Different kind of quants
I am currently an university student who is interested in pursuing a career in quantitative finance. From what I understand, there are 3 main types of quants: quant researchers, quant traders, and quant developers. There are also 3 main types of quant-hiring firms: banks/investment banks (Bank of America, NatWest, etc...), hedge/investment funds (Squarepoint Capital, Citadel, etc...), and prop shops (Jane Street, Optiver, etc...).
My question is, what are the compensation structure, career trajectory, entry requirement (education background and key skills), work-life balance, and typical day-to-day tasks of each types of quants in each types of institutions?
I know that I am asking for a multi-variete description of in total 9 types of career, which may not be feasible, but any information about a subset would be greatly appreciated!
And lastly, I've only once heard about a 4th type of quant -- quant PMs. Do they exist? How do you become one in different type of institutions (from what I read, becoming a quant PM is very lucrative)?
Thank you in advance!
Theres a lot of variation, but my personal experience below. I’m in commodities so its kind of different, and have worked at roughly equivalents of asset managers and prop shops.
- background and skills: quant research (QR) will be more math/stats, quant dev (QD) more computer science. Both code almost constantly, but qr makes the models/ideas, and qd implements them at scale. QR will tend to be more front office, QD front/middle.
- Almost always PhDs and at least masters at the high levels, with some bachelors only more rarely.
- Key skills: be really good at coding and math/stats/probability. The more domain knowledge for your area, the better.
- Trajectory: Mostly about comp/desks, but really just junior -> mid -> senior principal -> department head. Can also stay out of management if one chooses. Work doesn’t really change, can just get more sophisticated and more responsibility. Juniors might be doing more data engineering or devops, seniors more model development and direct trading.
- Work life balance: Generally good. I’ve averaged probably 45-65 hours/week over my career. Thats in seat, at the computer hours. Its hard do the deep, focused work required more than that, and most desks don’t want their quants doing fire drills all the time, pulling long hours. You’ll usually be staffed on longer-term initiatives and if you stay on schedule managers won’t be forcing long hours.
- Day to day examples: Can be really varied. From my world, QR will get tasks like improve performance of a model, develop a new model, research a new product or market area, price a product, find/develop alternative data sets. QD will get tasks like take some QR code and put in production, make it faster, scale it to other areas, make automated reports, data pipelines, manage the code lifecycle. Depending on the team makeup there can be a lot of overlap between QR and QD tasks. I’ve tended to work at places where there weren’t really QDs, and QR picked up a lot of their typical tasks. Never worked with someone with quant trader title, but we have quants that trade, and its really just QR with PnL responsibility. I’ve seen plenty postings though that imply the quant trader will get assistance from QR when the shop does have both roles.
- Comp: all over the place. Depends a lot on education, with PhD making the most out of school, obviously. Bonus % will depend how close you are to trading desk. Base can be anywhere from 100-250 with bonus % anywhere from 10%-200%.
Forgot to mention just like any other technical job, communication skills are important. Can definitely get by if you’re really bad communicator but a genius more than other positions. But the more senior you get, the more you need to do tasks like explain results, design meetings, collect requirements, document projects, advise team members and review work, work with IT, etc.
Thank you so much for your detailed insight! As you mentioned, the academic background is almost always PhDs, and PhDs receive the best compensation. Hence, would you say it is worthwhile to pursue a PhD first? Assume if I have an offer to pursue a PhD as well as starting a QR position in a prop shop, if my goal is to end up in quant anyway, is there any advantages to pursuing a PhD instead of starting the position with a masters?
Tough call imo. I don’t have a PhD, but went back and forth on pursuing one for a good while. A general rule of thumb is PhD are meant to create academics, and if you don’t want that its rarely worth the large opportunity cost and difficulty. Also if its obvious you don’t want to be an academic, it can be difficult getting solid advisors b/c its not worth their time, you’re next to useless to their career once you’re in industry.
That being said, QR is one of the few possible exceptions. Its not a rule, but at the top levels its hard to get in and continue without a PhD. What I tend to see is quant oriented people who don’t have a PhD will eventually self select out of QR/QD to an extent. Go into mgmt, IT, trading, PM, or other commercial roles.
So you can have a really fulfilling and lucrative career in quant-like roles without a PhD, but if you’re dead set on only doing financial math and programming, the PhD will definitely increase your chances significantly. You just need to be mentally prepared for doing something for 4+ years that you kind of don’t want to be doing. That will take its toll much more that you probably realize. Having to put up with all kinds of academic BS with the thought in the back of your mind “I don’t care about this, I had other options, maybe those were better, etc.”
To that end, mastering-out is really an underrated third way. You get the masters for free, and as long as you land a good role first, you’ll always have the narrative of “I was smart enough for the PhD, but didn’t want to put up with all the BS and wanted to work.”
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