Financial engineers use their advanced mathematics, computational finance and economics knowledge to create financial products for banks, investment firms and insurance companies. Financial products are the various services by these companies: loans, accounts, credit cards, insurance plans and investment portfolios. Their analysis of potential investment scenarios and risks are key to the increasingly complicated strategies of the financial industry.
Financial engineers are employed by insurance companies, hedge funds, banks and regulatory agencies. According to the U.S. Bureau of Labor Statistics, financial analysts make in the range of $74,570 a year. Financial engineers are in this category, but have the opportunity for profit sharing, which can increase this base salary.
A financial engineer needs advanced computational finance skills, which are gained through a range of mathematics, economics, statistics and physics courses. Some schools offer a financial engineering degree, but a degree in computer information systems, statistics or mathematics can fulfill the educational needs. Because of the complicated nature of the work, employers may require a financial engineer to have either a master's or Ph.D. in the field.
A financial engineer uses her quantitative-statistics skills to bring innovative, efficient data and predictive tables to financial markets and investors. This requires not only advanced education but also an understanding of financial theory, a history of the markets she is working with, and all of the factors that could enter into account. A financial engineer also must be an excellent communicator, translating her complicated analysis into valuable information for her employer.
The day-to-day work of a financial engineer is at the computer, creating and analyzing the computational models that he builds. Computer programming is a large part of the job, as he must build programs to automate the risk management and forecasting. Financial engineers also attend meetings with managers and financial analysts to understand the larger goals of a particular financial product.