SWE - Fall 2007 - (Page 54) from Haas School of Business in 2004. While engineering was interesting and her M.B.A. exposed her to the intricacies of business, she finds running millions of simulations for an accurate solution to a problem involving millions of dollars is a lot more challenging. One of the reasons Linda Kreitzman thinks engineers are attracted to this field is because financial engineers develop state-of-the-art financial tools and almost immediately see the results of their creativity. She describes financial engineering as a leapfrog race — new financial tools create new solutions that create new products that create new problems that create new tools, and so on. Financial engineers push the possibilities and an avid market comes back with additional problems and needs. However, Kreitzman points out that financial engineering is not a tool; it is a profession that uses tools. She is adamant that financial engineers aren’t only involved with a bottom line. “We don’t produce number crunchers. People Sudha Sethuraman “This is a highly male-oriented field. It is aggressive. But I think the grounds are getting more even. All the interviews I have attended tend to be fair and if I wasn’t selected there was always a valid reasoning for it… A lot of guys from my college, from UCLA, and USC competed for the same job, but I finally got the job.” Sudha Sethuraman, Risk Analyst, Western Asset Management, June 2007 graduate of Claremont Graduate University’s financial engineering management program. who are financial engineers come with two to five years of experience and a strong quantitative background. They read The Wall Street Journal and are passionate about finance and how the economy works,” she states. Importantly, financial engineering differs from financial analysis. Some of the financial areas in which financial engineers work include investment banking, strategic planning for corporations, securities trading, financial risk management, derivatives trading, hedge funds, and investment management. Describing her job, Sethuraman points to the different financial products she works with such as bonds, options, and futures that might be in a client’s portfolio in her risk management group. “We want to manage the portfolio risk exposure and use investigative methods to analyze risk. The instruments to do this don’t always come ready made, and we have to develop them,” she explains. Financial engineers have a variety of ways to use their skills. Some of the positions available are extremely technical and don’t require much interaction with others, or, as Beder, chairman and CEO of SBCC describes it, “Some financial engineers can spend all their time on math formulas or programming and slide their work out under the door.” But she goes on to explain that there are jobs that go to the opposite extreme. Other financial engineers must be able to communicate the complexities and concepts to clients who don’t have backgrounds in math or science. She observes, “Financial engineers range from people with a very quantitative, expert focus to people with a much broader perspective who also can translate complex concepts into English for senior managers and clients. We need them all.” Beder has spent most of her career in financial engineering and notes that the innovation in financial engineering comes from the cross fertilization of many fields. She recalls the founding of the International Association of Financial Engineering in 1992 as the “geek squad” on Wall Street. They knew that to make Kreitzman describes financial engineering as a leapfrog race — new financial tools create new solutions that create new products that create new tools, and so on. Financial engineers push the possibilities and an avid market comes back with additional problems and needs. 54 SWE FALL 2007
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