quantitative researcher vs financial analyst

[magnakalta]

Hello, I'm an international student who is studying with the goal of Quant. Recently, I got information that Quant's income is less than that of traditional fund analysts, so I want to check if it is true.

-Financial analyst has the opportunity to be promoted over time and become a portfolio manager and make a lot of money.
junior analyst (2–3 years) -analyst (3-4 years) -senior analyst (3-5 years) -portfolio manager
- In the beginning, they receive similar or less money than quant, but senior analyst can earn 500k to 1m and portfolio manager: 1m to 3m.
-Quant researcher has an upper limit of compensation. After a career, you can earn 500k, but it is very difficult to earn more than 700k. (because in most cases there is no pnl)
-Quant researcher can become a quantitative portfolio manager, but the odds are low and the rewards are also lower than portfolio managers


There is a question when assuming that the above information is true.

Many people from mfe programs go through IB, and I know that there is a way to become a hedge fund analyst after two years of experience in IB.
What are the advantages of choosing a quant instead of an analyst?
Do analysts really make more money than Quant?
How likely are analysts to be promoted to portfolio manager?

 

[jarryds]

n international student who is studying with the goal of Quant. Recently, I got information that Quant's income is less than that of traditional fund analysts, so I want to check if it is true.

Okay this is a lot to unpack. First off, where are you getting the idea that bankers are going through MFE programs? Those are two completely different career paths. I could be wrong, but I would be shocked to learn that MFE grads are getting into IB.

I don't think you understand the difficulty of getting analyst positions at reputable hedge funds after working in banking. Banking to HF is not an easy jump - many will work to VP and get a CFA. Obviously this is not globally exclusively true, but is for my banking contacts.

The last thing I would like to point out is the idea that analysts will cruise to a PM position. PM positions are very competitive and tough to get. Just as many starting analysts in banking won't become senior VPs, many HF analysts will never become PMs. HFs, like every other industry, has a ladder - there are way more openings at the bottom than the top.

If you are solely interested in chasing money - go into IB and become a workhorse. QR and a HF analyst are two very different roles and are not interchangeable. Sounds like you are a little too concerned with the money. The better question is: are you capable of even breaking into QR or a HF role? This depends on your interests and skills, both of which you should probably focus on. Do you like math, research, programming -> QR. Are you interested in portfolio management -> HF analyst.

 

[AppliedMath]

QuickTake:
Quant Researcher versus Financial Analyst. How to choose?
Ask yourself if you want to learn Stochastic Calculus and other such things. Yes=Q.R. No=F.A. Easy!

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Only 1% of people are 1% people. Don't base your career decision on something that, for 99% of people, isn't even possible. We need to be honest with what level we are and will most likely attain. In the Monte Carlo simulation of your career trajectory in the quant space, do you think that more than 20% of cases end up with you a $1 million earner?

There is no path to portfolio manager. It's a case-by-case thing where YOU manufacture your own opportunity after gaining the required experience. If possible you can get a mentor to help you with it. Portfolio Manager isn't something you get promoted into for good performance.

Therefore, go the Quant path. Less stress, great rewards.

Similar to what @jarryds said, Quant Researcher and Portfolio Manager higher levels on separate paths. To over-simplify
- PM path starts with a [Corporate] Finance (Degree) and Excel. The research here is on actual companies and assets.
- QR path starts with Financial Math/Engineering Degree and Python. The research here is on how to implement theoretical models for generic assets.

• "Many people from mfe programs go through IB, and I know that there is a way to become a hedge fund analyst after two years of experience in IB."
  
  • Yes. You can do an MFE and work for an Investment Bank after graduating.
  • You will not be involved in "sell-side" deals.
• What are the advantages of choosing a quant instead of an analyst?
  
  • Quant: You prefer programming, and normal hours.
• Do analysts really make more money than Quant?
  
  • Not really, but yes, because generally...
    • Top Analyst are closer to business generating activities,
      • More of them are needed than top Quant.
      • Their skills are learned faster.
      • They are therefore younger.
    • Top Quants work on things that are slow, like research, than needs to be proven down the line.
      • Less of them are wanted/needed since the payoff is less likely and long-term
      • Their skills take longer to learn
      • They are therefore older.
• How likely are analysts to be promoted to portfolio manager?
  
  • 0%. Portfolio Manager is a job you create by proving an opportunity exists.
  • They are listed with low numbers and low frequency on job boards.
  • If advertised, they will go to someone who has been a portfolio manager before.

About Money: If you really just want to make a lot of money and you want it to be a short timespan and you want he skill to be useful in the future, forget finance, and just become a software developer. 6 months of study to get a $100K job, then three 1 years stints to and 50K-100K in top of that by learning more and changing companies. Then you can move from start-up to start-up being given stock options of potential unicorns. Buy the options and the 1 year mark. Leave the company. Repeat. Since you're up for long hours, you can work 2 Dev jobs at the same time, 100% remotely. There are far more roles for top devs than top Quant or top PMs, and becoming a 400K FAANG/Unicorn Dev with RSUs is either easier or faster than becoming a 400K Quant Researcher or 400K Financial Analyst/PM.