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Why isnt an Operations Research degree more valuable/desirable for jobs?

joseclar

Active Member
When looking at quant finance job postings it would seem that or would be an ideal degree. It provides high level math, especially math stats, economics, modeling and computer science. Those are essentially the main skills wanted for most finance roles. So why isnt one of the more requested degrees?
 

ygmwy

Well-Known Member
It's a supply/demand thing in my opinion. OR is sort of like a liberal arts-type major for quantitative sciences. It has many different applications from process modeling, to weather modeling, traffic modeling, and insurance, as well as to financial modeling. The point is, an OR degree is a mile wide, but not a mile deep. Thus, an OR candidate, all other things being the same, would lose out to an FE candidate for a financially intensive role--and schools are pumping out so many FE candidates these days, that employers will never run short of them (and there are 10 times as many OR's out there as FE's). Also in many finance jobs, it's not just about having raw skills. Most jobs are not like internships where they are willing to hold your hand and teach you everything from the ground up. Most OR students, while having the skills in math stats, economics, modeling and computer science, don't necessarily possess the same financial expertise as FEs. Thus, that means they will require more training, whereas an FE candidate has everything the OR has, but has already focused his learning on applications to finance.

That being said, there are tons of OR candidates that get these FE jobs, but you need to brand yourself really well, demonstrate an aptitude for financial work, and have all the right experience.
 

joseclar

Active Member
Certainly makes sense. Would you say a financial undergrad degree with a graduate degree in or would impact things at all?
 

Ken Abbott

Managing Director
When looking at quant finance job postings it would seem that or would be an ideal degree. It provides high level math, especially math stats, economics, modeling and computer science. Those are essentially the main skills wanted for most finance roles. So why isnt one of the more requested degrees?
Interesting question. My guess: because OR people are often not as focused upon finance and don't market themselves as effectively.
 

ygmwy

Well-Known Member
Certainly makes sense. Would you say a financial undergrad degree with a graduate degree in or would impact things at all?
As Ken pointed out, it all depends on how you market yourself. I know lots of OR's that are clearly better than some of my FE colleagues. Many of the OR's I know are actually 100% financially oriented, but just want to take their education in their own direction--and they do better because of it. They also have jobs that FE's would be jealous of. Put yourself in the shoes of an employer. If someone asked you "I'm an OR. What do I have to do to be hired over the FE's?" What would be your answer? Once you answer that question, you will figure out what you need to do. Add in the fact that it's all been done before, you should have all the motivation to press on and chase those finance jobs.
 

joseclar

Active Member
Ken, it definitely seems like the majority of OR do look to go into finance less. I see you have an OR background, since the skills seems like such a good match it prompted me to ask. Can you clarify what you mean by marketing oneself, sorry if that should be obvious? Also do you think that the name is an issue. OR doesnt instantly convey the level of math and programming, like other quant degrees? Thanks.

Can you give some examples of jobs FEs would be "jealous of" thanks.
 

Ken Abbott

Managing Director
Many, if not most MS in Finance students (I hate the term "Financial Engineer") go in with some idea of what they want to do when they graduate. That allows them to focus their studies and to consider carefully how they will describe their growing skill sets to potential employers. Many, if not most, also have a deep-seated interest in finance and financial markets. It's much easier to seem interesting to a recruiter when you enter an interview knowing something about the industry and about the job for which you are interviewing.

Unfortunately, name can be an issue in terms of getting a foot in the door. Networking is key. That said, most heavy-duty quants are clever enough to look past branding to the candidate.

As far as the jobs OR people get, those are the exact same jobs any MS in Finance would get.

It all depends on your interests. If you want to review pricing models, you'd better get a finance degree. PDEs are an important part of that job. Want to know how many PDEs my risk team (covering the buy side, the swap dealers, and the commodities dealer) has had to solve in the past five years? Let's see. Let me think a second. Zero. None. The best traders I know are intuitive. They "feel" the markets. They have to understand the models, but they don't necessarily have to build or maintain them. Stochastic calculus? Interesting, but I haven't used it much in the past 20 years. They people who do use it are usually Ph.Ds. I've probably hired (or helped to get hired) 40 of my students over the last 10 years. Most of them don't use most of the advanced finance stuff they were taught.

What we DO have to know is basic statistics, including time series, some (basic) stochastic processes, time value of money stuff (like in any actuarial program), some (basic) finance, some accounting, and a whole lot of EDA. Along with the EDA, we also need to be able to express ourselves clearly and in a nontechnical fashion. Truth be told, there seems to be a backlash against the thousands of quant-a-be's graduating from these MS programs. I hear people talking more and more about basic problem-solving skills being the key things to have. Not that there won't be any jobs for new MS grads, but probably not doing the things they expected to be doing.
 
