People who specialize in applying statistical and mathematical methods to solve risk management or financial issues are called Quantitative Research analysts often shortened to Quants. This article offers information on what that job involves, how to become one and what the salary might be.
How To Become A Quantitative Research Analyst
As mentioned your job is to make determinations based on analysis you do looking at economic patterns and financial trends. With this information your company can make the best possible decisions concerning investments. You would work as part of a team that included engineers, physicists and mathematicians. Part of your duties might include daily statistical analysis, deciding on appropriate levels of risk management, creating, maintaining and modifying models, write summaries of your results to present to your employers, researching new products on the market, collect data, test programs, help with portfolio management. You can have front office quants who work closer with traders giving them trading or pricing tools or you can have back office quants who do the research and models work. Front office quants tend to get paid more but the role is usually more stressful.
Education and training
Quantitative research analysts come with backgrounds in physics, mathematics or engineering but should also have excellent skills in computer programming including MATLAB, Python, Java, C and C++. Those with Masters or PhDs in Quantitative Finance, Financial Economics, Financial Engineering, Mathematical finance, operations research, computational finance or financial analysis do especially well at getting hired.
Competition for jobs can be tough especially if you are looking to work with top investment banks where the salary you can earn is obviously higher. You will also need to stay up to date with changes in technology so a willingness to continue your education is a must. Most common employers include hedge funds, investment banks and sometimes management consultancies, commercial banks and insurance companies.
Other skills or knowledge that will stand you in good stead include;
- linear algebra
- differential equations
- enjoyment and excelling at solving problems
- Monte Carlo techniques
- CQF – certificate in quantitative finance
- work under pressure
- able to meet deadlines
Areas you can work in
- Quantitative investment management
- Library quantitative analysis
- Risk management
- Quantitative developer
- Algorithmic trading quantitative analyst
- Model validation
A Quantitative Research Analyst salary
The base salary for this position is dependent like many jobs of this nature on a variety of factors. Location, city, experience, education all have an impact so there is quite a large range going from $51,000 to $120,000. Then there are bonuses which of course depend on how the economic climate is, how that company is performing overall as well as how you perform yourself. Bonuses can range from $1000 to $34,000 a year. While the national average wage for a quantitative research analyst is about $82,000 total, it is possible you might bring anything from $51,000 to $150,000. However there are some quants who have positions that pay over $250,000 with large bonuses achievable on top of that. This kind of pay is not the norm, but it is possible for those who are in demand.