Salaries for master’s graduates in the finance sector are rising

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Salaries for graduates of leading master’s degrees in finance have grown much faster for those working in financial services compared to other sectors, demonstrating the strength of the industry.

The latest Financial Times ranking shows that among people who graduated three years earlier with a master’s degree in finance from one of the 65 schools included in the ranking, the average salary of people working in finance was $98,000 this year, an increase of 12 percent compared to 2023. For the third of graduates who chose to work in other sectors, the increase was 3 percent, to $78,000.

This trend indicated a new increase in the relative attractiveness – in terms of salaries – of finance school graduates working in finance and marked the largest pay gap in at least eight years.

The average salary for female graduates working in finance has risen to $91,000, narrowing the gap with men slightly to 8 percent, highlighting the still significant disparities in traditionally male-dominated careers.

Chris Connors of Johnson Associates, a New York-based financial services consulting firm, notes that the earnings growth is also visible in his company’s numbers. He said this was due to higher starting pay in the face of stiff competition for recruits, subsequent increases due to high inflation and a recent increase in bonuses after two stable years.

“The industry was hiring like crazy and the war for talent was very pronounced and there was a lot more turnover,” he says. “From 2021, base salaries have increased significantly more than historical rates in financial services.”

For a second year, ESCP maintained its position at the top of the FT’s ranking of “pre-experience” courses – for students who have had little or no previous work experience – while three other French-based schools finished in the top four: HEC Paris, Skema and Essec. London Business School retained its leading position among the few institutions offering a post-experience course for people with existing industry experience, ahead of the University of Cambridge: Judge and the University of Amsterdam – Amsterdam Business School.

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

Since 2017, almost three-quarters of graduates from these fields found employment in the financial sector and earned more each year than graduates of these fields. The pay gap for graduates working in the financial and non-financial sectors has increased to $20,000 compared to $6,000 in 2017.

The 2024 rankings are based on data from business schools and 2021 graduates. Institutional participation is voluntary and the list is weighted according to factors such as salary, gender balance and value for money.

Ranking data shows that men still constitute the vast majority, both as students and teachers. Only three of the 65 ranked schools had gender parity among lecturers – IE in Spain and Grenoble Ecole de Management and Iéseg in France. At the Università della Svizzera italiana in Switzerland, the percentage of women on staff was only 17%.

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

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

The disruption of traditional finance professions by artificial intelligence – with changes in both basic data entry and more sophisticated analytical work – has also resulted in restructuring on the part of recruiters and a likely shift in student interests.

At the same time, several business schools say employers are increasingly demanding so-called “soft” skills such as teamwork, communication and critical thinking, alongside “harder” quantitative skills including coding and financial analysis.

Students also desire more hands-on, “experiential” project-based learning with companies and seek to learn about newer technologies such as cryptocurrencies, as well as ways to engage in sustainability and social impact.

The FT ranking takes into account business schools’ approach to sustainability through campus net-zero commitments 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.

At all schools included in the ranking, graduates rated their best courses as corporate finance, investments and statistics. Compliance was rated the lowest by graduates.

On average, courses in North America were the most expensive per month, while those in continental Europe were the cheapest – below the price of schools in the UK and Asia.