The old stocks and bonds trading mechanisms that once ruled Wall Street have been left in the dust by a new generation of investment instruments that may consist a variety of components, each with carefully established value. Mutual funds were at one time the technological cutting edge for investors because they were made up of a portfolio of investments. You could buy stock in a collection of investments selected by professionals.
Today the development of investment “instruments” is driven by an assortment of sophisticated data applications utilized by professionals with high-level mathematical skills. The “derivatives” that turned sour and drove Wall Street into a panic in 2008 were investments constructed of other investments, many of them based on what proved to be high risk ventures. Those derivatives were developed, in many instances, by experts with some degree other than an MBA.
Engineering graduates are considered to have applicable skills on Wall Street because of the technical and analytical skills inculcated in any undergraduate engineering program. Engineers who find themselves in investment houses may be brought in as entry level analysts and may find value in pursuing a master’s degree at some point in the future.
Mathematics graduates have the training to develop mathematical models, which is what developing investment products is all about. With every design for an investment instrument comes a risk assessment, which is where the modeling skills, the ability to manage and interpret statistical data plays a critical role.
Physics Graduates bring many of the same skills to the finance sector that mathematics students do, with the major difference being the analytics built into a physics education. There are both structural and analytical elements to a physics major that can have great bearing on successful employment as a quantitative analyst, or “quant” in a Wall Street brokerage or a major investment house located elsewhere.
Computer Science Graduates bring a different set of skills to the investment world. In the ongoing scramble to develop new investment instruments there is also a scramble to analyze them and to design them. In this area the MBAs doing the trading may come to rely on software engineers or graduates who have those skills. Computer science brings both the theory of functionality and the skills to implement application changes.
Statistics graduates are trained for work where data management skills are an important part of the job, and thus they bring skills that can be applied with a financial services firm. But perhaps the most rewarding goal for a stats major is becoming an actuary, working in risk management. Investment houses are redesigning their entire risk evaluation programs in the wake of the 2008-2009 crash. Becoming an actuary requires a good deal of additional work but it can pay off with a senior position in finance.
It isn’t the knowledge gained in these undergraduate majors that are important in today’s investment sector; it is the skills acquired along the way that are valuable. MBA students go through the basics for statistical analysis and learn the math for standard accounting and finance work, but they don’t develop the level of analytical skills or data manipulation ability that students coming out of a math-oriented major already possess. But while you’re breaking into the financial services field with your B.S. you may want to consider a part time master’s degree program that can gain you access to management level positions. Most investment houses today are looking for that additional credential when developing the next generation of management.
Bob Hartzell is a freelance writer for Masters Degree Online.com that covers the shifts in today’s job markets and the corresponding changes in educational options. More recently he’s been covering the graduate & masters degree space as an upside opportunity for students in a down economy.
2 Comments
Is there a B.S. (see what I did there?) in Thievery and Ponze schemes? If so, that’d be perfect on Wall Street.
Two bachelor degrees and I still don’t fit in with the Wall Street crowd…Interesting article though, thanks for posting it.