A bit redundant, but why are so many engineers (especially people with masters) still trying to get into finance, specifically IBD? I could understand the allure of getting into a trading/quant type role, but I still get so many inbounds from people in engineering programs asking how to break-in and asking questions about quantitative work you do....
I can count on my hand the number of people I know in IBD who know basic VBA/macros, and the rest have some basic grasp financial analysis (at the analyst level). With the amount of dumb money being thrown at tech today, are some many people still drawn to the IB? Is it because you read an article on M&I that said you could make north of $150k in your first year, that was written 10 years ago?
I think yes - people are chasing the money (or at least where they think it is based on past returns)
Based on my own personal experience I would say that the main reason is that there are just too many dumb people around in finance, which makes banking an attractive opportunity. There are many geniuses, that's true, but when you face people who can't even do elementary math or argue like a child, it becomes something you cannot just leave behind. I guess the biggest example it can be given here is concerning financial "modeling", the guys usually treat it like if it was some sacred, unlearnable skill that requires thousands of hours of training and some special mentorship that you can only get if you work in banking. Seriously, for someone who worked with LES/RANS turbulence models, partial differential equations and stochastic calculus at school, it is not some basic accounting stuff and excel tables that will scare engineers out. The so called "social skills" and the like can be learned in no time, and for those who don't, there are always suitable options who require them less.
Disagree here.
You're absolutely right that modeling is fairly straightforward, especially for engineers who are by nature more technically savvy.
However, "social skills" are what ultimately makes the vast majority of bankers successful or not. These social skills cannot be learned in "no time". As bankers rise in the ranks, its arguable the most important skill to have. Engineers that are both technically and socially savvy will have no problem. Engineers that are more comfortable with numbers than actually interacting with clients and managing the people below them will flame out fast.
I agree with you. But most (of these) engineers (that want to get into banking because of this supposed "hype") won't make to VP/MD anyway. The discussion and my post is more directed toward analyst/associate level work. This is already a big "jump" from what the current engineering world offers (outside the US/California bubble). In the long-run, again, I agree with you social skills are the utmost important thing, but at that point these engineers already left for consulting, tech, corp development and are making the six figures they wished for.
You're making it sound like it's really hard to be good with both people and numbers. Social skills is just like any other skill, practice and you get better.
Bump. Have seen lots of people who can't do elementary math but can format like pros - which is where the rubber meets the road, so to speak. I don't want to get too granular on this topic, but feel free to dig into it further
your comment on social skills is idiotic and only someone who a.) naturally has great social skills or b.) is so devoid of social skills they do not realize they don't have them would make such a remark. Social skills are more difficult to learn than diff eq (for most people) I'll tell you that much. Also, your statement on the level of intelligence in finance is also idiotic. It is a high paying field (IB/ ER/ AM/ HF/ PE) that attracts top talent, regardless of major. The fact you think knowing stochastic calculus makes you intelligent and majoring in history makes you "dumb" is indicative of your myopic view of the world.
I agree they are difficult to learn, if that's what you mean, and that most "engineers" won't learn them the way they should, ever. The thing is, like I said, idiotic people can survive in finance (at the "high level") - sometimes for decades (while it is not actually hard or difficult in engineering - it is impossible), so yes, there are many dumb people around. Just think about the amount of mutual funds and hedge funds that use strategies that were demonstrated again and again in the academia and in practice to fail, and people still invest with them. Just think about the amount of corporate decisions that are taken based on metrics that were shown again and again to have no predictive importance. Just think about how ignorant politicians are, and many of them working in finance at the government level, taking decisions that affect the lives of millions of people. It is a high paying field precisely because real talent is very, very rare, and because the disparity of skill is huge. And I don't think majoring in history makes you dumb, on the contrary - and I find it interesting that you mentioned one particular field that I deeply respect. Maybe it is you who think history is not a respectful major, after all. I was not talking about university majors or degrees more broadly, but about one specific aspect of banking - financial modeling. For an engineer, financial modeling, specifically, is not a thing. As for the rest, it depends, but engineers (in general) are more used to tackling complex problems at school, solving things others can't and working harder sometimes just for the pure "pleasure" of working (if there's any), so it is undeniable that it gives them (again, in general) some (initial) advantage in banking. In the long run, agree with you, these are not so important things, but like I said previously, that is not what most of them are looking for.
what the above poster said, plus Eng pay sucks unless you have access to the US and Cali. Plus not everyone's into the Cali culture.
Yeah... Fuckin' hippies.
Agree with what Katchvartanian said. Also, for engineering students in the U.K., you are facing a choice of getting 20k+ from a good engineering company (think Rolls Royce, Dyson) versus getting 50k+ from a bank, not even taking bonus into account.
Ever wonder why California attracts most of the top UK engineers?
Cant emphasize this enough. As an engineer, one would feel like shit were they to make the next gen engine for a Boeing or Airbus at Rolls Royce and only get paid 25k quid. Banking base >> engineer base. Spot on on why UK engineers and coders end up in Cal.
Also banking has some allure to it from what engineering students see from watching Suits (even though it's a law series) and Margin Call. STEM education is being proposed as the most important thing after condoms, yet a STEM geared education system will only work if
STEM roles are accorded competitive prestige and pay. Think roles in companies like Google, Facebook or Tesla, which have a whole lot of sexiness and respectability attached to them.
I wasn't going to comment on this, but given that many people have echoed my thoughts, I will do so now.
The fact of the matter is that STEM careers are total shit unless you work in the U.S./Cali. You study tremendously more difficult material and harder and longer than everyone else, for jobs with no opportunity and appalling compensation. Most of the engineers I know are depressed because their jobs are so pathetic; indeed, most engineers end up working in sales or shitty business jobs when they graduate -- not what they worked hard in studying for.
