What is the difference between a financial engineer and a finance professional? For private citizens, and even for some professionals, the distinctions between the two may not be apparent. However, as the world financial market begins to understand the limits of financial engineering, it is becoming easier to tell them apart. Here is a quick primer on the major differences between the two careers.
Career Paths
Financial engineers, also known as FEs, typically work in the financial services industry. They can find work as financial research or risk consultants, risk managers, or financial traders; these are made possible because FEs has a strong analytical background and can analyze data to predict future trends. Finance professionals, or FPs, have more options than FEs. They can work in commercial or investment banking, hedge funds, open their own financial planning firm, and more. This is because while they do not have a background in engineering, they are adept at understanding how to manage wealth.
Subsection of Industry
The easiest way to differentiate between the two professions is to look at what subsection of the financial industry they work in. FEs generally work on the technical side of the industry, building the models that FPs use for their work. FPs, then, work on the business side, meeting face-to-face with clients. It is possible for FEs to do the job of FPs; it is not possible for FPs to do the job of FEs without attending an accredited program.
Resource: 25 Great Master of Financial Engineering Programs
What Does Each Profession Do?
FEs use computer programs, algorithms, mathematical theory, and financial theory in order to pull together the data-backed financial analysis that drives the market. They are adept at using code, building financial risk assessments completely based on data, and create financial products that can be used in the current climate. FPs, on the other hand, use the programs and data pulled together by FEs to offer financial products to their clients. They work with individuals, banks, and investment firms to manage their wealth. A basic way of seeing the difference between the two professions is that professionals use the products engineers create in order to serve clients, meaning that while both professions are different, they work hand-in-hand to create the industry we know today.
Clientele
Financial engineers often work with companies, trading firms, IT departments at banks, and even with mobile banking businesses. Because their work is directly tied in with the technology that drives the financial industry, most of their clientele remains the entities that provide services to individual clients. A financial profession, on the other hand, works directly with individual clients or companies to help them build or consolidate their worth. While it is possible for financial engineers to work as professionals, giving advice to clients or working in an analyst capacity, their main clientele remains on the tech side of this industry.
FEs and FPs are both integral to the market; in fact, one cannot survive without the other. While it is easy to believe they are mutually exclusive, the distinctions between the two careers are exactly why the financial market is successful. Now that we’ve explained what the difference is between a financial engineer and a finance professional, students and professionals can choose to pursue either path depending on their interests.
