Tim Grant is a Managing Director and formerly Head of UBS Delta Americas at UBS Investment Bank*. Tim has taken a leading role at UBS in a quest to dispel the myths surrounding the role of the quantitative skill set in sales and trading today. In an exclusive interview with QuantNetwork, Tim spoke about his work at UBS, his personal hobbies and shared advices for QuantNetwork members.
With his busy schedule at UBS, Tim has generously donated his time to finish this QuantNetwork exclusive interview. On behalf of QuantNetwork staff and members, we'd like to thank Tim for taking the time to answer our interview questions. Thanks Tim!
Can you give us a brief bio?
I joined the UBS graduate training program in 1999 in London and after a short period in international bond sales moved to the UBS Delta group within fixed income. This group is a quantitative portfolio and risk management consultancy servicing institutional hedge funds, pension funds, banks and insurance companies. The group has built an award winning online portfolio risk management platform that allows UBS to structure large and complex multi-legged and multi-asset trading programs. I spent 3 years in London marketing portfolio solutions to UK, French, Dutch and German institutional clients. In 2002 I moved to the US to build the UBS Delta franchise in the Americas.
What is your educational background?
I have an M.A. in Materials Science and Metallurgy from the University of Cambridge (Trinity Hall) and underwent a year of research at the Swiss Federal Institute of Technology in Lausanne (publishing on the subject of the fracture mechanics of metal matrix composites) before completing an M.Sc. in Financial Engineering from the University of London (Birkbeck College) in 1999. My masters thesis was on the pricing of credit derivatives - specifically on the practical application of reduced form ratings-based pricing models in the pricing of (then nascent) credit default swaps.
What do you consider as your accomplishments up to this point?
As a team we are proud to have built a successful world class portfolio analytics franchise and partnered with our sales and trading colleagues to form a truly unique offering for our clients. The UBS Delta group is fundamentally client and relationship driven and that straddles quant, portfolio analytics, trading strategies and technology. We are actively changing the way that business is being done at UBS. As a result during the last 8 years we have coordinated some of the largest fixed income portfolio block trades that UBS has been involved in, trading asset classes ranging across treasuries, agencies, corporate, high yield, emerging markets and interest rate and credit derivatives. We've often been at the forefront of new market developments in terms of practically applicable hedging techniques.
Any failures you'd like to tell us about?
We all make mistakes and though it's a cliché it is true that those experiences make us stronger. I can, however, share a view I feel strongly about based on my own experiences and those of my colleagues - being good at managing and leading people is crucial. People may not think about it and may naturally assume they will take to it easily, but it's challenging and humbling experience. The brightest spark who is academically minded, highly quantitative and a successful revenue driver in isolation will not necessarily naturally have the skills required to manage a team and build businesses in an entrepreneurial way. For those thinking about a longer term career in finance with a view to building and leading businesses I believe it's important to have this in mind from the beginning. I'm not saying you can't learn or teach these skills. But people get caught out when they think that it's a straightforward corollary of their academic prowess.
What other projects and/or ventures are you involved in?
Within UBS I am heavily involved and committed to addressing our need for highly quantitative but rounded graduates who will one day exhibit the leadership and entrepreneurial flair we need at senior management level. There are many both within the industry and on the outside looking in who have the wrong idea about what we do and what we need. I feel we should forge stronger links with our colleagues in academia and I'm taking a leading role from the business side in helping drive that initiative - both camps have a lot to gain in this respect.
Outside of work I am a mentor for the iMentor program in New York City. I have a mentee at the Bronx Academy of Letters and actively participate in the iMentor organization (www.imentor.org). I believe mentoring is very much a two way street and that even the most seasoned city professionals can always learn from the responsibility of having to give considered and impactful advice to high school students. It's very humbling and a healthy dose of humility goes a long way.
Really as a hobby and based on my passion since childhood for fast cars (yes I had a Ferrari Testarossa on my bedroom wall) I am also the Chairman of Performance Outfitters Group (www.performanceoutfitters.com) which is a Stamford, CT, based design workshop that specializes in high end luxury and performance cars.
What would you want to do for a living if you weren't a banker?
If I wasn't a banker, I still labor under the misapprehension that I could have been a rock star, explorer or race driver. Therefore in my spare time do my best to live those dreams by playing guitar and singing (badly!) in a rock band, traveling extensively and driving fast cars.