I've said this before and I'll say it again: Only study STEM if you truly have a passion for it. If you have ANY interest in subjects such as finance and accounting, then you will most likely be better off ditching/avoiding STEM and pursuing those. If anyone tries to convince you that STEM is a good career, they're either (1) living in the U.S./Cali. bubble or (2) not STEM majors and/or talking out of their ass.
Okay. I'm a US engineer working for top tech. My first year including bonus/stock (I'm only counting stock actually transferred over to my bank account NOT vested or promised stocks) is >150K, believe or not. With a couple of years of experience now, I make slightly more but not by much. And I plan to pursue IB after my mba. It's not simply because of the $ I will be making but more because how fast I can accelerate/advance my career in IB. In Tech (I'm talking about the best firms), on average you will be stuck @ senior level and making 200~300k which is decent but guess what... that would probably be the last title you will have. Advancing beyond senior level, say principal/director level is NOT easy as an engineer.
What's the last engineering blockbuster film you watched? They want to live the sexy life like they see on films such as Margin Call.
In all seriousness I was an engineer, but after the third bridge fell down my boss told me it wasn't my calling.
You beat me to the MC reference:
Beat me too. Just noticed.
It's actually very simple: money. You reach your maximum income very quickly as an engineer.
This. To draw from it further, engineering is an innovation oriented career - you want to rise up from your $250k salary, you better be innovating and designing new shit in a corporate/ become a startup founder. I worked under a biotech professor once, who was RnD director at Roche/Eli Lilly/Amgen. He made north of $500k pa, before quitting corporate for more research freedom. Bu then, there are only so many director-level positions for PhDs and engineering graduates.
Someone I know went into IB to get a 'business foundation' to then apply for product management roles. He said people often go into IBD to open up options on the business side of tech firms, as typically they won't recruit a graduate with no experience on the business side, unless you interned there/a similar company before.
Sometimes people just use banks and MBB firms as a signal post-graduation that they are a quality candidate.
Most engineers...want to be engineers. You will rarely meet someone in a technical field who is interested in management or anything too far removed from the technical side of the house. If you're talking about a few engineering students taking hard classes and hearing their friends romanticize about their dream banking or prestigious job titles...then I'm sure you'll get some anecdotal evidence in your favor.
A better question is why do so many kids in accounting, finance, business and economics pursue degrees with only their highly unrealistic job in investment banking in mind?
+1 on engineers only wanting to be engineers. Very true line of thought at my company.
Yep. Talk about market inefficiencies, move into management since none of them want it.
Very true OP.
I have noticed that its mainly engineers that among all other specialties happen to do works outside their actual fields !
I attribute that to oversupply of engineers and lower demand in the job markets and probably it explains too the poor wages they get.
Frankly speaking I have not seen engineers who are genius quants running hedge funds its almost always those physicists, mathematicians and economists who have better knowledge of PDEs, modelling, stochastic calculus and computations..etc than engineers.
I blame the education system for creating a glut of undesirable qualifications.
I work in the defense industry, where practically everyone is an engineer or has some background in STEM. The reasons I see an engineer wanting to move into IB is the $ and upward mobility. While they make good money as an engineer they do not have an "unlimited cap" that you will see in the finance world.
The sad part is that many do not realize how quick they could rise up the food chain and $ earned, if they left their engineering role in the current company and moved into a different field internally (could be finance, HR, BD, etc.). People with multiple experiences at my company are immensely valued, and in turn get paid out. The difference is the timeline for this. IB you will be clearing $200k in a high COL area very quickly. In the engineering world (excluding the Bay Area), it will take a good few years to hit that $200k figure, BUT you will be in a much lower COL most likely.
Good points, though I wonder if it really is valid to justify low pay with the low COL indefinitely. Sure, in the earlier stages of one's career, CoL plays a major factor. But as one grows older, has kids, etc, etc. low COL is often levelled by the same requirements - healthcare, children's education, vacations abroad, etc, all of which are absolute expenditures, not relative.
Sure, an engineer making 200k living in Indiana can live the lifestyle of the 500k banker living in Manhattan. He might be able to save maybe 70% after taxes, compared to the maybe 50% that the banker can save up. Assuming roughly 40% taxes, that's 84k vs the banker's 150k. But if they want to shell out cash for an MBA, they have to pay the same $250k.
This is the reason why the engineering field ends up breeding mediocrity.
Frank - I agree with you. Although I am not an engineer at my company, it is still something that lingers in the back of my head as the pay structure is similar regardless of role and location. (In what is the stupidest concept to me, my company pays the same $ amount for the same role, regardless of location. Imagine being an engineer making 100k in NYC and knowing that a peer at the same level is making the exact same in Montana..... I oddly am on the beneficial side of the equation in my current position, so I guess I shouldn't complain).
In response to your final statement, I would say that in large part - yes, the engineering field breeds mediocrity. But I believe this is because of complacency and not because of inability. Many engineers love their work and couldn't imagine doing anything else nor do they care to do anything else. The majority of WSO users are very type A go-getters and want advancement in their career (scope of job role and salary earned). Probably 90-95% of the Directors and above at my company have engineering backgrounds. It is a very natural progression to get to after 15-20 years. I would say that you almost fall into the role with tenure, assuming you are a good consistent performer over your time. Once you hit Director and above, you get paid well.
I believe STEM is the way to go if you wish to be an entrepreneur in the future. Banking can give you the finance know how but getting a STEM degree and working in product development at FB or Twitter will not make you rich. Using your comp sci degree to create an app that solves a problem or makes life easier for people is the key.
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