Is the lure of finance degrees fading? Here’s what the data and experts say.
Welcome to Finance Wrap-Up UK – your fortnightly newsletter, created by LinkedIn News UK finance editor Manas Pratap Singh .
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Last week, anxious A-level students faced the recurring dilemma: should they pursue a university degree or dive straight into the workforce? For those considering degrees in finance, the decision was particularly fraught.
Not long ago, a prestigious “top tier” university degree would?unlock access to the financial industry's most coveted jobs. Top Wall Street firms, hedge funds and investment consultancies relentlessly vied for graduates of elite programs, valuing their academic pedigree above all else.
But times have changed.?
Today, higher education seems to be losing its lustre in recruiters' eyes as practical skills and hands-on experience increasingly become a priority. Research by the Institute of Student Employers — formerly the Association of Graduate Recruiters — found that less than half of recruiters required a 2:1 degree in 2022, compared to three-quarters in 2014.
Data from LinkedIn also reveals this shift. According to The Future of Recruiting 2023 report, UK job listings requiring degrees fell 90% between 2021-2022. Globally, recruiters increasingly prioritise skills over degrees, with 25% now more likely to search by skills than they were three years ago, and 50% more likely to search by skills than by years of experience.
What finance education lacks
As technology continues to develop at a rapid pace and is capable of doing a lot more technical work, contours of professional value now encompass a broader spectrum for recruiters, says Alison Houghton-Corfield , national relationship director at Master Private Finance .?
She adds: “It's no longer enough to merely comprehend complex financial concepts. The ability to collaborate, negotiate, and communicate across diverse teams is now equally vital.” And this “people skill” doesn’t come free with degrees.?
Technology has also added another layer of complexity when it comes to hiring within finance.?
Benjamin Laker , professor of leadership at Henley Business School , says it has opened new educational paths. “Bootcamps and online courses now delve into areas such as blockchain and algorithmic trading, offering focused knowledge in shorter time frames,” he adds.?
University degrees still pay a premium
One thing university education doesn't lack is the lure and promise of higher pay.
According to OECD data, UK degree-holders take home 50% higher wages compared to people without a degree.?
This salary premium has held steady despite an increase in the number of university graduates. Over the past two decades, the share of young British degree-holders grew from 29% to 57%.
Certain degrees, like finance, can pay even more. "Finance graduates have among the highest lifetime earnings," says Andre Spicer , dean and professor at Bayes Business School . "Their wages tend to rise much faster in the years after graduation."
And students, increasingly concerned about pay, are aware of this advantage.
According to a survey by the CFA Institute, seven in 10 UK graduates and current students prioritise “good salary” when choosing a career, a jump of 23% from 2021. This has put finance at the top of the list of favourable careers, with nearly one in three career starters seeing it as a reliable option.
LinkedIn's own data also supports the trend of career starters seeking more "stable" job choices, with consulting, legal and finance careers topping the list of preferred careers.?
So, is a finance degree still worth it?
As Scott Newton , a senior finance professional who is a managing partner at management consultancy Thinking Dimensions, says, it is both “yes and no”.
He says that a solid education continues to be valuable when applied correctly and in conjunction with building one’s personal skills. But a degree alone is not enough in today’s finance world, as?bosses and recruiters look for both soft and hard skills.
The "return on investment" (ROI) many experts point out is positive when looking at the lifetime earnings prospects of finance graduates. And not to mention, finance enrolments continue to rise.
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On the other hand, while degrees maintain prestige, adapting to the evolving financial sector requires versatile skills and hands-on experiences as much as traditional academic training.
In your opinion, do skills matter more than qualifications today? Let us know in the comments below.
In focus: Market volatility
There has been a surge in trading of "zero-day options", a type of financial instrument that allows traders to make very short-term bets on stock market moves. Zero-day options now account for 43% of all trading activity in options linked to the S&P 500 index, up sharply from 6% in 2017.
Analysts say demand for these highly speculative short-term options has jumped further amid recent stock market volatility. The concentrated trading in zero-day options is concerning because it may be exaggerating stock market swings on certain days.
“The message here is market volatility may be driving an increase in volatility-led strategies, not the other way around,” Louis Gargour , managing partner and chief investment officer of LNG Capital LLP wrote on LinkedIn.
Read his full analysis here:
Idea of the fortnight: Drawing a salary as a startup founder
Should startup founders pay themselves? If so, how much? Ivan Hoo , co-founder of COAL , a firm that prepares startups for investments, looks at data to answer this question.
Read his post here:?
UK finance editor: Manas Pratap Singh
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Credit Controller @ Black & White Engineering | Credit Analysis
1 年In my opinion, no, a degree is a piece of paper that says you know things but it’s not until you get into your new role that you realise you know nothing, I believe in a solid foundation of education up until the age of 18 after that the best thing to do is go and get a low level position in a finance team and works your way up, do required qualifications on the job through the employer if needs be but honestly experience trumps a degree everyday of the week!
Delivering accounting finance skills for accountancy firms and finance teams in industry | AAT ACCA CIMA ICAEW | technical accounting | digital and data analytics | leadership and management | accountancy apprenticeships
1 年I train accountants for the various professional accountancy qualifications such as AAT ACCA CIMA ICAEW. In recent years we have seen a move by many employers away from recruiting candidates with relevant degrees as they often don't possess strong enough knowledge of the fundamentals of bookkeeping and accounting. Also, the exemptions that relevant degrees offer can cause issues with eligibility for the apprenticeship funding that so many employers are keen to use to support the skills development of their trainees. Many employers would rather take on a geography graduate than an accounting graduate so they know they can train them from first principles. Many employers are also more focused on school leaver pathways than graduates at all.
Director at john Bain edinburgh ltd
1 年You can have a degree but...it doesn't make you competent!
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1 年????????????
I would say out of most, if not all degrees, finance is the one that's most valuable. This is from someone who did Business and Marketing.