If you want to access the most interesting jobs in finance now, you probably don't want to pay hundreds of thousand of dollars to study MBA. Nor do you want to pay tens of thousands to study a Masters in Finance. If you're looking for a future-proof qualification that will ensure you remain employable throughout the process of 'digital transformation' in banking, a Masters of Financial Engineering is probably your goal.
MFEs are nothing new. The hottest and oldest of them all - the one year Masters of Financial Engineering program at Berkeley Haas has been around since 2000, but as banks focus more on technology and more on data science, the qualification is becoming increasingly pertinent.
In an interview last year, Linda Kreitzman, the 'Queen of Quants' who runs Berkeley's program, explained the difference between an MFE and a standard Masters in Finance or MBA. "Our program is much more technical, more data-science oriented," explained Kreitzman, adding that the MBA and Masters in Finance are more general in their scope, whereas the MFE is for students who are strong at programming, stats, math, and finance.
Its a mix that sells. In 2018, the 67 students on Kreitzman's MFE course received 129 job offers, up from 98 offers for 69 students in 2017, and 95 offers for 68 students in 2016. It doesn't take an MFE to see that students have become nearly 40% more desirable in two years.
Pay for Berkeley's MFE students in rising too, albeit less dramatically. In 2016, average first-year compensation for course graduates was $156k. Last year it was over $159k and students had their pick of joining big banks, big hedge funds, or old-fashioned asset management firms.
As demand for places on Berkeley's MFE increases, places available on the course are rising. In 2018, 80 students were enrolled. This year, it's likely to be closer to 100.
While the Berkeley MFE is the most prestigious and highest paying, it's not the only course of its kind. Some of America's other top MFE courses are shown in the table below. Carnegie Mellon's Masters of Science in Computational Finance accepted 100 students last year. 93% of them had jobs within three months of graduating.
Masters of Financial Engineering and Computational Finance courses are not intended to equip students for a life of number-crunching in the shadows. As Kreitzman explained last year, the course doesn't set out to create the "typical quant" who sits in a back room, but someone with strong finance and communication skills too. MFE graduates work across investment banks, hedge funds, fintech firms and consultants as everything from quants to data scientists to portfolio managers, strats professionals, quant developers and more.
Carnegie Mellon is unusually explicit about the roles its graduates in engineering and computational finance go into. Last year, it says the largest employers were Citi, Goldman Sachs and Bank of America Merrill Lynch, which each took nine students and placed them as everything from traders to quant analysts and junior investment bankers. JPMorgan took another eight. At Goldman Sachs in particular, Carnegie Mellon graduates became strats - Goldman's word for a kind of hybrid programming and quant role at the heart of its attempts to automate its business.
JPMorgan and Goldman's demand for Carnegie Mellon's students has remained relatively flat for two years. However, Bank of America's appetite for the graduates has more than quadrupled (from two to nine). As more banks follow Goldman's lead in creating big strats functions, demand for MFE graduates from Carnegie Mellon and elsewhere is likely to keep rising in future, which is more than can be said for other roles in a world of vigorous cost-cutting.
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