What is Applied Finance?

Applied Finance refers to the practical application of financial knowledge and methods. Applied finance has a different meaning to Finance, which is a broader term encompassing financial theory and concepts.

Don’t believe some of the definitions of applied finance you see out there. The difference between applied finance and finance is quite simple, though there are a couple of issues to unpack. It does mainly come down to applied meaning practical rather than theoretical.

Let’s look at what applied finance means, especially in relation to choosing between finance and applied finance degrees.

Master of Applied Finance

A distinction between finance and applied finance is mostly made when discussing university courses. In Australia, the most common search term containing the phrase “applied finance” is “master of applied finance” (according to Ahrefs keyword stats from 28 July 2022).

A Master of Finance is considered to offer financial training broadly, including theoretical concepts, that may lack obvious practical use.

In contrast, a Master of Applied Finance is considered to emphasise the teaching of practical skills and techniques that can obviously be applied in the real world.

Dr Luis Filipe Goncalves-Pinto, Program Director of Applied Finance at UNSW, expressed that his program is “designed for ambitious individuals looking not only for advanced financial knowledge, but also for hands-on and relevant applications of such knowledge.” [emphasis added]

Applied Finance vs Finance

There’s a question as to whether applied finance is really all that different from general finance.

The appeal of a Masters in Applied Finance is that you don’t have to spend much time on theory, instead getting into the business of learning practical financial skills.

But is a Masters in Finance mostly theory and principles? Probably not. And is it easier to pass? Only if the examiners make it that way.

Educators cater to students and the demands of industry. If studying applied finance is seen as producing a higher return on your education investment, general finance programs will adjust to be more practical.

Interestingly, the applied finance program at UNSW claims to be closely aligned with the Chartered Financial Analyst (CFA) curriculum. But so is the finance program at ANU, with ANU’s Master of Finance being a Program Partner of the CFA Institute.

Is Applied Finance a Good Degree?

If you were interested in doing a Bachelor of Applied Finance or Masters in Applied Finance, would it be a good degree to choose?

My personal opinion is that the idea of studying applied finance is a good thing. You want to graduate with not just a degree but also with skills that you can start applying in the finance industry.

But I wouldn’t take the title of a degree too seriously. Just because a degree is labelled as “applied finance” doesn’t mean it is fundamentally more practical and useful.

You need to assess the overall quality of any finance program, including looking at the course structure in detail to see if it will meet your education goals.

Is a Degree in this Field Worth It?

A Masters in Applied Finance is a high-return degree because of the job opportunities it creates. Graduates work in lucrative roles such as financial controller, investment banking analyst, portfolio manager, and risk manager.

If the question is applied finance vs finance for your studies, know that doing an “applied” degree will do no harm in this industry and may do some good. The coursework is more likely to have a practical flavour, which helps your development and may be viewed positively by some recruiters.

It is doubtful whether the title of a master’s level program in this field makes much of a difference by itself for your career prospects. But there is no harm in striving to be a doer, not a theorist, and to market yourself this way. If you like the course itself and the career stream, it is a good qualification to earn.

Related: Is a Master of Finance Worth It?