Carnegie Mellon University

Masters in Financial Engineering Programs

thinking-image-900x600-min.pngThe demand for financial engineers remains strong based on many factors, including a thriving global economy, exponential growth in financial data and increased focus on compliance and risk management. Also known as “quants,” these professionals enjoy challenging work, lucrative compensation and fast-track promotion opportunities.

There are a number of ways to enter this dynamic industry. One of the most popular paths to becoming a quant is a financial engineering masters degree. Many schools offer these degrees under different names, including financial engineering, math finance, quantitative finance and computational finance.

Given the multitude of programs, it’s difficult to assess and compare the many options available. Ranking sites can provide useful data such as job placement and salary statistics, but with so many ranking methodologies it can get really confusing really quickly. A thorough assessment of your options requires much deeper analysis. If you are thinking about a masters in financial engineering, here are some key factors to consider in your evaluation.

The skills needed for the quantitative finance industry are, by definition, interdisciplinary, but not all financial engineering programs are the same. It is important to consider whether the program is isolated in one department or top-heavy in math or finance. Financial engineering programs often emphasize finance and financial markets at the expense of more rigorous computing and quantitative skills. Some mathematical finance programs focus on theoretical math at the expense of real-world application. The strongest programs incorporate a mix of math, probability, applied finance and programming and teach students to apply these skills within the context of the financial services industry.

Although most programs share a set of common courses, the number of required courses and elective courses can vary widely by program. Programs with a high percentage of electives can make it more challenging for potential employers to determine if graduates have all of the core skills required for success. It’s also important to understand how many of the electives are designed and integrated with quant finance. With some programs, students attend elective classes with students from other majors and have to “connect the dots” to quant finance on their own. Additionally, some programs offer valuable experiential learning opportunities like capstone projects and trading competitions while other programs do not.

Another key factor to consider is how well the program keeps pace with industry trends to stay relevant. Is there a group of senior faculty and/or industry professionals that continually evaluates the strategic direction of the program and makes updates to the curriculum based on changing industry needs?

It’s critical to assess how often the curriculum is updated and the types of courses being added. On that note, consider the importance of soft skill development as a supplement to quantitative skills. Look for programs with dedicated courses on honing key soft skills which can have a tremendous impact on both job and promotion success.

Financial engineering programs typically have a mix of tenured faculty and adjunct professors. Tenured faculty are subject-matter experts in their academic area and provide the strong foundation needed to succeed as a quant, while adjunct industry professionals are important in providing real-world context. A key factor to consider is the balance between the two. Some programs have a very high percentage of adjuncts to fill in curriculum gaps and/or address the lack of integration between departments. As most adjunct professors work full-time, their availability and support of students outside of the classroom may fall short in comparison to the support received from tenured faculty.
There can be significant differences in the level of support offered by a program’s career services department. When evaluating this key program offering, it’s important to look at the availability of dedicated, full-time career counselors, the career services breadth/depth, program-initiated recruitment events and other efforts that can be instrumental in securing gainful employment. In addition to career services, a program’s alumni network, industry connections and reputation “on the street” are also key factors in job placement success. 

Access to complete and transparent employment data is critical for calculating return on investment. Does the program publish employment data and how much detail is provided? Does the employment data follow specific guidelines and is it validated by an accredited third-party organization?

Comparing program employment statistics can be challenging because the figures are not always defined or calculated the same way". For example, some programs include base salary only while others include guaranteed and/or non-guaranteed bonuses, stock options, signing bonuses and relocation expenses as part of the average salary. A few exclude salary data for non-US based positions, which can misleadingly increase the average salary figures. Some programs include the non-US salary figures but rather than converting to US dollars at the market exchange rate will instead adjust using a theoretical concept known as "Purchasing Power Parity" which also makes the average salary figures appear higher. Some programs report salary data with no reference to what percentage of the total class this “average” figure represents. Average salaries are dependent on other factors as well, such as prior work experience and job location. Programs with a high percentage of students with financial industry experience typically have higher average salaries. Programs where the majority of its students take positions in high cost cities like New York or San Francisco will generally show higher average salaries than programs where the majority of students take positions in lower cost cities like Austin or Atlanta. 

It’s also important to point out that job placement percentages can be influenced by a program’s graduation month and financial industry hiring seasonality. For programs with a December graduation date, many job postings may occur beyond three months after graduation making the six-month statistic a better indicator of placement success.

Tuition cost is a key factor to consider when evaluating financial engineering programs. However, looking at tuition cost alone is not getting the complete picture. It’s important to evaluate the number of courses/credit hours in the program, as there may be significant variations in how much is learned and how well students are prepared to enter the workforce. Also, some programs offer scholarships to help offset the tuition cost while others do not. Finally, reviewing starting compensation and salary growth data can be helpful in calculating program ROI.