Quant Trading vs. PE Career Progression?
With the hot topic of Quant trading/HFT, wondering how that career trajectory would compare to that in PE? Assuming you manage to grind it out to the end in both industries. Especially concerning WLB and Pay?
PE has a much clearer career path and trajectory. It also has way better exit options imo. U can move firm to firm, go to some HFs, move more into operations / management roles. It’s a much more established career w/ clearer timelines and exits along the way.
Quant has better WLB p much every step of the way. Especially early on, WLB and pay are generally miles ahead of PE (both @ an ~175-250k 80-100hrs vs ~400-600k 50-60hrs and aso levels ~300-500k vs ~700-900k if ur doing relatively well). Career progression and pay are very much so linked to individual performance metrics. Pay structure at each prop shop is p unique and particular but all almost entirely performance driven. I’m not as familiar w/ quant or multi strat HFs but have heard worse things abt WLB since it’s a more traditional finance culture. Hours are ok (think in btwn swe and S&T, a bit lighter than like consulting), turnover is high, and it is a much more stressful and cutthroat environment than most realize. Stress is because of how much pressure there is on you to perform and hit certain returns as well as how much money you can be trading in fractions of fractions of seconds esp if u r in HFT. A lot of ppl that I’ve seen leave either go to another shop, try and start their own team, or just do something random w/ the money they’ve made. If you can’t cut it, u have learned relatively few transferable skills. Maybe you can try and network ur way into a S&T desk at a bank. U likely alr have the coding and analytical skills to compete for top data sci and swe jobs if u can break into quant, and they’ll respect ur time in quant. U prob won’t b lateralling and taking big pay cuts. It’ll b kinda like starting over.
More top PE partners/etc at large funds make more than most upper level quants. Most mid tier quants make more than mid tier PE aso/vps.
WAYYYY fewer roles in the quant industry. Statistically, I think it’s much harder to break into esp if ur not willing to take some random job at some bootleg firm. Not sure if it’s as future proofed as PE w/ more automation and AI models on the horizon. Almost all quants would never be able to succeed in PE. Almost all ppl in PE would never be able to succeed in quant. U need a much more specialized skill set and talent to be in quant than PE. Ofc you have to be very smart and knowledgeable to make it in PE, but u have to have savant level math/numbers skills to make it in quant.
I know single digit number of ppl that even had the option to consider both careers (a few top performing MIT, Yale, and UChi kids). If u do have offers in both industries, I’d recommend thinking abt if u want to work long hours, play more politics but have a clearer path and goals w/ a wider and more diverse range in the work u do or if u want to work a very stressful specialized job and make as much money as possible very quickly and early on into ur career and u absolutely LOVE numbers.
Best of luck.
Thanks for the detailed response, greatly appreciate it! I looked at some employment compensation surveys for PE (Heidrick & Struggles 2022 PE Report) and Quant (Baruch MFE Program 5th Year Career Development Report) and it seems that the compensation for people working in PE and Quant 5 years out seem to be pretty similar. Are these surveys trustworthy, and how accurate do you think these surveys are?
For Example:
Median Salary 5 years out as a Quant at a HedgeFund is 400K+ TC and the mean salary for an associate/senior associate at a 10bn-20bn AUM Fund is ~350K without carry. (Carry compensation numbers seem to be very optimistic imo)
This is a good response. In college in studied math and ended up recruiting for both quant and also IB (with intention of going to PE).
Ended up on IB->PE track since the concept of quant was so intimidating to me - if you do great the sky is the limit, but if you fail there’s no going back. And you can work your ass off as a quant but if you just aren’t smart enough / don’t have the right touch you fail.
Not once in IB / PE did I worry about being “smart enough to succeed”. It takes work ethic and half a brain to get by enough in IB/PE, but I know plenty of incredibly bright people who went into quant and ended up getting shown the door pretty quickly
Don't agree that quants have less exit. If they are tired of the game, they can transition into business development type of role in quant fund, or AI researcher at top tech companies, or CEO of quant fund. They can also lateral into tech companies pretty easily, just throw in their top phd connections and some AI/ML paper and they're in. Quant is immune from AI automation because quants themselves are applied AI scientists in finance / money management space.
Most of these exits are for long-tenured quants who have an extensive academic background. Many (probably less than 50%) of quants nowadays have phds or impressive research papers with their names on them. A typical quant is not going to just exit to be the ceo of another quant fund, and it's a lot more difficult than you're making it sound to land a good research spot at a top tech firm if you went to a quant firm straight out of undergrad.
Your point about quants being immune from AI progression doesn’t make sense. Of course they’re susceptible to it. Quants who are trading all day don’t just magically transform into AI developers once the AI takes over their jobs (not saying that definitely ever will happen, but if it were to occur). The point of computers is to do things better and faster than people are capable of. Human computers, who used to be crucial, did not suddenly transform into programmers and electrical engineers when electronic computers were invented.
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