Careers in Financial Engineering
Financial Engineering has been one of the emerging disciplines in recent years. It uses mathematical and computational finance knowledge to make sound financial decisions. In the new economy, the challenges of money management are quite complex. Industry leaders utilize computational models and mathematical theories to make quick forecasts and investment decisions involving millions of dollars. They understand how a wrong move might spell disaster for their organizations.
In such a fast-moving, high-risk scenario, the evaluation and quantification of risks, the measurement of risk-reward pay-offs and sound forecasting are essential elements in making informed decisions. This is where a financial engineering professional steps in. Most of us would be quite uninformed about financial engineering, roles, and responsibilities of a financial engineer and the various job roles that a financial engineer can take in an organization. Read the post to know more.
An Overview of Financial Engineering
The Financial Engineering Program is only a recent addition in American campuses. It was approved by the International Association of Financial Engineers in 1992 and the Polytechnic Institute of New York University was the first institution to offer this subject as a course.
Financial Engineering is known by many names in the US. Computational Finance is one of the most used terms to represent the course. The skill sets imparted under the course are, however similar. The program marries computational programming skills like C programming language with high-end math subjects like linear algebra, differential equations, probability theory and statistical inference.
Career and Job Responsibilities of Financial Engineers
The job responsibilities of financial engineers may differ according to their job roles. The following are a few responsibilities performed by them.
- One of the most fundamental roles performed by finance professionals is to measure and quantify the risk that financial instruments like derivatives create.
- They use computer simulation models and math to make trading, hedging and investment decisions in corporate sectors and financial organizations.
- They integrate computer simulation models with company goals to assure success.
- They help create fiscal policies, maintain accounting records accurately, develop client budgets, and perform cost analysis and expenditure.
- Financial engineers work with cross-functional teams to monitor expenditure and collect data. They work on data to identify trends.
Here are some common job roles available for financial engineers:
- Finance Specialist
- Finance Analyst
- Data Analyst
- Market Analyst
- Portfolio Analyst
- Portfolio Manager
- Risk Analyst
- Risk Manager
- Financial Adviser
- Data Scientist
- Sales Engineer
- Director of Finance
- Data Engineer
- Quantitative Model Developer
A financial engineer earns an average salary of USD 79,327, with minimum and maximum annual salary ranges between USD 68K and 136K. These finance professionals may earn a bonus between USD 4K to 31K.
Organizations such as Goldman, Sachs & Co. and JP Morgan, Chase & Co. employ finance professionals as a part of their banking and finance operations. Apart from this, many small investment and brokerage enterprises also require the skills of computational finance professionals.