How did you get involved in finance from your Materials Science background?
As a high school and university student I was always fascinated with applied mathematics and sciences. My eyes glaze over when you try and teach me stochastic calculus but when you tell me what it can be used for I perk up. Hence, despite my interest in physics, I went into materials science which straddles physics, chemistry and engineering with a fundamental focus on applications. I had aspirations to complete a PhD (which I started at EPFL in Switzerland) and move into academia but quickly became disillusioned with the career path implied by that choice. When I looked around at my options it didn't take long to find finance as a field that had a rigorous academic underpinning but whose practical applications were plain for all to see. Also it seemed to offer opportunities for personal growth in terms of leadership and entrepreneurialism. My stepping stone was my MFE and to this day I think it's one of the best moves I ever made. The MFE allowed me to segue out of academia and into applied finance. The underlying mathematics and problem solving processes are remarkably similar!
You mentioned that you have taken a leading role at UBS in a quest to dispel the myths surrounding the role of the quantitative skill set in sales and trading today, tell us what those myths are and how you plan to dispel that.
Well there are two main themes here. The first - what does the term "quant" actually mean? The second - what roles actually exist in sales and trading on the modern trading floor today and what type of skills are required to execute them? Focusing on the first part for now, I think that there is generally a misunderstanding as to what a "quant" actually does and I think it harks back to the 80s and 90s and the age of the "rocket scientist." The impressive characters were invariably PhDs who were transferring their experience in applied physical sciences or mathematics into the finance area. They tended to be segregated for the most part from the traditional sales and trading roles and there's some notion that they'd be hunched in front of a computer in a dark corner of the bank putting together intricate and intractable models to support the trading desk.
The idea that a quant might actually speak to a client was almost laughable. Though obviously a caricature that image was rooted in reality. This issue now is that this particular reality no longer applies. The so called "quants" have come out of the dark rooms and are now running trading desks and managing and growing huge businesses and those sorts of quants actually don't exist to the same extent that they did. I'm not saying we don't need highly qualified and gifted PhDs to build our models or in any way implying that our universe has become less quantitative. What I'm saying is that people think that banks need lots of quants in the old-school framework and are labouring under the mistaken assumption that there is a significantly increased need for those people when there isn't. But also they assume that completing an MFE somehow qualifies you for that role when it doesn't. If you speak to prominent quants in our industry, some of whom have gone back into academia, they will all tell you that the landscape for quants has changed dramatically and it's not like it used to be (almost always relayed with a nostalgic tone!)
To be a true "quant" in our business you still need to be highly academically literate and probably have a PhD (and be up against the stiffest competition ever), so what exactly is left for our MFE graduates? This brings me to my second theme regarding the roles that exist in sales and trading in today's reality (and I mean sales and trading specifically over investment banking/corporate finance). There are stereotypes that currently exist about what kind of personality and background a salesperson or trader has. The salesperson is a slick, fast talking relationship person who makes a living off wining and dining clients and having long business meetings on the golf course. They have market views, but when it comes to the quant aspects of finance, well, they leave that to the quants. Traders are loud mouthed and aggressive gun slinging risk takers with variable tempers and limited attention spans who trade on instinct (the masters of the universe that Michael Lewis describes in Liar's Poker). I've already covered the stereotyping surrounding quants. There also seems to be a belief that an MBA is the generally accepted pre-requisite for a position in sales and trading. Or perhaps also that playing varsity sports like football and lacrosse at certain schools is a guaranteed route to the trading desk (in British parlance the "old boy network").
Now let's be clear here: you not having these pre-requisites in any way shape or form exclude you from being incredibly effective on the trading floor. The times have changed. Just look across the range of complex assets that now trade on our trading floors. The level of financial engineering/modelling that has fueled the growth in trading volumes and the widespread use of derivatives across not only the institutional but also retail investment communities is incredible. Certainly simple building blocks of more complex instruments (e.g. interest rate swaps and credit default swaps) are now massively commoditised and this trend continues as the natural cycle of product evolution in financial markets we've seen for decades continues apace. The buy side investment community has had to become more comfortable with financial engineering in order to understand their more complex investments. In any given situation there are now a number of different ways to express the same view across different markets and that theme is becoming more prevalent - Black and Scholes/Merton recognized in the 70s that credit and equities are somehow fundamentally related and now we're really starting to see capital structure arbitrage move from being the preserve of specialist hedge funds to being a strategy for large established institutional players. So basically everything is becoming more complex with more variables and more intellectual bandwidth over and above the traditional sales and trading skillset is required to get the job done. Also investment banks in particular are much larger and more labyrinthine institutions than they were even 10 years ago such that the qualities of leadership and entrepreneurialism are more highly prized in terms of being able to drive and grow businesses.
