If you've ever sat through a college class thinking that you could do as well as your professor, you're not alone. While teaching is a lot harder than it looks, there aren't many jobs where you can work nine months a year, do something you enjoy, get holidays, and spring break off, all while earning a six-figure salary at the same time. To many, it sounds like paradise, but like economists say, there is no free lunch. You may enjoy finance and investing as a student, but it is a long way from the student's desk to the professor's.
Teaching classes is only one part of a college professor's ongoing responsibilities. Depending on the school where they work, professors will also have committee meetings and research requirements. The old adage applies to business school professors as much as it does for anyone else in academics—it's publish or perish. Depending on the type of school where they work, professors could be asked to publish as many as two to three academic articles or research papers per year. And publishing isn't so easy always—research has to be rigorous, detailed, convincing, and novel in order to get past peer review.
- With MBA programs still in high demand and Wall Street firms looking to hire financial quants, business school professors are needed to instruct and research.
- Becoming a professor in a business school means teaching, publishing original research, and service—but comes with above-average pay and the hope of tenure.
- To become a professor, you must first obtain your Ph.D. in a field such as economics, finance, marketing, or sociology that a business school would hire from.
Why Business School Professors Are in High Demand
Not to slight English or history professors, but there aren't many private sector jobs available for them, and there certainly aren't as many students lining up at every major college across the United States to get a master's degree in history as there are for the Master of Business Administration (MBA) degree. These two types of demand apply to finance professors and other disciplines like accounting.
While business school professors are in high demand, there is not a lot of supply. By some estimates, there are fewer new grads each year than the number of new job openings (remember, Wall Street wants some of these people as well). Many Ph.D. programs in finance aren't very big and are also not found at many schools. There are very few smaller public universities, nearly no liberal arts schools, and only a select number of the larger schools that even have finance Ph.D. programs. Many states have only one or two programs. In the existing programs, only a handful of students are admitted every year. Another issue regarding the supply of business professors is that many of them are nearing retirement in the coming years. For those entering the field, this may mean big opportunities down the line.
What Does a Finance Professor Do?
Depending on the school where they teach, professors usually have a fairly flexible weekly schedule. The type of workload and research expectations should be an important factor when considering where to work.
Here are a few points to consider:
- A typical teaching load is two to four classes per semester; these classes could involve instructing both undergrad and master level students. If the school has a Ph.D. program, the professor will likely be teaching these classes and/or advising these students.
- Professors conduct their own research (often with graduate students assisting) for submission to academic publications and possibly to industry sources. The more prestigious the university, the more research tends to be emphasized over teaching.
- Even though most students never see this side of their professor's work, professors also serve on faculty committees and advise students. For Ph.D. students, the professor might serve on dissertation committees, working on research with the students and helping to provide guidance in other ways.
Many smaller state and local schools are teaching oriented, while more prestigious schools will expect a lot more in the way of research output. At top-rated schools, "teacher of the year" awards don't carry nearly as much weight as publications in the top journals. Parents of college-bound students should note this as well when considering where to send junior next fall.
How to Get Started
Well, now that you know all about how to become a finance professor, there's just one small problem—in order to teach, you need a Ph.D. Sure, you can teach as an adjunct instructor for the thrill of teaching and a little extra money, but without a Ph.D. you can't get tenure or a good salary. The traditional strategy is to go to the best school you can get into, and go out of state from where you want to end up. The out-of-state strategy is helpful due to the factors of supply and demand. If one is in Iowa for example, then there are many more University of Iowa Ph.Ds looking for jobs than University of Michigan grads. In academics, intellectual diversity is big, but so is prestige.
If you want to work at an Ivy League school and get paid more than $200,000 per year, you'll need a Ph.D. from an equivalent school. The general rule in academics is that you can always go down a notch for work, and usually sideways, but almost never upwards—unless you win the Nobel Prize or another prestigious award. The problem is that everyone in the field knows this and the spots for these usually small programs are extremely tough to get—often much more selective than for top MBA or undergraduate spots.
What's Involved in Getting a Ph.D. in Business?
Depending on one's other graduate education, expect to complete four to five years of school before getting the opportunity to teach those eager young minds. During this schooling, you'll likely take advanced math courses, such as linear/matrix algebra and finite math, as well as a number of statistics-type courses such as econometrics, regression, multivariate and time-series analysis. This is required in order to do the statistical research for your dissertation and other independent research after graduation. This emphasis on math and statistics may be the single biggest hindrance for those considering this field.
Once coursework is done, you will then undertake your dissertation research. The dissertation is a body of original research that makes a novel contribution to the field. In the past, the dissertation was a book-length undertaking, but now it is increasingly common to complete a three-paper dissertation with 3 thematically linked publications in academic journals. The whole process of obtaining a Ph.D. can range from 4 or 5 to as many as 8-10 years to completion.
The Bottom Line
If you want to go to a school that is in the mid-to-upper tier, then your Ph.D. work will have more in common with a math major than a money manager (unless you work at a quantitative hedge fund). If teaching is your passion and perhaps you don't really want to do research with your time, then plan on a teaching-oriented school.
One handy rule is that if a university has a Ph.D. program in one or more business fields (not just finance), then research is usually emphasized. If not, then it's likely more of a teaching university. Even if you don't like research, plan on publishing some articles in academic journals if you want to get tenure.