What kind of skills do you need to work at a finance firm?

I'm a senior in high school matriculating to Caltech. I invested lots of time into high school math competitions (14 on USAMO, if that means anything). I'm not sure if I want to go into academia. For the time being, I'm keeping my options open.

I apologize if I'm posting a common question and if that's against the rules. I'm new to the site and to finance and am just trying to get a basic understanding. I'm not even sure if this is the right forum.

Finance is a big field. What jobs require lots of math? What kind of skills are needed for these jobs, in math, CS, economics, and else? Will majoring in pure math hold me back? What additional classes would I have to take/what additional information would I need to learn? Would majoring in applied math make it easier to get a job in finance? Does getting a PhD help? How does a pure math PhD compare to an applied math PhD?

How do finance firms compare to one another? The Worldwide Online Olympiad Training (WOOT) class for high school math olympiads is sponsored by D. E. Shaw, Two Sigma, and Jane Street. I assume these would be well-suited for my goals. I've heard they are extremely competitive, populated with IOI and IMO medalists. How do they compare to academia in competitiveness? What other firms offer mathy jobs?

 

Because you're probably a borderline math genius, I would recommend becoming a quant. Look at DE Shaw, 2sigma, Jane Street, and reach out to possible connections either through CalTech or outside that can help you get the foot in the door (starting late sophomore/early junior year). Plenty of time.

Also, with your background, you would probably find investment banking menial and stupid and a waste of time. So I wouldn't go for that,

 

First, I would say props to you for being ahead of the game and thinking about the implication of your major choice, etc. Given your background, you're a pretty natural fit for JSC, DE Shaw, 2Sigma, Five Rings, and a few other niche quant-y prop firms.

In terms of competitiveness, you'll likely find that many of the guys these firms hire could likely choose to continue their studies at top PhD programs but decided they didn't like the pure research path at some point during their college years. That being said, almost any top math grad can get a spot in a quant role at one of these firms but not all top math grads will matriculate to top PhD programs (if that makes sense). The pool of competition doesn't overlap that much.

For your major choice, you'll be best suited picking something that you enjoy and can excel in. It seems math has been your focus so far and you won't be worse off for staying the course. If you're flexible and find your interests more varied later on, I would suggest you try some theoretical comp sci courses and spend some time writing / proofing various algos. Quant work inevitably goes back to code at some point and all of the firms you mentioned (and other quant houses) will be happy to see you're somewhat familiar with their processes.

 

Thanks, both of your posts have been very helpful. I think I will major in pure math and self-teach the quant skills that aren't covered in class. If my interests broaden, I'll adjust my major accordingly. Hopefully, academia and industry will still both be viable options after I graduate.

 

Pure math is a great major, and if you have electives, consider taking some introductory programming courses, and also data structures/algos, and algo analysis. Also some stats courses, like regression analysis. Quant researchers have to have some level of programming ability.

In terms of whether pure math will set you back vs. applied math, in almost all of the proprietary trading firms (minus the top tier, highly quant ones listed above), will ask basic probability and combinatorics questions. These are covered in an intro to probability course, so take that if you have space. Having a pure degree will be more useful at the firms listed above where the questions are more abstract.

Other jobs you could consider are working as a quant/data scientist at Google/Uber/Other-Tech-Giant, doing algorithm development at tech firms/ML startups, etc. If I had the brains I'd consider working at an engineering firm like Tesla or SpaceX as well.

Being good at math competitions like IMO and Putnam are a great sign. You're on a good track, I did well in interviews at various trading firms and am nowhere near your level.

Also check out HRT if we're going to talk about top-tier, competitive quant firms.

 

I would echo the previous posters' comments. Pure math is a great major, especially if you do some programming on the side (highly likely you will be doing that, unless your focus is something incredibly theoretical). Moreover, Caltech is a great school, so it seems that you're off to a very good start. But then again, as a math major myself, I am biased :).

As to your other many questions, I think you will have ample time to discover how things work. Best of luck!

 

The people most qualified to answer your questions have jobs in investment banking. They probably don't have time to check these forums every 3 hours. If it has been more than a day or so, then it would make sense to bump the topic up.

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

One of my close friends started a distressed credit hedge fund and I am currently working there. He and the other 2 founders were all PM's at a very large credit fund (often in the news). They had experience across pretty much all asset classes, heavy of course in CLO's, hybrids, bank debt, et al.

On an S&T desk, of any kind, you aren't going to be doing much analysis...you're executing orders for your clients. Yeah, maybe they ask an opinion on something, but then you ask an analyst. If you are a desk analyst (as opposed to a research analyst, one who publishes) then there would be a fair amount of FSA going on I imagine.

