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What is it like to be a Financial Engineer

I want to make sure I am going into the right field.
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Erica’s Answer

So I recently started a job as a financial engineer, and I know several other financial engineers at my company that perform a lot of different functions within the company. So the first thing I want you to know, is that the job title encompasses a variety of different things, so you will be able to explore and learn a lot of new things, without changing job titles. In my current role, I review modeling applications that my company uses. The models can range from very simple econometric models, to more complex machine learning models. I write SAS code to replicate their results, and then review their methodology to ensure it is valid. I also write reports on the reviews that I complete. The other financial engineers I work with do a lot of data analysis. If someone in one of the customer-facing business units has a question, the financial engineers are usually the ones who answer it. They will use SAS, Python, R, and SQL to extract and analyze the data, and then Tableau to create reports to show the data to the user.


If you have more questions, I'd be happy to answer! I've also linked below to a page that gives an generic overview to financial engineers in general, and how to become one. Best of luck!

https://www.master-of-finance.org/faq/what-does-a-financial-engineer-do/

Erica recommends the following next steps:

Learn some basic coding. Python is a really great starting point, and it'd be good to learn a programming language designed for statistical analysis, like SAS, R, or STATA.
Pursue a degree in finance, economics, statistics, mathematics, or computer science. Double major if you can!
Apply to all kinds of different places, and talk to people who work there. Financial engineer means different things to different companies, so make sure you know what kind of work you'll actually be doing there.
Thank you comment icon Thanks! It's been awhile since Ive posted this question but the answer is interesting. I'm still debating what area of finance I want to go into, right now its looking like Investment Banking or Private Equity (internship this summer) Maxwell
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Isaac’s Answer

Financial engineering is a multidisciplinary field involving financial theory, methods of engineering, tools of mathematics and the practice of programming. It has also been defined as the application of technical methods, especially from mathematical finance and computational finance, in the practice of finance.

Isaac recommends the following next steps:

Financial engineering plays a key role in the customer-driven derivatives business which encompasses quantitative modelling and programming, trading and risk managing derivative products in compliance with the regulations and Basel capital/liquidity requirements.
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JAYAKRISHNAN’s Answer

Financial Engineering is the application of Mathematical Techniques for solving financial Problems. Financial Engineers use the expertise in computer science, Stats, economics and applied mathematics to build models to address various aspects of finance.
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Marco’s Answer

Financial engineering is a very interesting function. For example, you can develop a project that generates savings for the owner and in this case, already saving for the beginning of the operation, or not, if there is a good planning. You will analyze project phases and confront the financial events of these phases, and check what can be done to maximize progress by minimizing disbursements.
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Nikhil’s Answer

Financial engineering, simply speaking, is to engineer (or solve/build/analyze) and build "things" using mathematical finance and programming. It is for those who are good at mathematics and have good programming skills. A really good financial engineer is good at linear algebra, stochastic calculus, knows mathematical programming using any of these languages - python, R, c#, c++ and/or (less popular ones like Matlab, strata, SAS etc.). With the advent of cloud computing and availability of a lot of tools, some aspects of financial engineering are becoming redundant as machines are able to do a whole bunch of analysis at a very cheap cost which otherwise a financial engineer would have built a model for (ex machine learning models for stock trading are replacing the role of classic financial engineers).
However financial engineers are still useful for pricing complex and exotic securities and they are certainly needed in risk management to build and constantly improve risk models.
Overall it is a rewarding career but only if you are truly passionate about math and programming. Otherwise it can be a very difficult career choice as it is a very specific skill and there are not a lot of places who need people with these skills.
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Jaime Andres’s Answer

Financial Engineers use their skills to predict how stocks and other financial tools will perform, manage portfolios and assess the risk of investments. They use math and computer science to build models of trends in the stock market. They have extensive knowledge of the theory of finance and of the historical behaviors of specific markets. Using this knowledge and their computer skills they create simulations so that clients can see how certain investments are likely to perform. Based on his models, and realizing that the stock market sometimes acts in unanticipated ways, the computational analyst advises clients on how to manage their stock portfolios. Many of these professionals work in risk management in CVE, or credit valuation adjustment. Simply put, they determine the likely risks of an investment and, depending upon the amount of risk the client is willing to take, design an investment profile for him that includes stocks of differing security. Some clients are willing to assume more risk because the return on these investments is usually higher, while others want moderate-to-low-risk investments. Computational analysts work in insurance companies, hedge funds, in asset management, in proprietary trading and in banks.
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Sam’s Answer

Financial Engineer is a broad topic. The role can be similar to Financial Analyst in some corporations. Typically, you will use your basic knowledge of Finance and accounting as well as extract data to create a model or key performance indicator. The purpose is to create additional values using data to help organization to make a right decision making. Challenge about the role often time is ambiguity. You may not have perfect information and assumptions are needed to create the model. Furthermore, there is always room for improvement after developing the tool. It takes time to fine tune and present to your management for your finding. I think this is the hardest part to explain what you have created and how useful your innovation and discovery.
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