Note also that the traditional role silos of trader, salesperson, researcher and quant are no longer clear cut. There are a myriad of roles on the modern trading floor that blur the boundaries and that combine some or all of those individual elements. Salespeople need to be more quantitative than before as they need to be able to understand and sell the complex securities created by structuring desks (and in this day and age of regulatory and public scrutiny that need has only increased in its importance). Traders need to be able to think and act like salespeople. Structurers are often equal parts marketers. The true professional should be able to do anything well and be outstanding at their specialism.
How can a freshly-graduated financial engineering student make a transition into more of a business role after a few years working in this field i.e. more responsibilities, more visibility within the firm and acquiring roles with direct P&L implications?
This question implies that somehow the freshly-graduated financial engineering student NEEDS to make a transition into the business. This is not the case. The business NEEDS these graduates for the reasons I outline above. Don't see yourself as handicapped; see yourself as having an unfair advantage!
What advice can you give people just getting into this field? What are the most common mistakes you see newbie making?
The biggest mistake I see is that people don't fully understand what they're getting into. This is actually true across the board but particularly for MFEs. If you walk in with the wrong preconceptions and stereotypes in your mind you'll probably try to act accordingly and that's likely to land you in trouble as you apply. Truly know WHY you want to be in the business and HOW it works. If you can't vocalize convincingly to yourself why, holistically, you're right for sales and trading then you won't be able to tell me in an interview. You'll be expected to formulate and market strategies and concepts throughout your banking career so better start now.
What are the technical skills and personal qualities that you look for in a prospective applicant?
With an MFE you should be able to convince me of your quant ability immediately. You'd be surprised how often that's not the case. And that's supposed to be your specialty! Assuming you pass the quantitative tests you need to be very well presented, resilient, entrepreneurial, thoughtful, honest and bold. Most of all is to be original and the best way to do that is to be yourself rather than being what you think I want to see.
Given current market headlines, is demand for quants increasing, decreasing, or remaining the same? Are certain quantitative skill sets becoming more valuable?
Without a shadow of a doubt YES. And this is not a trend that I see reversing anytime soon. I believe all senior managers and leaders of the future will all need risk management skills as a pre-requisite.
What competitive edge does UBS has over its main competitors when it comes to attracting talented MFE graduates?
We understand their worth completely and will put them to work utilizing their skills from the moment they get here. I don't think that's true of all sell side houses.
What do you plan to do to make a difference in the way UBS is hiring quantitative minded students?
My role is to educate our internal population on the value and applicability of the quantitative skillset. Our recruiters all have a consistent framework of understanding that allows students with this sort of background to sell themselves as effectively as possible. UBS looks upon quantitative candidates very favourably!
If you were asked to design a curriculum for MS program in Financial Engineering which core courses would you pick?
Well I think they need more practical application experience. Turning up to the interview knowing how to derive Black-Scholes from first principles won't actually help you as much as having priced and mock traded options strategies with the model you've implemented.
Traditional Wall Street hiring practice seems to be fixated on hiring MBA for S&T roles even though those positions are getting ever more quantitative and technical. What steps would you advise MFE graduates to take to overcome that?
Be clear and bold about your skillset. Many on Wall Street don't understand how relevant and applicable your skills are so it's your job to tell them. But don't exaggerate - you'd embarrassed if you can't back it up with substance!
What do you know now that you wish you'd known 10 years ago?
That books like Liar's Poker and films like Wall Street don't represent the reality of banking today. And trading is not as scary as it can seem from the outside.
Tell us something about yourself that we don't already know.
I play guitar in a rock and roll band called Swerv.
What does the future hold for Tim Grant?
