quant HF - how much should entry PhD quant expect to be paid?

neiji's picture
Rank: Monkey | 34

Hello,

Central question out of my curiosity: how much quant research positions at quant firms like DE Shaw / Citadel / Two Sigma pay, for fresh PhD? In terms of base and guaranteed bonus (not signing bonus) this year?

I'm excluding signing bonus because Citadel is so famous for that.

Comments (87)

  • Investment Manager in HF - Macro
May 29, 2020

Base should be ~$150-200. Bonus ("guaranteed" although not all will write it this way in contract) ~$100.

Ex signing bonus you should be around 250-300k. Maybe a bit higher due to PhD, as the numbers above are entry level. This is for the top places, one tier down you are closer to the 200 range.

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May 29, 2020

In NYC this is correct.

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May 29, 2020

wow this is much lower than what another forum says it should be. I just got this from google search:
https://www.teamblind.com/post/hedge-fund-compensa...
They say it should be $400+ before signing bonus for firms like DEShaw.

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  • VP in HF - Macro
May 30, 2020

That's a joke. How on earth do you think someone could be worth that kind of money first year out of the PhD? In your first year there is so much to learn and in reality you will mostly be working on what exactly you are told by your PM or senior quants before you can really contribute something on your own. It is not like you go there straight out of PhD, write some completely new model nobody else has ever thought of which makes your fund 20 bucks and get paid 7 figures in year 2...
PhD is an academic qualification and while it can set you up with useful skills Quant trading is not directly transferable
There are some very rare exceptions maybe if you join a group at an MM and your PM manages to make a killing from something you worked on and is very generous.

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  • Investment Manager in HF - Macro
May 30, 2020

Those numbers are inflated. The "top" of the "top funds" will pay that much, and with PhD will pay a bit more than the entry level numbers I quoted.

It also depends on experience + PhD or just PhD. If you look at the numbers on blind many that are quoting 400-450 are including signing bonus.

I'm general 300 is a lot more likely before signing bonus. Not all firms are as uniform (in that some are willing to pay up and pay two new hires pretty differently) so you get some outliers but the standard at the top places is much closer to what I said.

Then it depends on what path you are on and how much you actually contribute to PnL vs other roles that are less tied directly to PnL.

The quick road to 7 figures is tied to PnL, but the posts on blind also exaggerate, at many of the places (especially as a quant) you aren't running a book and you don't even have insight into the full model or process. You may write some stuff that is very useful, but large quant places generally tend to protect the secrets and so you have less control over the investment process.

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May 30, 2020

Thanks a lot for the information!

I'm sorry that my reaction didn't come across quite right. I was simply surprised to see a big discrepancy here versus the other one. Those commenters on blind might be legit as they are from Two Sigma. Some of the replies seem to mention base + bonus only.

Can you comment more on your first-hand data, like which year?

In one data point I know, an undergrad got an offer from one of those firms (DE Shaw/Two Sigma/Citadel) that was a bit more than $300k before signing bonus. That's a rare case because undergrads are typically not hired for quant positions at those firms. This case is closer to your numbers. I expect PhD to get more, but how much?

It looks like one can be paid that well (like $300k+/year) at top tech companies for PhDs that work in ML. So I suspect quant firms should be willing to pay more.

And yes, I think your insight on the paths is extremely helpful; everyone can dream for 7 figures, but how can one materialize that dream?

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  • Investment Manager in HF - Macro
May 30, 2020

Sure I can share a bit more info, I have worked in the HF industry for a while (I'll leave it at 10+ yrs) and I know people across almost all the "top" funds including those mentioned (as in friends/colleagues and would actually recognize me if I reached out, not just a LinkedIn connection). Most are involved in hiring decisions at some level and have industry research on compensation trajectories.

The numbers I have were first year numbers (entry level), and as I said there is a wide range due to how firms approach recruiting. Some firms (one everyone knows about) will negotiate and pay up if they really want to land a candidate, while others will have a tighter range.

The $150-200 base is relatively common for top places (first year, and can definitely be out of undergrad), that changes as competing industries change (tech being a main one).

The bonus component isn't always guaranteed at these places. It just depends, as it is hard to guarantee anything in an industry with this volatility. Some places fully guarantee, some places set a minimum, others just give you a range. A number that is thrown around a bit is $100k, that just depends on the firm, the exact role (more on that later), and current conditions. I've seen $50k-125k or so for the ranges.

The key is around the trajectory, the role, and the risk. Here is some info on each:

1) the role (firm dependent) - as I said quant can mean many things. The more your role is researching and creating new alpha ideas, the higher your comp (and higher risk). The more you are modeling risk (or implementing trading algos or similar which are more around implementation than PnL generating), or implementing pieces of ideas the lower it will be (but usually more stable). Additionally large single manager places don't have the same freedom on trading, in that you are a piece of the overall portfolio and won't get as much insight on how it all comes together (and so harder to really attribute your contribution).

2) risk - as I said above, you have to consider your role and your firm on the risk side. Some firms are notorious for high pay and high turnover. Roles more tied directly to performance will be higher risk (as if you don't make money you are gone). So you want to consider this.

