Let's elaborate a bit on what management skills include here - Decision-making, people-management, admin responsibilities, project management etc (in no particular order and in it's most generic form).
And my point is that these kinds of skills tend to favor a different personality than what most engineers have. Most engineers don't like making clear-cut decisions- they like building stuff and working around complexity. And whether it makes sense or not, financial engineers are less likely to have management responsibilities at a bank than other people. Engineers simply aren't decisive enough and don't have quite as much of a killer instinct.
It's immediately obvious that strong analytical skills would benefit, not deter any of the aforementioned characteristics. Now, admittedly, not all quant managers may be the most suave of people and may occasionally lack the tact that other seasoned people managers have. But this is hardly an issue, since the teams they manage are made up of a similar breed of people and no one is wont to take offense.
Well, yes. Analytical skills are one component. I think a bigger component, however, is the ability to rapidly arrive at a decision and a course of action. The kind of personality that makes for a good financial engineer (understanding every detail of a system and every possible outcome of a decision) tends to make for a weaker manager.
From what I remember of Jung's and Myers/Briggs personality indicators, these tests are merely indicators of preference. A test may indicate that an individual has a preference to see things wholistically, but it doesn't disprove the fact that he can articulate effective decisions.
That's true, but most people tend to be stronger in one area or another. Someone who is an ENTJ may be a good financial engineer, but he would probably be even better if he were an ENTP or INTP.
An analytical mind is capable of rational thought. Anyone with a rational mind (and by association, an analytical mind) interacts with the environment (of the problem), gets a feel of the problem (wholistically), isolates it's most crucial features (simplify) and distills it into a robust frame-work of mind wherein he can arrive at a decision.
I agree with the first part- this is why most on the trading floor have a rationalist (N and T parts of the Myers-Briggs personality type) personality. However, the fact is that a perceiver aims for a different model than a judger. A judger will aim for a more simplified model that produces a quicker and unambiguous solution while a perceiver will aim for a more complex model that takes into account other potential outcomes but takes longer to arrive at an assessment that still may be as vague as the advice you get out of a fortune cookie. A perceiver wants to talk about the process, the assumptions, and the risks, while the judger just wants the results.
A manager's job is to simplify things into decisions and hand out instructions. Perceivers tend to keep things complicated and hand out caveats (I say this as an ENTP myself). Perceivers can manage, but all things being equal, a Perceiver would be a better manager if he were a Judger. Likewise, a Judger would be a better financial engineer if he were a Perceiver.
Most of the time, management skills are the most valuable thing that educated and experienced people have. Financial engineering is rare in that quantitative analytical skills are just as valuable as management skills. So my view is that if you're a perceiving-type personality, you should focus more on modeling skills than management skills to maximize your value, because you have a distinct advantage at it that Judgers don't have.
Remember that at the end of the day, engineers respect each other for their expertise and competence, not their authority or ability to make decisions.
There is always the consulting/teaching path just like what Derman did after leaving Goldman. You don't have to be a top flight researcher to find a teaching gig in one of the many MFE programs. There are always need for someone with practical, handon experience to teach the new comers what the Street is doing.
If you make enough money, you can write a book, start a project, business that you like. There are more to life than just a job in corp America.
Out of curiosity, do you need a PhD to get a teaching gig? My Dad was a lecturer at DePaul for a while, but he had a 3-year post-graduate degree instead of an MS and DePaul isn't exactly a research school.