That translates into significantly lower tuition costs. It also means more earning potential, at least in the short-term, as graduates can reenter the workforce up to one year earlier.

On top of that, specialized programs typically don't require several years of professional experience, a prerequisite for many MBA programs. Having a lower bar can be appealing to those who know they'd benefit from greater industry-specific knowledge, but haven't built a huge resume yet.

This can be a double-edged sword, however. According to GMAC, employers see employment history – not just a graduate-level diploma – as a key driver of future success. Even if you obtain a specialized degree, companies are likely to look for some relevant work experience. So for many young professionals, it pays to obtain employment for at least a couple years after receiving a Bachelor's, rather than rushing headlong into a graduate program. See Applying To Grad School: GPA Vs. Work Experience.

Preparing for the CFA Exam

If you plan on working in the realm of investments, there's something else you might want to consider when choosing a graduate program. Many of the professionals in this field go on to earn the Chartered Financial Analyst, or CFA, credential, which demonstrates a competence in areas such as accounting, ethics, money management and securities analysis.

Finance professionals can make their road a bit smoother by choosing a master's program that incorporates much of the content for the CFA exam, lessening the amount of preparation they'll have to do later on. A list of graduate programs recognized by the CFA Institute is available on the organization's website.

Interestingly, not all programs affiliated with the CFA Institute are geared toward a Master of Science in Finance. Many MBA programs also help prepare you for a CFA, especially those with concentrations in finance.

The Bottom Line

For many professionals in the fields of finance and economics, a graduate degree can open up new career opportunities and increase one's earning potential. Both MBA and non-MBA programs have certain pros and cons, so it's important to evaluate your long-term goals before choosing which route to take. For more to think about as you're considering this decision, look at Should You Get An MBA? and When Is Grad School Worth It?

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