Investment Bankers vs. Quants | Who Is Paid More?
Assuming everything was the same, same school, same age, same years of experience -- who would normally have the higher total compensation package? Ibankers or Quants?
Who Is Wealthier - Investment Bankers or Quantitative Analysts
Our users generally share that "Quants" generally make more and are wealthier than Investment Bankers due to the fact that their skills more differentiated and difficult to acquire.
Quants, at least the ones i've worked with, tend to be of more value, and are harder to train from the firm’s prospective. You can take most college grads and turn them into bankers (it’s really just glorified accounting), but quants are typically highly educated.As well many quants develop a thesis on the market that is their own and can open up their own shop, or run their own books based on this. Whereas bankers cannot have this sort of freedom, except a select few at the MD and above levels.
Quants generally have higher requirements to break in (MS, PHD, etc) so their pay scales accordingly - however, they're typically capped off at a certain salary level.Of course, some quants I know have great hours, 9-6 daily, no weekends, great pay. However it's a highly specialized skillset that not everyone can do, unlike most sell-side positions.
User @LTV", a hedge fund associate, shared that the compensation at the beginning of your career is similar:
All-in package is very much comparable, at-least for first 2-3year. However, quants get paid a lot more per hour.
How Much Do Quants Make?
First it is important to note that there are different types of quants on Wall Street. The highest paid type of quants are the ones that work for hedge funds / trading firms. In these cases, earnings will be tied to the returns of the firm and therefore are variable. There are also developer quants that create software for trading firms and investment banks. These individuals require a less quantitative background and therefore command a smaller paycheck. A high level developer might earn up to $250,000.
Overall, a quant position could earn $250,000 with a bonus over half a million dollars. On the low end, a quant may earn only $125,000.
How Much Do Investment Bankers Make?
To learn more about how much money an investment banker makes - check out our IB Industry analysis report.
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easily quants. Not even a debate.
wrg,idts
Have to agree with dipset.
Quants atleast the ones i've worked with, tend to be of more value, and are harder to train from the firms prospective. You can take most college grads and turn them into bankers (its really just glorified accounting), but quants are typically highly educated.
As well many quants develop a thesis on the market that is there own and can open up there own shop, or run their own books based on this. Where as bankers cannot have this sort of freedom, except a select few at the MD and above levels
coming from a quant haha. not sure i agree that bankers are glorified accountants.... more so glorified salesmen
and pretty sure bankers can open up their own shops, too.. just a different type of shop
I was just saying the barriers to entry are alot lower for a quant to start their own shop then they are for a banker. All a quant needs is some computer hardware and a fast internet connection. While a banker needs nice office space, and a team to woo clients. As well quants can start making money immediately, or even on the side(barring any agreements with the current employer), while bankers cant really do side M&A work.
Ya glorified accountants may have been a bit mean haha.
quant or ibanerk then?
All-in package is very much comparable , at-least for first 2-3year. However, quants get paid a lot more per hour.
It also depends on what you're doing/in what type of group. If you are too quanty in the wrong place you can quickly be relegated to a dark closet while your more personable colleagues advance.
I am sure quants also tip the scale of averages in their favor as well because you don't see too many bankers (really none at all) bringing in a few $100mm a year in cash money. Like someone else mentioned, you only need a few bucks to start as a quant, banking has a much higher overhead and is way more time intensive, generally speaking. Truthfully there is no contest. The top bankers make tens of millions, the top quants can crack a billion...a year.
Coincidentally, I recently saw VH1's "Fabulous Life of:" episode about Wall Street Hedge Fund guys (this is like 4 years old) and was thinking about these dudes that pull in a few $100mm in a single year. These guys literally make 2X the amount of money in 1 day then average educated person in the average American household will make in a lifetime. That is stupid money.
With that said, I wish I was a math/finance/computer genius because then I would have "F.U. money" too.
Regards
wait... top quants crack a billion... what are you talking about? Maybe a quant like George Sorros or Stanley Druckenmiller who start and manage a successful hedgefund... but if you're in the back/mid office crunching numbers all day let me tell ya... you're nowhere near a billion, lucky if you break 5 million
Yeah, ambition, you would be lucky to break $5mm too. Don't talk about it like it's chump change when you haven't seen that much in your life.
Wait, so they don't pay people in the back office a billion $$??
Of course they don't. I didn't say that and it certainly wasn't implied in my post, as evidence by the multiple posters before you who didn't even attempt to point it out. Stop being silly.
