Are too many smart people going into finance?

Are too many smart people going into finance?

There’s been concern for years that many talented individuals, especially from top universities, have gravitated toward fields like finance and law rather than pursuing careers in science, engineering, medicine, or entrepreneurship, which can drive innovation and economic growth.

Recent data indicates that a significant number of top graduates are choosing careers in finance over STEM fields. A 2024 survey by the CFA Institute found that 30% of students were confident that a finance degree would lead to a good career, compared to 20% for STEM (Science, Technology, Engineering, Math) degrees. Fewer talented individuals in STEM can slow advancements in critical areas like renewable energy, medicine, and technology.



Some argue that finance and law are essential for a functioning economy. However, critics say that when a disproportionate number of smart, ambitious people enter these fields, society may miss out on the potential benefits of their contributions to technology, healthcare, education, and other areas that can improve the quality of life.

Why Many Smart People Choose Finance

1. High Compensation: Finance careers often provide higher initial salaries, bonuses, and long-term earning potential compared to many STEM fields.

2. Prestige and Influence: Jobs in finance, particularly in investment banking or hedge funds, are seen as prestigious and provide access to influential networks.

3. Transferable Skills: Finance roles often value quantitative and problem-solving abilities, making them attractive to individuals with strong analytical skills.



Additional Reading...

“Student Optimism About Finance Careers Wins Out Over STEM” June 2, 2024
https://www.institutionalinvestor.com/article/2dbjyx948ob7cdlqoyoe8/corner-office/student-optimism-about-finance-careers-wins-out-over-stem

Counter balance this trend by elevating the status of STEM careers in popular culture and media. Celebrate innovation and entrepreneurship in STEM as much as financial success.



Conclusion

While finance plays an important role in the economy, a disproportionate focus on financial careers may lead to a talent drain from STEM fields, potentially hindering innovation and societal progress. Balancing incentives and shifting societal perceptions of STEM careers can help ensure that talent is distributed more equitably across fields that drive long-term global advancement



The debate is often about balancing individual incentives (high salaries, prestige) with societal needs (innovation, solving complex problems). What’s your view on this?