 
Cartwright:
One of my close friends started a distressed credit hedge fund and I am currently working there. He and the other 2 founders were all PM's at a very large credit fund (often in the news). They had experience across pretty much all asset classes, heavy of course in CLO's, hybrids, bank debt, et al.

On an S&T desk, of any kind, you aren't going to be doing much analysis...you're executing orders for your clients. Yeah, maybe they ask an opinion on something, but then you ask an analyst. If you are a desk analyst (as opposed to a research analyst, one who publishes) then there would be a fair amount of FSA going on I imagine.

Thanks for the info. Where did your friend and his partners start their finance careers then? In IBD? If so, what group were they in?

 
Cartwright:
2 started on the buy side, 1 did a summer in banking but started full-time on the buy side.

Thanks, I guess I better start working on my GPA and making those contacts hahaa

Cartwright:
On an S&T desk, of any kind, you aren't going to be doing much analysis...you're executing orders for your clients. Yeah, maybe they ask an opinion on something, but then you ask an analyst. If you are a desk analyst (as opposed to a research analyst, one who publishes) then there would be a fair amount of FSA going on I imagine.

Does this mean that you wouldn't be able to trade with the firm's capital at all? I was under the impression that flow traders outnumber agency traders at most BB's. I guess you don't need to do fundamental analysis to trade but wouldn't that be up to the trader's discretion? Aren't some S&T desks also strictly prop?

 

You might be best at a bank where you can learn the fundamental analysis. BAML lev fin would be the best for learning about analysis and deal structuring, but most of their PnL are fees arrangement rather than great returns on their investments. It might be a good learning track to break over into a fund someday.

 
Cartwright:
At least with respect to equities, by its very nature the "S" in S&T precludes prop trading. I can't speak to the geographical layout at every firm, but in theory, these are separate desks. We all know the prop desks front run everything and trade off client flow but in theory (heavy emphasis there), they are separate entities. There are prop traders, sales guys, sales-traders, and traders on the sales desk, doing both execution trading and making markets for clients, which certainly is prop trading in that you are using the firm's capital, but not in the sense that you generating ideas and getting paid strictly off PnL.

Does this hold true for macro asset products too (Rates Desks, Forex Desks, EM Desks, etc.)?

If thats true, then how do HF's properly choose candidates if they don't have some sort of personal P&L (not market making commissions)

 

I live in Australia and work in IB here so can shed some light on this. Where are you planning on going to university?

The target schools for IB in Australia are USyd, UMelb, UNSW, Monash, UQ (not necessarily in that order, but USyd and UMelb are the two schools I've come across most). Apart from those listed and a couple of universities in NZ, I haven't seen people from other schools in IB - not saying they aren't there, but it's probably quite rare.

Be very careful saying you want IB and are dead-set on it, having never worked a day of IB in your life. Not saying you're wrong and will change your mind, but it's definitely possible.

Ignoring your questions for now as I'm busy with some stuff and just passing through but may look at them again later. For you specifically (as someone still in HS) - it's good you're interested early, you have an advantage because you will have more time to prepare. IB is EXTREMELY competitive in Australia (more than in the US based on sheer number of applications per spots) as an example, a friend of mine interned in IB at a BB (bulge bracket - large global bank) in Melbourne this past summer, and they took 4 interns from 1,500 applications - the numbers at my bank were similar.

All you need to do right now is get in to a great university (and ace your classes when you get there - preferably an H1 in all classes but one or two H2As/H2Bs won't kill you), get involved in some extra-curricular activities that show your interest and stay abreast of market news etc.

 

I am planning on going to university at the best reputable available to me. My grade average is 85%+, hopefully I can drag that up and get a solid ATAR.

Which university do you think would make a more powerful impact? Living here in canberra, I have ANU sending me mail, even one of their reps rung me the other day trying to convince me that it was the school to go to. What do you think about them?

Well, if you'd like to shed light on the parts of the IB that you don't like, or parts people usually dislike; I'll see if that would turn me off, but generally I have always worked hard, and I am very good with numbers and money; investments are what I spend my time thinking about, and dealing with people regarding investments is a solid skill.

I'll see about University, if I do get in; I'll have to find a way to do as well as I possibly can but I am more worried about the actual cost of the courses.

 

If you are dead set on IB and you live in Canberra and you want to get in as quick as possible here is the pecking order (which is obviously my own opinion): 1. UNSW Finance Co-op Program (immediate IB placements during your studies) 2. UMelb BComm degree (3 years long) 3. USYD/UNSW/Monash BComm/LLB (although the LLB is losing its shine, it's a traditional degree. I'd only swap it for Engineering, if you are more mathematically-inclined)

What is good about IB: 1. The pay - let's not beat around the bush, no one would do this job unless it paid the $100k+ that it does 2. The training - most banks take you to NYC for 4 weeks+ 3. The benefits - gym membership, dinner, taxi ride home

What is bad about IB: 1. The hours - not as bad as the Americans may experience, but if you're sitting in a coverage team, it is not uncommon to be working 9am - 12am and throw in your weekends (unless you're at GS, in which case you get your Sats back) - they may sound good when you're young since you see the money, but they can destroy relationships/social networks/you 2. The work - analyst work is not fun, no matter what anyone tells you. Fixing Powerpoints or updating Excel is not flash but is the reality of the work in your budding years.