3) trajectory - again related to the above. Certain roles, firms, etc will have flatter trajectories. So while the pay is high coming in, it can cap out relatively close to where you start (call it around $500-600k all in). That can be similar to tech, and it makes sense if you think about how these firms are competing for talent. So how do you get into the higher pay? You can manage a book or be directly tied to PnL (high risk/high reward). At the larger places (I.e. two sigma that is very tech focused) you can manage a team of people that is building the algorithms. Or you can get closer to the "portfolio management" complexities of overseeing and bringing the ideas in to actually decide what and how to trade. I'm sure there are others but I think that covers a large amount of it.

At all the places mentioned there is a path to 7 figures. But just like anywhere else, it isn't easy. You can get lucky and have a huge year and be a person tied to that PnL. But outside of that you have to be very good, you have the remember these places hire top notch people and within the org the people clearing those numbers are near the top (the very top gets more). So while as a % there are more people walking around clearing those numbers, you have to take into account how hard it can be to get into those seats and also the volatility that some places can encounter.

    • 5
May 29, 2020

150 - 200

Array

  • Analyst 3+ in HF - EquityHedge
May 30, 2020

including bonus?

  • Investment Manager in HF - Macro
May 30, 2020

No 150-200 for funds mentioned is wrong. That is base at these places. If you look across roles labeled "quant" and across more funds you end up closer to that number. The problem is that quant is used across a range of roles and some are closer to risk management roles with no PnL impact. It would be like comparing the VP title across IB and retail/commercial banking (or VP in a risk management role) it will distort the numbers.

May 30, 2020

whats the catch you mention re signing bonus with ctdl?

Jun 17, 2020

150-200 pounds in UK base salary.

bonus depends on how your PM is doing.

  • VP in HF - Macro
Jun 18, 2020

The base sounds too high to me.
I know two people who started as alpha generating Quant researchers at one of these places in the uk and they got 120-130k GBP base, but both of them already had 2-4 years experience at other Quant funds.

    • 1
Jun 18, 2020

are they phd people? feels like they are being shafted. some idiot VPs on the sell side get 150-200k base just so you know. I know phd dc people who started at de shaw at 160k base. depends on how much you convince the systematic people you are a genius I guess. he specialise in machine learning.

Jun 18, 2020

4 years is experience is quite a lot, especially as all front office quants are super smart anyway. very few things take 4 years of full time work to achieve

Jun 21, 2020

How are the bonuses determined though? This can often be more important in alpha generating roles and seats with pnl responsibilities.

Jun 22, 2020

The first step is to curb your expectations. It depends what your PhD is in - something you've kept to yourself. If it is in History of Art then maybe PS30k + 0 bonus. If it is in something more relevant you can expect to get reasonable money. However, keep in mind that someone with an extra MSc probably knows more in terms of topics and breadth, while you have particular depth in a certain field. You would only get more money if this field is relevant to the company. If you've done a PhD in Mechanical Engineering, while you have transferable numeric skills, there are thousands of people with more suitable PhDs than you - in economics, in maths, in finance, in statistics and even out of those you still need to narrow it down to relevant topics. So in this case even an MSc in a relevant topic + extra experience is much more preferable than you.

Keep in mind that the 5 years you spent doing your psychologically exhausting but academically dull PhD others who left with an MSc have been working under pressure in industry. They've spent little time on irrelevant jobs and all of what they've learnt is relevant to the industry. They have knowledge that you cannot learn from a book and skills that you develop over a 5 year period. I've seen people with 2 PhDs who aren't making that much. The world is full of PhDs who think their subject is the shit and expect to be compensated for the 5 years they spent doing it but in reality nobody cares about the title - it's about the skills you have and don't have. Considering you've spent 5 years in a PhD you should be alright. Depending on your PhD you can make more money elsewhere too.

Having said this, hedge funds are meritocratic. It all depends on your people skills and your technical skills. You can find people with BA killing it and they aren't rare. You can also find people with PhDs on PS50-60k. I worked with some lecturers who had outstanding academic knowledge but academic knowledge isn't the sharpest edge in finance. While personally I think a PhD is a personal achievement, career wise I am not certain if it helps or hinders you. At 27 I was on PS140k just being good at quantitative skills. The more academic my background has become, the harder it has become to find a job and the salaries I am seeing for more academic jobs are lower.

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  • Investment Manager in HF - Other
Jun 22, 2020

If you are talking to technical PhD's who don't know Monte Carlo then you are probably talking to the wrong people (either wrong area of study, school, etc) which might be your point. But the assumption here is that we are talking about a relevant PhD.

As for the MSc route, I wouldn't recommend that. What I do agree with is that experience trumps academic degrees, so that might be what you are saying. But in general I have found that "quant" funds usually fall into two buckets: those that hire undergrads (who are top of their class, hard sciences, etc) and 2) those that believe (not judging on if correctly or not) that the analysis and strategies that they are implementing require PhD level employees (some very specialized, some just think that the understanding of some of these degrees can translate well).

The MSc usually falls somewhere in the middle, it is great for people trying to switch careers or get another shot at recruiting, but it rarely gets you a more senior position and is rarely what funds are looking for. Not saying it isn't worth it for some, but rarely are those the "target" recruits. But on your experience point I think it is lore valuable than a degree.

    • 2
Jun 22, 2020
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