Montana State University

Regents approve new MSU program in financial engineering

September 6, 2013 -- MSU News Service

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BOZEMAN -- The Montana Board of Regents, at its September meeting, approved a new program in financial engineering for Montana State University.

The program will allow undergraduate students to major or minor in financial engineering through two MSU colleges.

The program will be the only one in the region, said MSU professor Myles Watts, who led the development team. No other programs exist in the Montana University System or the Pacific Northwest. The closest undergraduate programs in financial engineering are offered in California. Others are available on the East Coast.

“This is an opportunity for MSU to develop a highly recognizable, prestigious program that provides solid employment opportunities,” Watts said.

Financial engineering is a growing field with high demand and the potential for high salaries, Watts said. Financial engineers commonly work in banking, corporate finance, securities, insurance, manufacturing, agricultural businesses and other industries that require sophisticated financial management skills. They analyze risk, create strategic business opportunities, look for ways to lower costs, and access new markets by combining new and existing financial economic instruments. To remain competitive, regional industries, as well as national and international firms, employ financial engineers because of the increased complexity and sophistication of business risk management.

“The management of risk is essential in today’s highly leveraged domestic markets as well as the global business environment,” Watts said. “Successful market, credit and production risk management requires complex financial economic modeling and analysis.”

The demand for financial engineering graduates is expected to grow 18 to 20 percent a year over the next seven years, according to the Occupational Outlook Handbook. Duff & Phelps reports average salaries of $97,000 with less than one year of experience. PayScale reports annual salaries ranging from $74,000 to $115,000.

MSU’s new program will be managed jointly by departments in two colleges: the Department of Mechanical and Industrial Engineering in the College of Engineering and the Department of Agricultural Economics and Economics in the College of Agriculture. Students will take courses in either department or a combination of the two. The new program will be subject to accreditation review, which could be completed before December.

“It’s a very, very difficult curriculum that combines engineering and economics,” Watts said.

Students will have rigorous training in financial economics, mathematics, and software engineering and modeling, Watts said. The math will be similar to what’s required in engineering, but expanded to include more statistics and probability theory. Financial economics will include a solid background in classical economic theory and markets.

The program will be taught largely by existing faculty teaching existing courses, Watts added. He noted that the faculty members have both academic and business world experience in financial engineering. They also have the industry contacts that will benefit students looking for internships or employment.

Helping develop MSU’s new program were faculty members Bill Schell and Durward Sobek in mechanical and industrial engineering, and Greg Gilpin and Joe Atwood in agricultural economics and economics.

“Several of us have experience in this area,” Watts said, referring to financial engineering. “That’s somewhat unusual that you would have as many people who have had experience with this.”

He has seen the need for more financial engineers in both the private and public sectors, Watts said. An MSU professor of agricultural economics, Watts was appointed by President Obama in 2010 to serve on the board of the Federal Agricultural Mortgage program, commonly known as Farmer Mac. He is currently vice-chairman of that board. 

Contact: Myles Watts at (406) 994-3704 or mwatts@montana.edu