One of my buddies is a quant(first year, base is at around 150k) working in the middle office (model validation/ risk management) and they just had a meeting and his boss told him that their year end bonus is targeted at 96% ?! Can quants in other BBs confirm this?(and this dude works less than 40 hours a week!) I'm a bit shocked.
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will reveal the name of his bank if someone asks
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Why are you considering model validation/risk management a MO role? I think it’s actually part of the core business of quantitative finance and the people working in that division are as qualified/have similar backgrounds to the other quants. From my understanding, as people get more senior in quantitative development they tend to move toward model validation a lot more since it requires more experience in model development. The YouTuber Dimitri Bianco has a lot of videos on the subject and is an example of that since he’s quite senior now and works in model validation. The most senior quants I met (~5) started in model development and moved to model validation too.
It’s not the same as risk management roles in other fields of finance. Someone working in model validation/risk management will be considered a real quant the same way someone working FO in IBD will be considered a banker. At least, that’s how I understood it from Dimitri’s videos on quant finance and talking with a few quants, I am in no way an expert.
I have actually talked to model val/risk quants at my bank(C/JP/MS) and it seems that everyone who is VP or below there is dying to move into FO to be a desk quant, also at my banks' MO quants will get bonus more like 60% max. My friend who's got 96% bonus works in WF, according to him, WF hires quants more selectively(almost everyone is a Phd), the pay gap between MO and FO is minuscule.
This is not correct. Don’t get me wrong, being a model risk MD is a great job and those guys are extremely smart but they are not paid the same as front office quants. The pay is similar to other risk management positions (very good but lower than front office generally)
How much lower if you don't mind to disclose
Model validation, while a demanding job with lots of smart people, is not a front-office role. Front office jobs either generate revenue or generate relationships (corp banking / research).
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