QF alumni find bull market on Wall Street
Story by Charles Gulbertson and Michelle Brescia ('91)
When Gerald Buetow left JMU for Wall Street, he had no intention of coming back. Like most professionals, this finance professor wanted to go where his skills would be most in demand. With a background in quantitative finance -- and having helped pioneer the QF major at JMU's College of Business -- Buetow found himself eyeing a career change with one of the large New York investment houses.
In June 1996, he left education for the fast-paced world of Wall Street, snagging a job as director of research in the investment arm of insurance giant Prudential.
"My job was to manage pension funds -- most of our clients were institutions rather than individuals -- and to try to pick the securities that would provide the most return," Buetow says. "It was a busy and challenging environment."
Within six months, he was spending up to 80 hours a week blazing new trails for Prudential in the area of structured derivative products. Despite his success, Buetow began to rethink his priorities.
"What started it was a telephone call from JMU. The quantitative finance program was in a bind and needed a professor. The College of Business asked if I would be interested in coming back. That got me to thinking," Buetow says. "Although it sounds kind of corny, the big thing I wanted to be able to say was that I had a positive influence on a lot of people."
Another factor played into his decision to return, Buetow had observed the performance of college finance graduates in such prestigious firms as Goldman Sachs, Morgan Stanley and Lehman Brothers.
"I started making the inevitable comparison between those kids and the quantitative finance students we graduated at JMU, and found that there ... was ... no comparison," Buetow says. "The young people I saw in New York had only a fraction of the knowledge that my students had upon graduation. It confirmed a hypothesis I'd formed while at JMU -- that our students were trained so rigorously that they could easily compete on the Wall Street level."
For Buetow, that recognition helped steer him back to an academic life of teaching, research, intellectual freedom and influencing students' lives for the better. He went home and told his wife, "I want to be a professor."
Turning down what he called an "enormous sum of money," Buetow returned to JMU and threw himself once more into the quantitative finance program he had helped develop.
This time, Buetow combined rigorous training with his firsthand knowledge of Wall Street to help graduates make all-important job contacts. As a result, JMU quantitative finance graduates are today working in large, prestigious firms such as Goldman Sachs, Morgan Stanley, KPMG Peat Marwick, First Boston, Lehman Brothers, Capitol One (Richmond) and Freddie Mac (Washington, D.C.)
"The students are the ones who actually get the jobs," Buetow says. "I make a phone call, write a letter or make a recommendation, but it's their hard work and perseverance in this program that ultimately gets them hired. And, from what they tell me, they are all doing extremely well."
One of the things they tell him is how much better prepared they are than other college graduates starting out in the same positions. "I think one of the reasons our graduates enter the job market way ahead of the game is that our program places a strong emphasis on developing their problem-solving and analytical skills," says Jim Sochacki, a math professor who assists the quantitative finance program. As the financial industry has become more progressive with advances in technology, Sochacki explains, computerized mathematical modeling has become extremely prevalent in predicting interest rates, the prices of stocks and options, and risk. Buetow and Sochacki in fact met in JMU's interdisciplinary mathematics modeling center, which Sochacki directs for students in math, physics, information and decision sciences, and materials science -- in addition to those in quantitative finance.
"We want our students not only to understand the financial aspects of their discipline, but also to know and understand how to depict a whole range of financial situations, like what's going to happen in the stock market, for example, using these mathematical models," Sochacki says.
In addition to a business degree in finance, QF students graduate with a math minor. Classes include a calculus sequence, differential equations, linear algebra, numerical methods and statistics, along with computer programming. The math course work teaches them to use mathematical models to predict what will happen in a given financial situation. By changing the parameters and recoding them, the models can be rerun for any number of different scenarios.
"There's an extreme demand for this knowledge. It's exactly what financial institutions are looking for to help them hedge investments and reduce losses," says Sochacki. "In fact, the modeling process is becoming more widely used in a number of other industries beyond the financial market, like engineering and high tech, so our students really have a lot of flexibility when it comes to choosing a career."
Both Buetow and Sochacki say their students leave JMU with an edge over graduates from other finance programs. Frequently these other graduates even ask to borrow Buetow's class notebooks. That, he admits, makes him feel good and convinces him that "we must be doing something right."
QF graduate John Stein ('97) is an analyst with Lehman Brothers in New York City. He readily agrees with Buetow that JMU is "doing something right," and credits his success to the intensive training he received.
"The course load is extremely demanding," he says. "It's a 70-plus-hour major. But I'd say it was the program's focus on firmly grounding us in general financial concepts, quantitative aspects of finance and how to think about complex financial concepts that has proved most valuable. I've been able to translate everything I learned to what I do in my job."
While Stein is one of several alumni working in New York, others have gained equally impressive employment credentials in other areas. One of them is Michael Bowman ('95), a data analyst for Capitol One in Richmond. Bowman's experience is perhaps a little different, in that Capitol One ignored him when the firm came to JMU on a recruiting mission in December 1995. Bowman, not to be deterred, went over -- or around -- the recruiters, and sent a resume directly to the company. In January 1996 he was offered a job.
"One of the things Capitol One looks for is strong analytical and problem-solving skills," says Bowman, who was one of the first graduates of the new quantitative finance program. "And I can tell you that I acquired those skills at JMU. With what I learned in the QF program, you can make it in almost every finance-related job there is."
Bowman has come full circle now. He regularly visits his old campus as a recruiter, searching for talent in the JMU quantitative finance program.
Some of Buetow's former students, such as Matthew Weiand ('96), formerly of Lehman Brothers, and Stephan Alb ('94), formerly of Goldman Sachs, have gone from employment to self-employment.
Weiand started his own trading company in New York, and Alb created his own hedge fund -- a fund which often uses derivatives to enhance returns or reduce market risks. Buetow says these former students simply got tired of giving away most of their trading profits to employers and struck out on their own. It is, he says, a trend that may continue as QF graduates acquire skills, confidence and professional contacts.
In an effort to strengthen an already powerful program -- JMU's quantitative finance program is the only one in the country for undergraduates -- Buetow has taken a lead role in establishing another one-of-a-kind program. It, too, is a joint effort between the College of Business and math department.
JMU's new actuarial science program is the first in the nation designed to unite finance specialists and mathematicians in a program that produces actuarial finance specialists, Sochaski says. It is a further specialization of the quantitative finance program. Students can enter the program through finance or mathematics. The program requires both math students and finance students to take an additional series of courses team-taught by math and finance professors.
The program was created to fill a need in the world of actuarial finance as it relates to insurance companies and policies, Buetow says. "Actuaries working for insurance companies set the price of policies, and financial specialists invest the money until it has to be paid out. More and more insurance companies are finding that they need someone who can interact between the actuaries and the investment people -- someone who understands both the pricing of insurance policies and the investment process.
"Because both programs, quantitative finance and actuarial science, require lots of math," Socahacki says, "Buetow can demand a lot more analytical problem solving from his students. This in turn gives the students a great advantage over other traditional finance students when they enter the marketplace. And," he adds, "our math graduates who go into actuarial business have the finance education that graduates from most other math programs lack."
"This kind of interdisciplinary program," Buetow says, is a "win-win situation."