I realize those that make that much are few and far between but my point was that these people will skew the average heavily (Just like the statistical bonus average on Wall Street has been like $700k but in all seriousness, the average person isn't getting anywhere near $700k). With that said, TOP quants will likely make more than a banker ever will.
Please get with the program before you try and school someone on what they didn't say.
Regards
(Since this is already bumped)
Soros is not a quant...
I'm not in industry, but it would stand to reason that Quants have more potential upside versus i-Bankers, if they are exceptional. Their long-term potential could be negligible though if they have no drive for success, considering i-Bankers have a semi-guaranteed lifetime earning potential so long as they don't screw it up.
-N.
Quants are just a bunch of eggheads with no social skills. They all look like that kid on that MTV show RJ Berger.
Sounds like someone's jealous.
when you guys say quant... what do you mean? are you talking about the guys who price derivatives? strats teams? risk managers? algorithmic traders?
specifically my question...i guess all of them included in a general sense. but if you REALLY want to be specific, it's about the guys who majored in computer science/physics/math and does programming and algos.
okay because I work for market risk at a BB and we work a lot with the Strats team and have a lot of ex-strats members. Everyone is a PhD(or two), has published papers, and is on line with or worse RJ Burger and I can guarantee you they do not make nearly as much as IBD or S&T, the runts you talk about that come out of undergrad and maybe get a MBA. But then again, people here work 10-12 hours and don't do weekends.
That would make sense. If you're a market risk "quant", you wouldn't be expected to make as much as an IB guy. Rule of thumb: if you're a quant that takes on principal risk (i.e. quantitative trader), then yes, your upside may exceed that of the IB guy. If you're not, then don't expect a fat payout.
n/a
Whoever said that all a quant needs is a computer and a room knows nothing about quants. The infrastructure that goes into supporting those quant models is really expensive.
If by programming, you mean Tech analyst, then they don't get paid much. I'm assuming you already know this though.
For quants it depends on your role in the team. In Quantitative finance, people develop areas of expertise - if you're one of the experts in the area you cover, you have potential to make top bucks. For example, if you're one of only 50 people in the world who knows how to price X or develop an algorithm to trade Y, then you bet your ass they'll pay a lot to retain you. This is why project assignments are really important. The rest who aren't "experts" still get paid well, but nowhere near the top salaries in FO.
In short, if you can understand the markets and can develop good algorithms/models to address a requirement to price or beat the, you're in the money.
Not trying to "school" anyone. I'm a summer analyst who just recently took an interest in finance so I understand I'm not in that position. Just looking for some clarification and giving my input on what people I work with make.
Any trader has more potential to make big bucks. Whether he is a quant or just a regular joe doesn't matter so I don't really think you can use quantitative trader as an example. He has the potential to make more than banking because the nature of his profession. I'll probably get grilled for this but I would think that the AVERAGE quant is smarter than the AVERAGE banker.
I'll grill you, lol.
While that may seem true because most quants study math, etc I think it is a bit presumptuous and hard to prove because "smarter" is rather subjective.
To play a little devil's advocate...some might same bankers are smarter because they do have more of a guarantee to make really great money over the course of their career, where as the amount a quant makes probably had more to do with how good of a quant they actually are (and luck when you consider random market fluctuation, etc.). Grilling complete.
Regards
Yea its not the best way to phrase what I was saying. I know there are tons of bankers with incredible pedigree but it just seems like quants always major in the most common "hard" subject fields. I guess you would never find a quant that would go apply for a job without knowing his subject pretty much in and out. Banking seems to be different. I also have heard quant interviews are brutal while I've heard from many friends that some of their banking interviews were cake. Of course banking is much more people oriented.
I'm wealthier! And buddy you need to find a better hobby
Strats at most banks do not make as much as the i-bankers or traders. By strats, I mean the guys who work on adjusting the pricing model (e.g. tweaking the binomial or black-scholes model). No, I am not referring to people in IT/Tech.
Quant traders might earn more money.
Algorithmic Trading analysts do not make much money (it's not very technical at all).
test
what exactly is a "quant" are they the derivs, trading, strategies guys?
Lots of misinformation here. First, the majority of quants have PhDs or at least a masters degree in math/CS/physics. These degrees cost money, and while usually not as much as an MBA, if you complete a PhD you will most likely already be in your mid to late 20s. Yes, you see postings for base salaries in the hundreds of thousands for quants, but if you're purely interested in making money, ibanking is probably the best route. The money you will make in your first 3-5 years (while you would be in a phd program) is enough by itself. Also, most people that become quants aren't undergrads looking to break into wall street. Finishing a quantitative phd requires huge amount of effort and drive. If you don't truly love your subject, then you probably won't make it.
