Understanding What Financial Engineering Is and How You Can Get Involved

Financial engineering emerged as a hot term and a hot field over the past few decades. The investing and finance world has grown into an even larger and more powerful sector of the global economy. This growth has spurred the increase in specialization. By specializing, people can increase their skills and become even more effective at doing their job. Financial engineering has been at the forefront of this drive for increased skills and specialization.

More or less, financial engineering refers to the application of advanced mathematical principles and methods to the world of finance. Advanced mathematical methods can help investors and financial firms secure even bigger gains in their investments by uncovering mathematically derived insights.

Often, financial engineers will use advanced modeling and computational finance methods. They can use computers to crunch huge numbers and to solve complex equations. Financial engineers are ultimately the ones in charge of designing the algorithms and overseeing the computers and their work.

Financial engineering is complex work. If you want to get involved in the field, you had better be good with numbers. Often, people who work in the finance engineering field have a degree in engineering, mathematics, statistics, or another related field. Many of the early engineers actually lacked extensive formal educational training in finance. They had to learn about finance on their own.

Now, however, a number of universities are offering programs that teach both advanced mathematics and modeling, as well as finance and investing. This way, students can gain a solid and well-rounded understanding of both fields right from the get-go.

The Basics of Financial Engineering Programs

The basic point of a financial engineering program is to instill a high level knowledge of both finance and mathematics. By combining the two programs, it can immerse students right from the beginning in the principals of both fields. This means that students will be ready to jump right into the actual investing field when they graduate. A math major, on the other hand, might have to play catchup, while a finance major might lack the necessary math skills. 

 

In the past, students would either have to take two degree programs, both a mathematics and finance based program, and then learn to combine knowledge from the two. This can be an effective way to study finance engineering, but it’s also more intensive. Still, if you can’t find a local school that provides a financial engineering program, you’ll almost certainly find schools that offer both finance and mathematics degrees.

By combining both fields of knowledge, students will have an easier time connecting the two fields. This will make it easier and more effective, in most cases, for students to learn how to apply advanced mathematical principals to the world of finance. Most of the professors will have experience in financial engineering and will be able to directly teach the students the principals.

Finance firms and investing firms are highly seeking professionals with financial engineering degrees.  If you want to get in on Wall Street, a financial engineering degree might just be the best option. This is especially true if you get a degree from one of the schools in the next section.

The Best Financial Engineering Programs

There are numerous financial engineering programs. Some of them are formalized as financial engineering specific programs, while others are dual programs in math and finance. While many programs are simply entitled financial engineering, other closely related and very comparable programs include computational finance and quantitative finance.

In this article we are going to focus on financial engineering articles. However, if your local university does not offer a financial engineering specific program, it’s entirely possible that you can combine training in mathematics and finance through your own course of study.

Financial Engineering Rankings

The TFE Times conducts one of the most reputable financial engineering rankings. Many of the names at the top of their list are the usual high ranking names. Many generally consider Columbia University’s financial engineering program as the best. Carnegie Mellon also offers an excellent financial engineering program, focusing on computational finance. The University of Chicago, long a powerhouse in economics, also offers an excellent financial engineering program.

Cornell, Berkeley, and Stanford also offer excellent financial programs. New York University also does, which also offers easy access to Wall Street. If you’re in the south, Georgia Tech, a renowned public engineering schools, also offers a top ten quality financial engineering program.

Outside of the most prestigious names in the education world, several smaller and less commonly known universities offer comparable programs. The Rensselaer Polytechnic Institute and Stevens Institute of Technology are two such universities. Claremont Graduate University and Worcester Polytechnic Institute also offer excellent programs.

Numerous state universities, besides the extremely prestigious ones already mentioned, also offer great programs. Rutgers’ financial engineering program is comparable to the best of the best. It is located in New Jersey (right next to New York City), and offers in-state prices for New Jersey residents. The University of Buffalo and Oklahoma State University, and University of Dayton also offer great programs.

There are many great choices, and given how hot the field is, you don’t necessarily need a big name degree to start a career in computational finance.