Recently, I've been thinking about career paths and I am curious as to what the pros and cons of starting as a quant within a BB would be versus starting at a hedge fund like Citadel, Two Sigma, etc.
Salary seems to be better on the hedge fund side (200k-300k starting vs 100k-150k at BB), but is there embedded career risk when starting out in a HF as opposed to within a BB and then moving laterally later on (i.e. the expected value of future salary when beginning at a quant fund is lower due to decreased future mobility)? Or are my salary numbers off to start with?
Another area of differentiation is the style of research being conducted, as within a BB research is distributed to clients as opposed to used for the purpose of alpha generation.
These are just two topics off the top of my head, but I'm curious to read everyone's input. Thanks monkeys.
I'm at a BB, what I can tell you is that we have tremendous difficulty hiring good junior people mainly because the pay is so low.
If you can get into an established hedge fund with good pay, do it. You are not losing anything, because worst case you can just go to a BB. Everyone here is trying to get out into prop shops/HFs, that should tell you which side has the higher bar for hiring.
Not only are BB salaries lower, but bonuses are as well. Sell-side quant is a decent career gig if you are extremely risk-averse. But if that’s the case, why not just work for FB/Google? BB quants receive promotions based on burecreatic HR timelines (good or bad depending on your risk aversion).
Most BB quants don’t manage any risk (PnL), although it’s desk and product dependent to an extent – e.g. equity derivatives quants maintain the pricing models which the traders use, but aren’t involved in managing the book and not seen as revenue generators. BB equity algo traders (e.g. central risk book) do manage risk, however their objective is not alpha generation, so that skill is not necessarily useful at an HF.
The HF space doesn’t view sell-side experience as too valuable. The incentives are entirely different, which makes it a hard transition from BB to HF. It gets harder the more one spends on the sell-side. I made the switch very early in my career, and couldn't be more pleased with my decision.
HF career path is much more rewarding, both intellectually, and monetarily. However, if you are extremely risk averse, it will not be the best fit.