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Quant Career Track

Hi everybody,

As an aspiring quant, I couldn't help but wonder where do all the quants go as they get promoted? In financial news, I often read about diverse financial leaders from various backgrounds. However, the famous quants I read about are usually dedicated to research or academia. My question is what is the career path of non researches quants? What are their career opportunities? What sort of managerial roles do they play?

I would really appreciate it if someone could shed some light on the matter.
 

GoIllini

Market Crises= Gray Hair
I would imagine that some of the successful ones go on to co-found hedge funds often with a trader or investment manager. Others will start analytics or consulting businesses.

The thing is that when you get to something as complicated and valuable as financial modeling, career progress starts to look different than it does for a typical professional. Most investment banks have both expert career tracks and management career tracks and quants tend to wind up on the expert tracks- I've met a few managers, but most quants are valuable for their technical abilities rather than management skills.
 
I'm skeptical about the implication that technical and management skills are mutually exclusive. Quant managers are subject matter experts at heart - I've seen a quant MD respond with great detail and amazing insight to some of the very basic questions concerning a model. And he is amongst the best managers I know.
 
Does the numerous job advertisements in various quant recruiting websites indicate that many quants don't really stick to a company for long? If so, why?
 
At first, it seemed to me that you made a rash inference, but on second thoughts, I think it's a very different way of looking at things.

From what I've seen, the job postings exist (I won't comment on the volume of adds though) because what quants do is fundamental to the capital markets industry today and their demand will persist. And quant jobs, like most other jobs are target areas for the organic growth of a firm. This may very well be on hold considering the pressing times though.

Anyhow, I'm interested in hearing from others on quant attrition rates in the industry - anyone?
 

GoIllini

Market Crises= Gray Hair
I'm skeptical about the implication that technical and management skills are mutually exclusive. Quant managers are subject matter experts at heart - I've seen a quant MD respond with great detail and amazing insight to some of the very basic questions concerning a model. And he is amongst the best managers I know.
They're not mutually exclusive, but at least from what I've seen, most quants are so strong in their analytical skills that their analytical skills tend to outweigh their management skills.

You do see some quants as managers (in fact, some managers need to be quants), but on the trading floor, many quants report to traders who then report up the trading hierarchy. I would argue that quants have it better, despite the hierarchy. Their jobs are a little safer and much less stressful, and the best quants can make roughly as much over a career as the best traders.

In the investment banking world, managers tend to have different personalities than your typical engineers. Typical banking managers need to be decisive and simplify information into a decision. Engineers need to look at things wholistically and understand the whole system. Most people will be stronger at either making decisions or seeing things wholistically. (CC: Jungian and Myers/Briggs personality types)
 
There is always the consulting/teaching path just like what Derman did after leaving Goldman. You don't have to be a top flight researcher to find a teaching gig in one of the many MFE programs. There are always need for someone with practical, handon experience to teach the new comers what the Street is doing.

If you make enough money, you can write a book, start a project, business that you like. There are more to life than just a job in corp America.
 
They're not mutually exclusive, but at least from what I've seen, most quants are so strong in their analytical skills that their analytical skills tend to outweigh their management skills.

Why would analytical skills outweigh management skills?

Let's elaborate a bit on what management skills include here - Decision-making, people-management, admin responsibilities, project management etc (in no particular order and in it's most generic form).

It's immediately obvious that strong analytical skills would benefit, not deter any of the aforementioned characteristics. Now, admittedly, not all quant managers may be the most suave of people and may occasionally lack the tact that other seasoned people managers have. But this is hardly an issue, since the teams they manage are made up of a similar breed of people and no one is wont to take offense.

In the investment banking world, managers tend to have different personalities than your typical engineers. Typical banking managers need to be decisive and simplify information into a decision. Engineers need to look at things wholistically and understand the whole system. Most people will be stronger at either making decisions or seeing things wholistically. (CC: Jungian and Myers/Briggs personality types)

From what I remember of Jung's and Myers/Briggs personality indicators, these tests are merely indicators of preference. A test may indicate that an individual has a preference to see things wholistically, but it doesn't disprove the fact that he can articulate effective decisions.

