As the name suggests, financial engineering makes use of mathematical techniques and principles to solve problems in the world of finance. It combines principles from different fields such as computer science, economics, statistics, and applied math to develop financial products and also analyze financial problems. Investment banks, insurance agencies, commercial banks, and hedge funds are common employers of financial engineers.
The demand for financial engineers increases as new investment products are developed and financial institutions need to test new methods of investment, financial models, debt offerings, and strategies. The average salary for a financial engineer is $78,222, according to Payscale.com (Oct. 2020), while the U.S. Bureau of Labor Statistics (May 2019) lists the average annual salary of a financial analyst as $85,660 per year.
Depending on where they work, financial engineers may perform the following activities:
With technological advances in finance, financial engineers will be expected to pace with new tools and methodologies to perform their jobs. Getting a master’s or a graduate certificate in financial engineering can boost career prospects for professionals in the field. It can help them take up managerial positions in financial institutions and governmental organizations as well. A number of prestigious universities also offer these programs online, allowing professionals to advance their skills while working.
The following guide provides an in-depth look at financial engineering as a career path, the best online programs in financial engineering, and notable faculty members. It also sheds light on general syllabi and admission requirements.
The Viterbi School of Engineering at the University of Southern California offers a fully online MS in financial engineering program. Offering courses through DEN@Viterbi (USC Viterbi’s Online Delivery Method), this program is designed for students with a background in applied mathematics, physics, or engineering who want to apply their knowledge and skills to finance.
The program consists of 30 credit-hours, including instruction in financial engineering, corporate finance, the probability for electrical and computer engineers, mathematics and tools for financial engineering, stochastic processes, investment analysis and portfolio management, an introduction to programming systems design, and linear programming and extensions.
Admission requirements include a bachelor’s degree in engineering or mathematics from an accredited institution, GRE scores, a current resume, letters of recommendation, personal statement, and TOEFL or IELTS scores for international students whose first language is not English.
Graduates of the program can take up opportunities in the areas of programming, finance, information technology, banking, insurance and trading, risk management, and regulation.
The CFRM (computational finance and risk management) master’s program offered by the University of Washington is delivered 100 percent online. This program can also be completed on-campus. Ideal for working professionals, this CFRM degree program is taught by the same experienced faculty members that teach on campus. The program offers rigorous and relevant instruction in both theory and practice of financial engineering.
The program comprises 26 credit-hours of mandatory courses and 16 credit-hours of electives. Some of the courses in the curriculum include investment science, options and derivatives, financial data modeling and analysis, Monte Carlo simulation methods in finance, portfolio optimization and asset management, optimization methods in finance, and ethics in the finance profession.
For admission to the program, CFRM students must demonstrate exceptional command of calculus, a programming language, and probability and statistics. Application requirements include a statement of purpose, academic transcripts from previous education, a current resume, recommendation letters, and English language proficiency for students whose native language is not English. Applicants with little or no professional experience are required to take the GRE exam.
The financial engineering master’s program offered by the Stevens Institute Of Technology combines statistical analysis, mathematical modeling, finance, computer programming skills, systems thinking, and economics to solve financial problems at the enterprise level. This FE program emphasizes the latest techniques in algorithmic trading, risk management, and financial analytics.
Made up of 30 credit-hours, the curriculum consists of a block of foundational courses: pricing and hedging, stochastic calculus for financial engineers, computational methods in finance, advanced derivatives, portfolio theory and applications, and a thesis in financial engineering. After these core courses, students can either select four electives of their own or select one of the following five concentrations: algorithmic trading strategies, financial services analytics, financial risk engineering, financial statistics, and financial computing.
To be considered for this program, applications must include the following: proof of a bachelor’s degree, official transcripts from all colleges or universities attended, a current resume, completed prerequisite courses (calculus and differential equations, probability and statistics, linear algebra, and programming), GMAT or GRE scores, two letters of recommendation, and TOEFL or IELTS scores for international students.
Students in the program learn to apply computational techniques, statistical analyses, and mathematics in solving real business problems. The systems-intensive and quantitative perspective of this program prepares graduates to solve problems in risk management, securities valuation, portfolio structuring, and regulatory concerns, as well as optimization and simulation techniques.
An online graduate certificate in financial mathematics can be completed without ever setting foot on campus at the University of Central Florida. Students in the online program have complete autonomy over their study schedules. This makes it an ideal choice for working professionals who wish to gain knowledge of financial mathematics and pursue careers in the financial services industry and regulatory agencies.