All in all I think this is a poor comparison to make, similar to asking who makes more, a doctor or a banker. The paths are completely different, and the people pursuing each path have very different motives and goals.
Illustrative examples:
The most successful quant (ie. Jim Simons) > by a long-shot than the most successful banker.
The reasonably performing banker > the reasonably performing quant.
The blah quant > the blah banker just because of skills scarcity.
Actual discussion:
I'm surprised quants have yet answered this in terms of variance, standard deviation, means and medians. This is a distribution question. Banking is the lower-risk option in which, as long as you're okay and can patiently work towards something, you have an Expected Value that's in the several millions over your career lifetime with a low standard deviation. Expected Value for quants is a totally different story.
Agreed. Average banker > Average quant, but Top quant guy > Top banker
From IB to HF Quant Analyst (Originally Posted: 12/01/2012)
I know there's not much on this topic but do IBankers - after their 2-year stint as analyst - take MFE and slowly work towards being a HF Quant Analyst?
Well, most of those admitted to MFE have undergrad/graduate degrees in engineering/math/computer science. Assuming that [quant heavy] background, it's possible. Just know MFEs tend to prefer IT/software engineering experience. IB and quant require two completely different skill sets.
I understand that and I see that generally people who become quants come from S&T background. However, I believe that the skills you get in IB is more holistic (modelling, doing due-diligence, completing deals) despite the fact that it's less quantitative-focus. I am not seeing many IBankers taking this path and it's making me wonder if I am making a wrong decision aiming for IBanking instead of other jobs.
I'm not saying it can't be done, but I have never seen it done personally. I don't think too many quants go into IB. Most quants would not consider excel spreadsheets on income statements and balance sheets 'modeling'.
Why would you bother with an IB kid? Take an engineering kid and he will be doing incredibly well at quant. I have a somewhat math background, work in S&T, but I would never even dream of being a quant. wtf type of question is this???
Because I have no interest in Engineering but I have passion for Economics with a strong interest in Math (double major in Econ and Math). I would really like to be a quant working on models but at the same time, I see a lot of benefits in going into IB before considering taking a MFE. The reason I ask this is because I've never seen anyone did this before (searched on google).
What if I take MFE after 2-year as an analyst? It is a sensible route? If not, normally how do people go around it? I know many quants are like PHD in physics and stuff.
You do realize that "modeling" is just one of the many things a quant does, right? If you don't like engineering, you won't like quant (except for a very select few roles that are theoretical - but these need a PhD at the absolute minimum). Vast majority of quants spend more time programming than theory.
I'm going to go out on a limb here and say that you're interested in being a research analyst, not a quant. You could also try risk management - it's fairly mathematical.
An MFE needs a fundamental background in math (diffy-eqs, linear algebra, multivariate calculus), besides a a reasonable level of comfort in programming. If you do get an MFE, aim for the top ones: CMU, Berkeley, NYU.
A vast majority of quants are not from MFEs, though (none of our quants are MFE). Most are PhDs/Masters in CS, Physics, Electrical Engineering, e.t.c. Also, getting a masters in these fields will set you up well from jobs in other fields, like say data-scientist at FaceBook, or yield-optimization at a F100. Just my 2c.
Lastly, if you do go the MFE route - take lots of programming classes. There's nothing more unfortunate than a talented person who has ideas, but can't execute them (and no, it's not IT's job to program your models for you).
Thank you LTV for the info! I will search up on research analyst. I am double majoring in Econs and Math with a possible minor in CS. But I gotta admit that engineering is not one of my strong interests. I have been lurking on quantnet recently and indeed CMU is everyone's target.
I appreciate your comment.
Which group are paid more, Quant or I-banking? (Originally Posted: 11/04/2006)
Hi, just wondering which group are paid more..I heard that quant in derivatives are paid very well. But how does that compare to the guys in M&As? (in BBs)
I think I-Banking. Quants are more like structurers who are just making products.
Unless you mean traders.....
But wouldn't expect that Quants would demand a higher wage due to their high level of skill? We're talking about people with PhDs in math or physics, right?
your eat what you kill
good quants at hf easily pull in 300k. however most start at less than 100k and are stuck for quite a while. quants at i-banks do not matter that much - it's a sales business...
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