I intend on continuing my concentration on the dynamics and changing landscape of trading, risk management and risk control. And have fun doing it.
*Editor note: As of Sept 2008, the head of UBS Delta America is Mr. David Jamieson
With his busy schedule at UBS, Tim has generously donated his time to finish this QuantNetwork exclusive interview. On behalf of QuantNetwork staff and members, we'd like to thank Tim for taking the time to answer our interview questions. Thanks Tim!
Can you give us a brief bio?
I joined the UBS graduate training program in 1999 in London and after a short period in international bond sales moved to the UBS Delta group within fixed income. This group is a quantitative portfolio and risk management consultancy servicing institutional hedge funds, pension funds, banks and insurance companies. The group has built an award winning online portfolio risk management platform that allows UBS to structure large and complex multi-legged and multi-asset trading programs. I spent 3 years in London marketing portfolio solutions to UK, French, Dutch and German institutional clients. In 2002 I moved to the US to build the UBS Delta franchise in the Americas.
What is your educational background?
I have an M.A. in Materials Science and Metallurgy from the University of Cambridge (Trinity Hall) and underwent a year of research at the Swiss Federal Institute of Technology in Lausanne (publishing on the subject of the fracture mechanics of metal matrix composites) before completing an M.Sc. in Financial Engineering from the University of London (Birkbeck College) in 1999. My masters thesis was on the pricing of credit derivatives - specifically on the practical application of reduced form ratings-based pricing models in the pricing of (then nascent) credit default swaps.
What do you consider as your accomplishments up to this point?
As a team we are proud to have built a successful world class portfolio analytics franchise and partnered with our sales and trading colleagues to form a truly unique offering for our clients. The UBS Delta group is fundamentally client and relationship driven and that straddles quant, portfolio analytics, trading strategies and technology. We are actively changing the way that business is being done at UBS. As a result during the last 8 years we have coordinated some of the largest fixed income portfolio block trades that UBS has been involved in, trading asset classes ranging across treasuries, agencies, corporate, high yield, emerging markets and interest rate and credit derivatives. We've often been at the forefront of new market developments in terms of practically applicable hedging techniques.
Any failures you'd like to tell us about?
We all make mistakes and though it's a cliché it is true that those experiences make us stronger. I can, however, share a view I feel strongly about based on my own experiences and those of my colleagues - being good at managing and leading people is crucial. People may not think about it and may naturally assume they will take to it easily, but it's challenging and humbling experience. The brightest spark who is academically minded, highly quantitative and a successful revenue driver in isolation will not necessarily naturally have the skills required to manage a team and build businesses in an entrepreneurial way. For those thinking about a longer term career in finance with a view to building and leading businesses I believe it's important to have this in mind from the beginning. I'm not saying you can't learn or teach these skills. But people get caught out when they think that it's a straightforward corollary of their academic prowess.
What other projects and/or ventures are you involved in?
Within UBS I am heavily involved and committed to addressing our need for highly quantitative but rounded graduates who will one day exhibit the leadership and entrepreneurial flair we need at senior management level. There are many both within the industry and on the outside looking in who have the wrong idea about what we do and what we need. I feel we should forge stronger links with our colleagues in academia and I'm taking a leading role from the business side in helping drive that initiative - both camps have a lot to gain in this respect.
Outside of work I am a mentor for the iMentor program in New York City. I have a mentee at the Bronx Academy of Letters and actively participate in the iMentor organization (www.imentor.org). I believe mentoring is very much a two way street and that even the most seasoned city professionals can always learn from the responsibility of having to give considered and impactful advice to high school students. It's very humbling and a healthy dose of humility goes a long way.
Really as a hobby and based on my passion since childhood for fast cars (yes I had a Ferrari Testarossa on my bedroom wall) I am also the Chairman of Performance Outfitters Group (www.performanceoutfitters.com) which is a Stamford, CT, based design workshop that specializes in high end luxury and performance cars.
What would you want to do for a living if you weren't a banker?
If I wasn't a banker, I still labor under the misapprehension that I could have been a rock star, explorer or race driver. Therefore in my spare time do my best to live those dreams by playing guitar and singing (badly!) in a rock band, traveling extensively and driving fast cars.
How did you get involved in finance from your Materials Science background?
