Salaries for Masters graduates in the financial sector way ahead

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Salaries for graduates of leading master’s in finance programs have grown much faster for financial services workers compared to other industries, a sign of the industry’s strength.

The latest Financial Times ranking shows that among those who had completed a master’s degree in finance three years previously from one of the 65 schools ranked, the average salary this year for those working in finance was $98,000 – up 12 per cent from 2023 .the third of graduates who chose to work in other sectors was a 3 percent increase to $78,000.

The trend indicated a new increase in the relative attractiveness – in terms of salary – for graduates working in finance and saw the biggest pay gap in at least eight years.

The average salary for female graduates working in finance jumped to $91,000, narrowing the gap slightly to 8 percent, highlighting the still-wide disparity in the traditionally male-dominated career.

Chris Connors of Johnson Associates, a New York-based financial services compensation consultancy, notes that earnings growth was also seen in his firm’s data. He says this was due to higher starting salaries amid stiff competition among recruits, subsequent increases linked to high inflation and a recent increase in bonuses after two stable years.

“The sector was recruiting like crazy and the war for talent was very pronounced, with much higher turnover,” he says. “From 2021, base salaries have risen much more than historical rates in financial services.”

For the second year running, ESCP has maintained its position at the top of the FT ranking of ‘pre-experience’ courses – for students with little or no previous professional experience – while three other French schools have made the top four: HEC Paris, Skema and Essec. London Business School retained its top position among the few institutions that offer a ‘post-experience’ course for those who already have sector experience, ahead of the University of Cambridge: Judge and the University of Amsterdam — Amsterdam Business School.

Among graduates of “pre-experience” courses who go on to work in finance, graduates who took up trading jobs had the highest average starting salary of $80,000, while those in non-financial sectors earned at least $55,000. Three years after graduation, the top earners were those in private equity, venture capital and hedge funds, earning an average of $120,000.

As of 2017, almost three-quarters of graduates of these courses took up jobs in the financial sector, earning more each year than those going into non-financial sectors. The pay gap between graduates working in the financial and non-financial sectors widened to $20,000, up from $6,000 in 2017.

The 2024 ranking was compiled using data from business schools and graduates who completed their master’s degree in 2021. Participation by institutions is voluntary and the list is weighted by factors such as salaries, gender balance and value for money.

Assessment data show that there is still a significant majority of men, both students and teachers. Only three of the 65 schools evaluated had gender parity among faculties – IE in Spain and Grenoble Ecole de Management and Iéseg in France. At the Università della Svizzera italiana in Switzerland, the proportion of women was only 17 percent.

Among student cohorts, only Toulouse School of Management and Skema Business School in France had gender equality, while on average just over a third of classes were female. At the Lucerne School of Business in Switzerland, it was just 11 percent.

The strength of earnings growth is one possible reason for continued demand for master’s in finance programs, despite the broader stagnation of less specialized business and management degrees, particularly in Europe and North America.

The disruption of traditional finance positions by artificial intelligence – with changes to basic data entry and more sophisticated analytical work – has also prompted a restructuring of recruiters and a likely shift in student interests.

At the same time, several business schools report that employers increasingly demand so-called “softer” skills such as teamwork, communication and critical thinking, alongside “harder” quantitative skills, including coding and financial analysis.

Students are interested in more hands-on, project-based “experiential” learning with companies and are pushing to learn about newer technologies such as cryptocurrencies, as well as ways to engage in sustainability and societal impact.

The FT ranking considers business schools’ approach to sustainability through their campus commitments to net zero emissions and the publication of carbon audits. Here, SDA Bocconi/Università Bocconi in Italy performed best, followed by BI Norwegian Business School and IE in Spain.

Across the schools ranked, graduates rated their strongest courses as corporate finance, investing and statistics. Shoda received the lowest rating from graduates.

Courses in North America were the most expensive per month on average, while courses taught in continental Europe were the cheapest – below the cost of schools in the UK and Asia.