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joseclar

Active Member
I really appreciate the detailed response. So would you say it is more about capacity in that they want to you can understand things like pdes stochastic calc, however it is more of signal than something you will use in actual market decisions? To that point would you say these msfe degrees are overrated as long as you have a strong foundation in math and finance and economics? For instance is it worth paying for a msfe over a comparable ms degree with financial support?

Also is the backlash more because the true quants are still the Phds and msfe grads dont really fit in the trading or with the phds. As far as phds go I am most interested in OR and Economics in your experience do companies hire OR phds for the same jobs as math or physics phds?
 

Daniel Duffy

C++ author, trainer
OR is essentially - correct me is I am wrong - an application of matrix and graph theory. As remarked "The point is, an OR degree is a mile wide, but not a mile deep."

There are lots of important application areas, but the maths is discrete. There's a world of maths outside the maths needed for OR IMO.
 
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Ken Abbott

Managing Director
OR is essentially - correct me is I am wrong - an application of matrix and graph theory. As remarked "The point is, an OR degree is a mile wide, but not a mile deep."

There are lots of important application areas, but the maths is discrete. There's a world of maths outside the maths needed for OR IMO.
Well said on both points. OR skills are very, very useful, but you need the institutional context.
 

ygmwy

Well-Known Member
Agree, and agree. The bottom line is, if you are an OR student, your career plan is not going to be planned for you. You have to know what you're interested in, how you're going to use your OR degree, and then be able to market that story to an employer.

If you are in OR and you have made up your mind to apply your skills to finance, continue to narrow it down. What part of finance? What kind of desk would you like to work on? What companies? Read those job descriptions. Figure out what skills are important. Go do informational interviews. Talk to recruiters. Figure out what they want. (In my case, be a recruiter for a while.) Find out what skills are important, who your competition is, how you stand amongst the FE's, and what you can do to make yourself special. That is the famous "secret sauce."

The marketing plan that was referred to earlier starts with proper planning, positioning, and having an end goal in mind. Then, once you have convinced yourself, you can figure out how to market yourself to an employer.
 

ygmwy

Well-Known Member
The way the professors in my department describe the relationship between OR and FE is this: OR is mathematics applied to the real world. You can apply this math in many industries and different contexts. If you apply OR to manufacturing processes and queues, it is called industrial engineering. If you apply it to a management context, it is called decision sciences, or management sciences. If you apply it to the financial markets, it is called financial engineering, and so on. (With titles varying between firms, and schools). The technical skills learned are all essentially the same. The ORs at my school learn Monte Carlo simulation just like the FEs do for example. But the FE Monte Carlo Simulation class is primarily focused on application to the financial markets. The OR version of the course is more broad and has many applications in many fields.

That being said, neither OR nor FE skills are better than the other. They are essentially the same technical skills being applied in different contexts. Ken is just mentioning that financial intuition, and thus financial math should come easier to FEs because that is their specialty, but an OR of course has the potential to go in any direction he or she so desires. In my opinion, OR students should not be under the impression that they are studying OR. Instead, they should decide on how they want to apply their OR "skills" and to which industry. If you have decided that you want to get into finance as an OR, then you should start developing yourself in the FE direction. At my school, the ORs and the FEs take about 70% of the same classes, but the 30% that FEs take by themselves is substantial. It's up to financially oriented ORs to make up the difference.
 
Based on your comments in this thread only, it seems that OR skills are more useful for quants than MFE/financial maths. Is my guess correct? If yes, why is it?
You seem to have missed the point of the discussion here. 'OR skills are very useful' but nowhere has it been proclaimed that it is the most useful. In my opinion, the most useful skill is raw quantitative/mathematical aptitude and an eagerness to extract relevant information (which could be both inferential and predictive) from numbers and equations. This skill could be manifested towards almost any industry of interest. OR skills would be just a subset of the universe of quantitative techniques out there, others being skills in statistics, computer science etc.

The point to be noted about OR programs in Universities is that each school has a distinct flavor or inclination towards a particular application area of OR. For instance, while the predominant research in OR at GTech would mostly be towards applications in industrial engineering, at a school like Columbia , it is invariably towards finance (due to location, close collaboration of the OR faculty with the business school faculty etc.) You could go ahead and take the best core courses in OR under the most eminent faculty (like Maria Chudnovsky, who happens to be among the leading graph theorists around). However, this wont be moving you much towards finance. Instead, you should probably be looking to gain a stronger foothold on something like optimization techniques (for asset allocation etc.) and other forms of continuous mathematics. The bottomline is chose the best (and most relevant) of OR and diversify.
 
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