As a high school and university student I was always fascinated with applied mathematics and sciences. My eyes glaze over when you try and teach me stochastic calculus but when you tell me what it can be used for I perk up. Hence, despite my interest in physics, I went into materials science which straddles physics, chemistry and engineering with a fundamental focus on applications. I had aspirations to complete a PhD (which I started at EPFL in Switzerland) and move into academia but quickly became disillusioned with the career path implied by that choice. When I looked around at my options it didn't take long to find finance as a field that had a rigorous academic underpinning but whose practical applications were plain for all to see. Also it seemed to offer opportunities for personal growth in terms of leadership and entrepreneurialism. My stepping stone was my MFE and to this day I think it's one of the best moves I ever made. The MFE allowed me to segue out of academia and into applied finance. The underlying mathematics and problem solving processes are remarkably similar!
You mentioned that you have taken a leading role at UBS in a quest to dispel the myths surrounding the role of the quantitative skill set in sales and trading today, tell us what those myths are and how you plan to dispel that.
Well there are two main themes here. The first - what does the term "quant" actually mean? The second - what roles actually exist in sales and trading on the modern trading floor today and what type of skills are required to execute them? Focusing on the first part for now, I think that there is generally a misunderstanding as to what a "quant" actually does and I think it harks back to the 80s and 90s and the age of the "rocket scientist." The impressive characters were invariably PhDs who were transferring their experience in applied physical sciences or mathematics into the finance area. They tended to be segregated for the most part from the traditional sales and trading roles and there's some notion that they'd be hunched in front of a computer in a dark corner of the bank putting together intricate and intractable models to support the trading desk.
The idea that a quant might actually speak to a client was almost laughable. Though obviously a caricature that image was rooted in reality. This issue now is that this particular reality no longer applies. The so called "quants" have come out of the dark rooms and are now running trading desks and managing and growing huge businesses and those sorts of quants actually don't exist to the same extent that they did. I'm not saying we don't need highly qualified and gifted PhDs to build our models or in any way implying that our universe has become less quantitative. What I'm saying is that people think that banks need lots of quants in the old-school framework and are labouring under the mistaken assumption that there is a significantly increased need for those people when there isn't. But also they assume that completing an MFE somehow qualifies you for that role when it doesn't. If you speak to prominent quants in our industry, some of whom have gone back into academia, they will all tell you that the landscape for quants has changed dramatically and it's not like it used to be (almost always relayed with a nostalgic tone!)
To be a true "quant" in our business you still need to be highly academically literate and probably have a PhD (and be up against the stiffest competition ever), so what exactly is left for our MFE graduates? This brings me to my second theme regarding the roles that exist in sales and trading in today's reality (and I mean sales and trading specifically over investment banking/corporate finance). There are stereotypes that currently exist about what kind of personality and background a salesperson or trader has. The salesperson is a slick, fast talking relationship person who makes a living off wining and dining clients and having long business meetings on the golf course. They have market views, but when it comes to the quant aspects of finance, well, they leave that to the quants. Traders are loud mouthed and aggressive gun slinging risk takers with variable tempers and limited attention spans who trade on instinct (the masters of the universe that Michael Lewis describes in Liar's Poker). I've already covered the stereotyping surrounding quants. There also seems to be a belief that an MBA is the generally accepted pre-requisite for a position in sales and trading. Or perhaps also that playing varsity sports like football and lacrosse at certain schools is a guaranteed route to the trading desk (in British parlance the "old boy network").
Now let's be clear here: you not having these pre-requisites in any way shape or form exclude you from being incredibly effective on the trading floor. The times have changed. Just look across the range of complex assets that now trade on our trading floors. The level of financial engineering/modelling that has fueled the growth in trading volumes and the widespread use of derivatives across not only the institutional but also retail investment communities is incredible. Certainly simple building blocks of more complex instruments (e.g. interest rate swaps and credit default swaps) are now massively commoditised and this trend continues as the natural cycle of product evolution in financial markets we've seen for decades continues apace. The buy side investment community has had to become more comfortable with financial engineering in order to understand their more complex investments. In any given situation there are now a number of different ways to express the same view across different markets and that theme is becoming more prevalent - Black and Scholes/Merton recognized in the 70s that credit and equities are somehow fundamentally related and now we're really starting to see capital structure arbitrage move from being the preserve of specialist hedge funds to being a strategy for large established institutional players. So basically everything is becoming more complex with more variables and more intellectual bandwidth over and above the traditional sales and trading skillset is required to get the job done. Also investment banks in particular are much larger and more labyrinthine institutions than they were even 10 years ago such that the qualities of leadership and entrepreneurialism are more highly prized in terms of being able to drive and grow businesses.
