• C++ Programming for Financial Engineering
    Highly recommended by thousands of MFE students. Covers essential C++ topics with applications to financial engineering. Learn more Join!
    Python for Finance with Intro to Data Science
    Gain practical understanding of Python to read, understand, and write professional Python code for your first day on the job. Learn more Join!
    An Intuition-Based Options Primer for FE
    Ideal for entry level positions interviews and graduate studies, specializing in options trading arbitrage and options valuation models. Learn more Join!

Yet another career advice thread: equity research path path vs. financial engineering path

Hi,

I've been doing a lot of reading on this forum and others, and am preparing for a career change into finance. My background is in electrical engineering, and I have a BS EECS from Cal and a MSEE from Stanford. I'm 34, and have about 12 years of experience in chip design/high-tech, so programming isn't a problem for me. (I'm familiar with Matlab though I have to brush up on my C++.)

I've been an investor since I started working and a full time day trader this past year, hence my interest in the markets and naturally, finance. I am San Francisco based and would prefer to stay in the area, but won't have a problem moving if need be. I know that it is really hard to break into finance right now, but I have to try to pursue my passion.

From what I can see, I can proceed along two paths:

1. Get a 1 year FT MS in finance and study for the CFA PT, try for a junior equity research or portfolio management position, naturally covering high-tech at first. (I'm debating the MBA because at my age I would prefer a 1 year FT program over a 2 year program.)

2. Get a 1 year FT MFE and go the quant/programming route. Will also try for CFA level 1 before I start the program, and maybe other levels later. This path directly leverages my technical background the best, though Im worried about being pigeon-holed later.

I'm interested in either career. Can anyone provide any comments or advice on the career potential of either path based on what you have experienced so far?

From what I understand:

1. Most positions are in NY, though in SF there are PM positions for private wealth management and some quant positions for hedge funds. Companies in SF are Blackrock/Barclays global and Dodge and Cox, etc.

2. Junior PMs/ERs start at around 60-70k + bonus while junior FE's start in the 6 figures + bonus.

So, my questions are:

1. Is my understanding of the salaries for each position correct? What is a reasonable/typical salary for each position after 5 years?

2. What is the current job market for each position? I've heard that ER positions have been decimated while they are currently still hiring entry level FEs. I also heard that it is easier to get into a middle office role (risk?) than a front office role.

3. What do you think the long term potential is for either position in terms of job stability and transitional opportunities within the field?

thanks a lot for your advice!

Huang
 
So ultimately its about programming or accounting?Or are there more factors involved here?
Yes i like programming.But if something involving accounting is not redundant and boring i wouldn't mind preferring it over the other.
Are the growth prospects and career progression similar in both fields ? Are both fields exciting enough in its own way?
 
I would say in the most simplistic terms, yes.

There are growth prospects in both fields, again depending on what you want to do. efinancialcareers could be a starting point - with the OPs experience I would blast out resumes directly to all the semi research analysts on the street, see if you get any nibbles. This would likely be the path of least resistance.

Do bear in mind that junior equity research associates are often hired straight out of undergrad or directly from the industry they would be covering. Your salary estimate would be in line for such a candidate. Advanced degrees are unnecessary - with no work experience you will seldom make more for having one.

I found the accounting to be redundant and boring but YMMV (and I may be biased - I left equity research for quant/risk) You are really comparing apples and oranges here - would suggest reading Joshi's quant guide and some of Vaults equity guides to get a better feel from what youre signing up for.
 
Something to consider with your background and being in SF is private equity/venture capital.

You could go back to school, but I would think you could get a job without another degree. Pass CFA level 1 and apply to a few jobs that interest you, if you don't get an offer then consider school.
 
How easy/hard it is to switch from asset management roles to those of quant developer or algo trading given that you have a good programming background?
 
The work experience of one is nearly irrelevant to the other.

To switch you would be starting over in a junior capacity. Do not pass go, do not collect $200-style.
 
I would like to contribute my thoughts here, Shantanu. I am working for an IB in equities research. Yes, there is a lot of accounting involved, very little technical aspect. Your IT background would only help if you are covering tech stocks. A brief background of myself...

Initially, I wanted to try out for a more quantitative position but somehow this job found me first. It can be very fufilling if you are someone who wants to learn about businesses/industries. You have opportunities speaking to CEOs and really understanding what drives this whole economy. Salaries are not fantastic anymore, although it is still a slight premium to the average industry's compensation. Lots of hours and hard work.

Algo/quant/derivs/Fixed Income... $$/effort is definitely higher. Good luck!
 
Thank you Sam Chan.
Something similar to you is happening to me.I have the option of choosing quant role in a smaller company with not so good salary.On the other hand i have another option of getting in bigger company with better salary but for a non quant role.
 
I would like to contribute my thoughts here, Shantanu. I am working for an IB in equities research. Yes, there is a lot of accounting involved, very little technical aspect. Your IT background would only help if you are covering tech stocks. A brief background of myself...

Initially, I wanted to try out for a more quantitative position but somehow this job found me first. It can be very fufilling if you are someone who wants to learn about businesses/industries. You have opportunities speaking to CEOs and really understanding what drives this whole economy. Salaries are not fantastic anymore, although it is still a slight premium to the average industry's compensation. Lots of hours and hard work.

Algo/quant/derivs/Fixed Income... $$/effort is definitely higher. Good luck!
Really,? I thought ER is doing real finance but not tech and is a way to PE/VC and HF. But quantitative roles are easy for foreigners like me to find a job.
 
I have similar concern that, I might begin my career with some quant job like trading algorithm developer, with a MS degree in financial mathematics. But years later I will be very willing to turn to private equity analyst, and even start my own venture investment business if possible. Could someone give me any idea how to make the transform smooth ? such as, what kind of knowledge/ability is most required to do private equity analysis and venture investment business
 
I have similar concern that, I might begin my career with some quant job like trading algorithm developer, with a MS degree in financial mathematics. But years later I will be very willing to turn to private equity analyst, and even start my own venture investment business if possible. Could someone give me any idea how to make the transform smooth ? such as, what kind of knowledge/ability is most required to do private equity analysis and venture investment business
dont think you can go into pe/vc from a quant position. they are so different. your quant skills absolutely dont help pe/vc work.
from what i see, pe/vc either work at top ibd groups or phd in engineering.
 
dont think you can go into pe/vc from a quant position. they are so different. your quant skills absolutely dont help pe/vc work.
from what i see, pe/vc either work at top ibd groups or phd in engineering.

yeah that's what I concern, the mismatch of skills. I am not sure what do you mean by "pe/vc either work at top ibd groups or phd in engineering ". I thought pe is a good way out for people on analyst position in ibd. So what do you think is the key to do well in vc business.
 
yeah that's what I concern, the mismatch of skills. I am not sure what do you mean by "pe/vc either work at top ibd groups or phd in engineering ". I thought pe is a good way out for people on analyst position in ibd. So what do you think is the key to do well in vc business.
That is what I meant. Pe/vc previously worked at top ibd groups. So the most common path to pe/vc is working at ibd first. To your last question I am not sure what is the right answer. But given the type of people the vc firms try to recruit, I think you can roughly guess the skill set. Also I heard that it is really hard to break into the industry if u r not working in ibd.
 
Top