In addition to the general UCF graduate admission requirements, applicants to the program must provide proof of a bachelor’s degree from a regionally accredited institution and one official transcript (in a sealed envelope) from each college or university attended. No GRE is required for admission.
The program consists of nine credit-hours of required courses and three credits of electives. Courses include financial mathematics I, differential equations for financial mathematics, risk management for financial mathematics, and computational methods for financial mathematics I and II.
At the end of the program, graduates can pursue opportunities as commercial analysts, portfolio managers, investment specialists or managers, senior financial data analysts, financial advisors, and regulatory scientists.
Columbia University’s certificate program in financial engineering is delivered 100 percent online through the Columbia Video Network (CVN). The program provides training in applying engineering and quantitative methods to finance.
Applicants must submit official transcripts from an undergraduate degree in mathematics, science, computer science, engineering, or a related field from an accredited institution; proof of a mathematical background; three letters of recommendation; a current resume; a personal-professional statement; and a $150 application fee.
Comprising four graduate-level classes (12 credit-hours), the program includes instruction in stochastic models, optimization models and methods, the foundations of financial engineering, and quantitative risk management.
On successful completion of the program, graduates are well-equipped to enter careers in financial management, banking, securities, consulting, and general manufacturing among other industries.
The financial mathematics program offered by the Johns Hopkins Whiting School of Engineering helps students sharpen their managerial and quantitative skills, so they can advance their career in the global financial industry. The following programs are offered:
These online programs allow students to balance their life, family, and work while advancing their career to the next level. Students analyze case studies on various topics such as risk management, financial derivatives, data analysis, quantitative portfolio theory, and Monte Carlo methods. Graduates of the program are eligible to take up senior management positions at top financial firms.
To apply for admission, students need an undergraduate or graduate degree in a quantitative discipline from a regionally accredited college or university, a minimum of two years of relevant full-time work experience in finance or a related field, transcripts, and proof of proficiency in English via TOEFL or IELTS scores for international students.
A total of ten courses must be completed in the master’s degree, while the certificates require the completion of four courses. Courses include an introduction to financial derivatives, financial risk management and measurement, financial engineering and structured products, interest rate and credit derivatives, statistical methods and data analysis, optimization in finance, Monte Carlo methods, and time series analysis, among others.
Upon completion, students have access to a wealth of opportunities in management. They can take up leadership positions in financial and governmental organizations. They are equipped to apply engineering-driven approaches to construct and deploy the financial transactions and processes.
Finally, here are some additional on-campus programs in financial engineering:
To grow as a financial engineer, students must be motivated to continue their education beyond the realm of formal degrees. This means taking up short-term courses and constantly upgrading their skills.
Various massive open online course platforms such as the ones listed below offer short-term courses in financial engineering. A number of these courses are administered by top universities such as the Massachusetts Institute of Technology and New York University. While most of the courses are free, students can add a certificate for a nominal fee.
Coursera is a worldwide online learning platform offering MOOC (massive open online courses), degrees, specializations, and master track courses. The platform works with colleges, universities, and other independent educational organizations to offer certifications, online courses, and degrees in several subjects, such as data science, engineering, machine learning, business, mathematics, computer science, and others.
The courses are taught by renowned faculty members from world-class universities. Each course can be thought of as an interactive textbook, complete with videos, quizzes, and projects. As of October 2020, there are 143 courses offered in financial engineering (and related subjects) on the platform. Some of these courses include financial engineering and risk management courses from Columbia University, a financial markets course from Yale University, and the fundamentals of quantitative modeling offered by University of Pennsylvania.
EdX—a trusted platform for learning and education, is a massive open online course (MOOC) provider founded by MIT and Harvard. Along with university-level online courses in a variety of disciplines, edX also includes some free courses in its ever-expanding catalog.
The platform is home to over 20 million students, top universities in the world, and industry leaders that converge on the platform to push the frontiers of traditional education. The platform is open to learners all over the world, irrespective of age and career stage. The self-paced, online format makes it a preferred choice among working professionals looking to advance their knowledge. It has over 20 courses in financial engineering to choose from. Some of these include:
As a final note, other reputable providers of free or low-cost financial engineering education include Udemy, the Saylor Academy, and Harvard Open Courses.