If you’re interested in solving complex economic issues, whether you pursue this passion at a bank, hedge fund, or for a government agency, a degree in financial engineering can be a great asset.
Financial engineering studies use the principles of applied mathematics to tackle financial issues. It is a multidisciplinary field that includes financial theory, the methods of engineering, the tools of mathematics, and the practice of programming.
Importantly, the Occupational Information Network has classified financial engineering and analysis roles as a bright outlook occupation — that is to say, an emerging profession in an industry that is undergoing rapid growth.
What Kind of Coursework is Required?
Typical coursework may include analysis and optimization, econometrics, statistics, decisions models, corporate finance, capital markets, and computer science, to name just a few. The purpose of including such a range of classes is to seamlessly integrate studies from several fields that complement one another in order to create a dynamic course of study.
Students leave these programs with an understanding that, though there is financial uncertainty in the real world, tools can be developed to help make the decision process optimal. It is important that students who choose to pursue this discipline have a strong and consistent understanding in areas such as calculus, statistics, and linear algebra.
What Types of Financial Engineering Programs Exist?
Different types of programs are available at the undergraduate and graduate level, offering students a choice of when to enter this field.
The most common undergraduate degree in financial engineering is often referred to as a B.S. in financial mathematics, but some schools may use other names like a B.S. in computational finance or a B.S. in quantitative finance.
At the undergraduate level, students get a chance to dip their toes into the field and have the opportunity to assess whether this career path is one they wish to further pursue. While top-level financial engineering positions require a master’s degree, a bachelor’s degree in this field can help students begin careers in the finance sector or be especially helpful to students who seek to enter graduate programs (although you can pursue a financial engineering master’s degree without having the undergraduate background).
Graduate-level programs are for those students who want to be leaders in finance-related fields, whether in cutting-edge research, public policy, or in the finance sector. The most common graduate degrees awarded in the field of financial engineering are a Master of Science (M.S.) in finance, financial engineering, or computational finance. Each course of study typically lasts two years.
If a particular part of financial engineering is more interesting to you, you can pick a specialization in your graduate studies. Many universities permit this choice so that the student’s education has more breadth and depth. Examples include incorporating courses in public policy, computer science, and liberal arts to your primary course of study.
If research or teaching is in your future, you may also consider a Ph.D. program in a related mathematical field. While there are currently no formalized financial-engineering Ph.D. programs available to students in the U.S., many doctoral candidates pursue a degree in mathematics and focus on solving financial problems. Such a concentration enables them to delve deeply into the domains of financial engineering and to become subject-matter experts.
Because financial engineering is a multidisciplinary field, you may discover that there are areas within the field of study that you are more partial to. If specific courses appeal to you strongly, pursuing a program purely in economics, mathematics, engineering, or statistics could be a better option.
At the graduate level, some schools also offer dual degree programs, such as an MBA combined with an engineering degree. This could be a better pathway if, for example, you are interested in becoming an entrepreneur and want to concentrate your ventures in the biotechnology or aerospace markets.
What Kinds of Jobs do Financial Engineers Take On?
Typically, financial engineers pursue such professional roles as quantitative researcher, quantitative developer, quantitative trader, algorithmic trader, or portfolio manager for hedge funds or investment banks. Those who focus on public policy can go on to work for the government, developing state and federal financial policies or conducting research at think tanks. Picking one career path does not preclude moving to another, however. There is a tremendous amount of fluidity between different financial-engineering careers, as well as transferable skills that permit professionals to easily move between these opportunities.
What Are Some Notable Financial Engineering Programs?
Financial engineering programs can distinguish themselves in different ways — by having prestigious faculty, high employment rates, or offering a supportive environment for students to grow. Selecting a program will depend on which of these or other factors are most important to you.
The Financial Engineer website created a list of rankings for financial engineering programs. The rankings are weighted towards considering the mean GRE scores and salaries of students who attend each program, but also take into account undergraduate GPAs, acceptance rates, and employment rates post-graduation. The 2015 top five rankings for financial engineering master’s programs include:
- Columbia University
- Carnegie Mellon University
- The University of Chicago
- Cornell University
- The University of California – Berkeley
A complete list of financial engineering programs, both at the undergraduate and graduate levels has been compiled by the International Association of Quantitative Finance.
As a multidisciplinary field, the study of financial engineering allows students to cultivate skills such as critical thinking and creative problem-solving in various fields of studies, making them more competitive and sought-after in the job marketplace. Students who graduate from these programs leave with an understanding that one must assess financial problems from many different angles to reach an optimal solution.
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Academic Programs. Retrieved June 25, 2015, from International Association of Quantitative Finance.
Rankings Methodology. Retrieved June 25, 2015, from The Financial Engineer.
Student FAQ. Retrieved June 25, 2015, from International Association of Quantitative Finance.