Data scientist in AM start up vs quant equity research in IB

I must pick one of the two options. My core competence is machine learning (ML) for finance. I'm interested in ML-based quant trading/investment.

Asset Management: I would join in day 1. Managers very experienced from IB who will bring investors. I used to work with one of the future managers in the past. I would be asked to use machine learning to refine investment strategies and to produce research for a potential underlying fund or clients. Strongly preferred location.

Investment bank: I would join a new quant equity research team lead by a very experienced person. I would be in the research division producing research mainly for hardcore quant clients.

What would you recommend?

 
Best Response

I personally would go with the firm that has the most number of people experienced in applying machine learning to finance. Managers who don't have a background in machine learning/technology will tend to not understand what it takes to build a successful machine learning research team. If you don't already have a lot of experience in applying machine learning/quantitative strategies to finance, I would advise you to go with the firm that will give you the most exposure to people who have the most experience and best track record. Assuming that the very experienced person you referred to from the bank is a quant, I would go with the quant equity research team. Maybe I'm misunderstanding but for the AM firm it sounds like they would expect you to personally build out their ML capabilities. I'm not sure what your experience level is but that could prove to be quite difficult. If it were me, I would look at the backgrounds of the people I'd be working with. If one place is filled with physics/math/CS PhDs while the other is filled with standard finance types, that would make the decision pretty easy for me.

 
DeepLearning:

I personally would go with the firm that has the most number of people experienced in applying machine learning to finance. Managers who don't have a background in machine learning/technology will tend to not understand what it takes to build a successful machine learning research team. If you don't already have a lot of experience in applying machine learning/quantitative strategies to finance, I would advise you to go with the firm that will give you the most exposure to people who have the most experience and best track record. Assuming that the very experienced person you referred to from the bank is a quant, I would go with the quant equity research team. Maybe I'm misunderstanding but for the AM firm it sounds like they would expect you to personally build out their ML capabilities. I'm not sure what your experience level is but that could prove to be quite difficult. If it were me, I would look at the backgrounds of the people I'd be working with. If one place is filled with physics/math/CS PhDs while the other is filled with standard finance types, that would make the decision pretty easy for me.

Although, if the AM startup has experienced managers, as he claims, and if the OP is going to be one of the earliest employees and quants, wouldn't this be an opportunity with significant upside potential?

OP, does the startup provide equity? If so, how much?

 

That's true. Perhaps I'm just a bit more risk averse personally. I think the decision should come down to how confident you are in your ability to independently build out quant capabilities for the AM startup and compensation. If you do have the ability to build out these capabilities, that has enormous value and you should be fairly compensated for that with equity.

 

Thanks QGKZ and DeepLearning for the considerations. A few additional details: - The leader in quant equity research has no knowledge in machine learning but I would have the freedom to come up with my own experiments to some extent. - The leader in the start up has dozens of year of experience in BB. He has never used machine learning but keen to see if it works. The other person is well educated, technologist and expert in data science, experience in BB. - No additional details on the contracts for the moment.

Basically my concern is: how fool would I be to reject a quant equity research position in BB, for a AM start-up with great potential and a more machine learning-based role?

My goal is to increase my expertise in machine learning for trading/investing, namely all the steps in between data-processing, modelling and pressing the button to buy/sell. The former opportunity is a great place and may give me more credibility in the long term since it's BB. The latter has more potential, more risky in a preferred location. I trust the leaders in both groups.

 

From the information you have provided, it seems that the AM startup has serious potential. It also seems like, although you'll have significant discretion, you'll be under the supervision of an experienced quant.

The BB may give you a more structured training, but if you're hard worker, you may be able to handle the significant responsibility at the startup.

As DeepLearning said, you also need to be honest with yourself and assess your risk tolerance. The BB is definitely a safer option in this regard, although it potentially comes with less reward. This brings me back to what I said before: compensation. Find out how much they're willing to pay you. Your focus should be on getting a significant amount of equity. Once you've got compensation information for the startup and the BB, you can make conduct a risk/reward analysis.

 

Another thing to consider is that building quant experience at the BB will beef up your resume quite a bit. There will be other startups. Of course, if the AM startup blows up, you'll be kicking yourself. I think it's going to come down to compensation as well as your confidence in your own abilities to build this type of technology independently (which is quite hard imo).

 

This week I'm going to discuss the salary + equity for the AM job. Given the information that I provided, what could be considered a good cash + equity for a permanent role? What are good questions to ask during the discussion? I've just been told that I should expect something quite below what I could expect in IB for the cash component. Equity are provided though I don't know in which form yet.

 

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