What is ugly about IB: 1. The people - it can go both ways, people come and go in banks and its a bit of a circus, especially down here in Australia 2. The benefits - gym membership, dinner, taxi ride home (they are positive since they're benefits, but they also suck because they mean you're chained to the office)

 

Fantastic, you've answered everything I wanted to know. I have thought positively about UNSW for a long time and I'll probably check in for the best way to concrete a tunnel through the path of least resistance. You mentioned that the pay is good for IB, although I'm wondering what the average figure is for a starter analyst in canberra/sydney. I am also interested to see if it's possible to start getting any work experience at these places, because that would give me a leg up.

Only place related to finance I can get work experience with is from the CFO for department of human services here, an I don't think that's going to matter at all towards my career. If you think it's possible to get work experience with any form of analyst position, where should I look?

 

As @"Bobski"'s post implied. I'd skip ANU. Certainly not impossible to get in from there but it's definitely not the path of least resistance and you'll be in a much better position from another school.

I wouldn't worry so much about the cost of university - assuming prices don't go sky-high if things get deregulated (ie assuming fees stay around the levels they are at now) even if your family is unable to afford school comfortably or you can't get HECS HELP, working 3 days or so a week while taking a full course load is actually very doable and you should be able to earn solid money during the semester if necessary. Moving to another city and paying living expenses (if that's what you meant) will be expensive but if you can get HECS etc working should mitigate those costs significantly. Point is if you are pretty set on something like IB find a way to make a better school happen - will be worth it long-term for sure (even if your degree is tough because you have to work while you study).

Post above alluded to some of the worse parts of the job, but I didn't mean you'll dislike the job - I was saying be careful more in the context of when you go to university, you may end up changing your mind, as people very often do (for example I was initially a neuroscience major and ended up transferring to commerce and doing IB).

 

I'll heed your advice about the cost of ANU. I'm an independent student and live on my own, which is the exact problem. Hopefully, they wont skyrocket, and working 3 days a week wont be too hard in university gathering I'm only taking one or two courses. Not too informed on the HECS program, should look into how much of my income that will be taking off in the future.

Speaking of changing interests, I was actually in chemistry and chemical engineering which I did really well in; but I disliked a fairly large chunk of the necessary work and decided that it wasn't really my thing, at the time though I started investing and getting into finance about 2-3 years ago, still love the idea of working in finance today, so I am hoping this really is a career that I'd like. If it isn't I'm sure there is a field in finance I can jump into that I would prefer anyway.

 

I don't think there's any doubt that you will be able to HECS your entire university degree unless you're not an Australian citizen. If you're in high school and want to get into banking the best thing you can do for yourself is to just maximise your ATAR by picking the right HSC courses so you have the best choice of universities (don't go ANU).

Once you get into uni you might find that IB is not for you, as notER says, but with a commerce degree you can pivot into so many other different roles anyways.

 

Agree with all that has been said above. I think what definitely needs to happen in your case is that you need to get the fk out of Canberra. There's nothing out there in terms of M&A. As mentioned, your best bet is to get into one of the target universities (Usyd, UNSW, UMelb, UOQ, Monash, UWA) and do some combination of Comm/LLB/Eng/Honours in one of em or the UNSW Co-op. Ideally as most M&A activity is centred around Syd/Melb, I'd consider going to uni at one of these cities in the first instance. So yeah, u def need to bring up your marks to get into one of these courses (95+ ATAR) otherwise you'd find it a lot harder to crack in.

Average pay for a first year analyst in Syd/Melb is $100k base + bonus ranging from 0% to 50%.

With regards to work experience, the only partly beneficial experience you may get is to try and get some work experience in the corporate finance department at one of the Big 4 accounting firms (don't even know if they offer this service in Canberra to be honest).

 

Year 11 right now, and I'll probably only be able to move back to Sydney after year 12, purely because I've got too many obligations where i'm living (just got some accounting WE with gov department) but I was interested to see if there's any way to jump into a finance WE from my current position.

 

At MBB, to be hired you don't need to know VBA, Access or SPSS.

But at some point in your project you will need to use them. From my experience, there is always someone using one of those in a project.

Therefore, it depends of the project you will either have to learn the software very quickly or someone else will do it for you. But you will not be looked down because you don't know it.

 

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