With words like “meltdown” and “turmoil” being widely used to describe the current state of the financial system, it may seem like an odd time for scientists to consider careers in finance. But in the spirit of good investment advice–buy low, sell high–this may be a good time for the finance-curious to give the industry a look.
Financial services companies–banks, investment houses, hedge funds, insurance companies, and so on–have long recruited financial analysts from the ranks of physical scientists and mathematicians. Such scientists are valuable, in finance as elsewhere, thanks to their mathematical chops and analytical (and programming) skills. In January 2001, a Science’s Next Wave (the predecessor of Science Careers) feature on financial analyst careers said: “[In] a financial market that is becoming more and more reliant on complex mathematics to determine opportunities, scientists are being hired in droves.”
Omit the words “in droves” from the end of that sentence, and the statement still applies. We won’t try to sugarcoat today’s Wall Street job market: It’s ugly. Many employees face layoffs or have been laid off already. Banks and investment companies have cut back on hiring. Salaries and bonuses are smaller. Yet, as Lee Maclin, who teaches mathematical finance at New York University (NYU), puts it in a Science Careers podcast: “Even though this is a very tough time to find a job on Wall Street, this is the right time to seek out the skills to find a job on Wall Street.” Maclin also predicts that the financial markets will probably recover from the current slump before Main Street recovers–which means that finance jobs will be available before a lot of other jobs.
What makes science-trained analysts important to financial companies? These days, investment decisions are often based on a complex mix of variables and conditions. In recent decades, intuition and qualitative judgment have been replaced by models, quantitative analysis, and complex math. This quantification of finance has, admittedly, played a part in some of the industry’s recent failures, yet experts insist the answer lies in more, not less, quantitative expertise. Indeed, the need for rigorous analysis is likely to increase as calls for more regulation and oversight are heeded. The roles such analysts play may change, but all the experts predict that the demand for financial analysts with scientific training will recover.
Scientists working in finance fall roughly into two groups. First and most numerous are the “quants”: quantitative analysts who apply mathematical and programming skills to many aspects of the finance industry. In our feature, correspondenttells what quants do and interviews several science-trained quants about their experiences and the future of quant careers. The second category of science-trained financial analysts–investigated by London-based writer –combine financial knowledge, knowledge of specific areas of science, and quantitative skills to advise investors on science and technology investments. Finally, in our podcast, NYU’s Maclin, also a financial systems executive, talks to correspondentabout the work of quants and their career prospects.
Photo: Alicia Reeves