With the economic downtown of 2007/2008 still looming over the financial centres of the globe, the outlook for quant jobs has changed dramatically. A career in quantitative finance now means a heavier emphasis on implementation (and thus programming), with regulation causing a shift towards private funds, away from large banks. The advantages and disadvantages of a typical quantitative role have remained relatively similar, however. This article studies those advantages, helping you to decide if a quant job is right for you.
A quantitative role is often highly rewarding, from an intellectual standpoint. No doubt you picked mathematics, physics, engineering or computer science (the common routes into quantitative finance) because you enjoy numbers and working on problems. A financial engineering role is full of interesting, stimulating challenges right the way from statistical research all the way through to model implementation and optimisation. Traders will be using your models every day in their work and so your contribution will have a direct effect on the firm’s bottom line. If you are PhD trained, you will find those years of grad school highly applicable, as a quantitative role needs individuals who are self-starters and can tackle a problem independently, if necessary.
The shift towards private fund employers has meant that many roles now exist in more casual settings than the typical investment bank trading floor. For individuals who come from a background in research, this can be extremely attractive. The atmosphere can be “collegiate” and highly meritocratic. Clocks are not often watched as much as longer-term results, which means more freedom and creativity to pursue models than you might find in a larger corporation.
Many funds tie their operations/implementation departments very closely to their operational research. Execution optimisation is a highly important part of the trade lifecycle within a fund, often requiring teams of PhDs to “get it right”. If you’re more statistically inclined, there are plenty of opportunities within funds to explore new models. Funds and Commodity Trading Advisors follow myriads of strategies, including Trend Analysis, Short Term Mean Reversion and Statistical Arbitrage, to name a few. There are plenty of opportunities to jump directly into these trading opportunities, which can lead to highly lucrative positions.
There is the also the benefit of a high “compensation package”, often in the form of a large base salary (even for juniors) and a substantial bonus. In banks, this remuneration procedure may be more opaque than a fund, but it will often still be high. The potential for career development is also strong, with many quants entering trading or even upper management. Risk and regulation are huge areas of growth for many firms these days and many quantitative roles are opening up in these areas, so quants are still considered a “growth market”.