An analytical mind is capable of rational thought. Anyone with a rational mind (and by association, an analytical mind) interacts with the environment (of the problem), gets a feel of the problem (wholistically), isolates it's most crucial features (simplify) and distills it into a robust frame-work of mind wherein he can arrive at a decision.

It may be an altogether different issue that perhaps quants don't exercise their managerial skills purely out of choice - if and why this happens is subject to question.
 

GoIllini

Market Crises= Gray Hair
Let's elaborate a bit on what management skills include here - Decision-making, people-management, admin responsibilities, project management etc (in no particular order and in it's most generic form).
And my point is that these kinds of skills tend to favor a different personality than what most engineers have. Most engineers don't like making clear-cut decisions- they like building stuff and working around complexity. And whether it makes sense or not, financial engineers are less likely to have management responsibilities at a bank than other people. Engineers simply aren't decisive enough and don't have quite as much of a killer instinct.

It's immediately obvious that strong analytical skills would benefit, not deter any of the aforementioned characteristics. Now, admittedly, not all quant managers may be the most suave of people and may occasionally lack the tact that other seasoned people managers have. But this is hardly an issue, since the teams they manage are made up of a similar breed of people and no one is wont to take offense.
Well, yes. Analytical skills are one component. I think a bigger component, however, is the ability to rapidly arrive at a decision and a course of action. The kind of personality that makes for a good financial engineer (understanding every detail of a system and every possible outcome of a decision) tends to make for a weaker manager.

From what I remember of Jung's and Myers/Briggs personality indicators, these tests are merely indicators of preference. A test may indicate that an individual has a preference to see things wholistically, but it doesn't disprove the fact that he can articulate effective decisions.
That's true, but most people tend to be stronger in one area or another. Someone who is an ENTJ may be a good financial engineer, but he would probably be even better if he were an ENTP or INTP.

An analytical mind is capable of rational thought. Anyone with a rational mind (and by association, an analytical mind) interacts with the environment (of the problem), gets a feel of the problem (wholistically), isolates it's most crucial features (simplify) and distills it into a robust frame-work of mind wherein he can arrive at a decision.
I agree with the first part- this is why most on the trading floor have a rationalist (N and T parts of the Myers-Briggs personality type) personality. However, the fact is that a perceiver aims for a different model than a judger. A judger will aim for a more simplified model that produces a quicker and unambiguous solution while a perceiver will aim for a more complex model that takes into account other potential outcomes but takes longer to arrive at an assessment that still may be as vague as the advice you get out of a fortune cookie. A perceiver wants to talk about the process, the assumptions, and the risks, while the judger just wants the results.

A manager's job is to simplify things into decisions and hand out instructions. Perceivers tend to keep things complicated and hand out caveats (I say this as an ENTP myself). Perceivers can manage, but all things being equal, a Perceiver would be a better manager if he were a Judger. Likewise, a Judger would be a better financial engineer if he were a Perceiver.

Most of the time, management skills are the most valuable thing that educated and experienced people have. Financial engineering is rare in that quantitative analytical skills are just as valuable as management skills. So my view is that if you're a perceiving-type personality, you should focus more on modeling skills than management skills to maximize your value, because you have a distinct advantage at it that Judgers don't have.

Remember that at the end of the day, engineers respect each other for their expertise and competence, not their authority or ability to make decisions.


There is always the consulting/teaching path just like what Derman did after leaving Goldman. You don't have to be a top flight researcher to find a teaching gig in one of the many MFE programs. There are always need for someone with practical, handon experience to teach the new comers what the Street is doing.

If you make enough money, you can write a book, start a project, business that you like. There are more to life than just a job in corp America.
Out of curiosity, do you need a PhD to get a teaching gig? My Dad was a lecturer at DePaul for a while, but he had a 3-year post-graduate degree instead of an MS and DePaul isn't exactly a research school.
 
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