Note also that the traditional role silos of trader, salesperson, researcher and quant are no longer clear cut. There are a myriad of roles on the modern trading floor that blur the boundaries and that combine some or all of those individual elements. Salespeople need to be more quantitative than before as they need to be able to understand and sell the complex securities created by structuring desks (and in this day and age of regulatory and public scrutiny that need has only increased in its importance). Traders need to be able to think and act like salespeople. Structurers are often equal parts marketers. The true professional should be able to do anything well and be outstanding at their specialism.
How can a freshly-graduated financial engineering student make a transition into more of a business role after a few years working in this field i.e. more responsibilities, more visibility within the firm and acquiring roles with direct P&L implications?
This question implies that somehow the freshly-graduated financial engineering student NEEDS to make a transition into the business. This is not the case. The business NEEDS these graduates for the reasons I outline above. Don't see yourself as handicapped; see yourself as having an unfair advantage!
What advice can you give people just getting into this field? What are the most common mistakes you see newbie making?
The biggest mistake I see is that people don't fully understand what they're getting into. This is actually true across the board but particularly for MFEs. If you walk in with the wrong preconceptions and stereotypes in your mind you'll probably try to act accordingly and that's likely to land you in trouble as you apply. Truly know WHY you want to be in the business and HOW it works. If you can't vocalize convincingly to yourself why, holistically, you're right for sales and trading then you won't be able to tell me in an interview. You'll be expected to formulate and market strategies and concepts throughout your banking career so better start now.
What are the technical skills and personal qualities that you look for in a prospective applicant?
With an MFE you should be able to convince me of your quant ability immediately. You'd be surprised how often that's not the case. And that's supposed to be your specialty! Assuming you pass the quantitative tests you need to be very well presented, resilient, entrepreneurial, thoughtful, honest and bold. Most of all is to be original and the best way to do that is to be yourself rather than being what you think I want to see.
Given current market headlines, is demand for quants increasing, decreasing, or remaining the same? Are certain quantitative skill sets becoming more valuable?
Without a shadow of a doubt YES. And this is not a trend that I see reversing anytime soon. I believe all senior managers and leaders of the future will all need risk management skills as a pre-requisite.
What competitive edge does UBS has over its main competitors when it comes to attracting talented MFE graduates?
We understand their worth completely and will put them to work utilizing their skills from the moment they get here. I don't think that's true of all sell side houses.
What do you plan to do to make a difference in the way UBS is hiring quantitative minded students?
My role is to educate our internal population on the value and applicability of the quantitative skillset. Our recruiters all have a consistent framework of understanding that allows students with this sort of background to sell themselves as effectively as possible. UBS looks upon quantitative candidates very favourably!
If you were asked to design a curriculum for MS program in Financial Engineering which core courses would you pick?
Well I think they need more practical application experience. Turning up to the interview knowing how to derive Black-Scholes from first principles won't actually help you as much as having priced and mock traded options strategies with the model you've implemented.
Traditional Wall Street hiring practice seems to be fixated on hiring MBA for S&T roles even though those positions are getting ever more quantitative and technical. What steps would you advise MFE graduates to take to overcome that?
Be clear and bold about your skillset. Many on Wall Street don't understand how relevant and applicable your skills are so it's your job to tell them. But don't exaggerate - you'd embarrassed if you can't back it up with substance!
What do you know now that you wish you'd known 10 years ago?
That books like Liar's Poker and films like Wall Street don't represent the reality of banking today. And trading is not as scary as it can seem from the outside.
Tell us something about yourself that we don't already know.
I play guitar in a rock and roll band called Swerv.
What does the future hold for Tim Grant?
I intend on continuing my concentration on the dynamics and changing landscape of trading, risk management and risk control. And have fun doing it.
*Editor note: As of Sept 2008, the head of UBS Delta America is Mr. David Jamieson
