A quantitative analyst is a type of financial analyst that uses math, statistics, and coding to help improve the finance industry. These analysts typically work for investment banks but can be found at any company where finance and coding can provide a competitive edge.
But what does a quantitative analyst do? In this guide, we’ll go over:
- What Is a Quantitative Analyst?
- Quantitative Analyst Career Path
- Salaries for Quantitative Analysts
- Pros and Cons of Being a Quantitative Analyst
- Quantitative Analyst Skills
- Similar Career Paths
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What Is a Quantitative Analyst?
Quantitative analysts, also called “quants,” are financial analysts who use math, coding, and finance skills to help companies make business and investment decisions. For example, some quants work on the buy-side of an investment bank, helping these large companies increase profits with automated trading algorithms. Other quants, on the sell-side, determine prices for marketable securities (like stocks and bonds) based on vast amounts of data and risk metrics.
One primary goal of investment banks is to beat their competitors (other banks and the market itself) on strategic purchases and sales. These banks want to be the first to buy a stock at its best price and sell when the profit margin is high.
“My day-to-day at A.I. Capital Management involved designing algorithms and working with others in building algorithms that could outperform the market,” Cameron Fen, head of research at A.I. Capital Management and the Data Prophet blog, says.
>>MORE: Discover what it’s like working as an analyst at a top investment bank with JPMorgan Chase’s Corporate Analyst Development Program.
Types of Places Quants Work
Quantitative analysts work in a variety of spaces across the finance industry. For example, some quants work for insurance companies evaluating risk, but quants also work in hedge funds, investment banks, and private equity firms.
Quantitative analysts also work outside finance companies, too, helping financial software development businesses build better tools for investors. Ultimately, quants can be found anywhere that finance, statistics, and computer skills give a company a competitive edge.
>>MORE: See if finance is the right career path for you.
Quantitative Analyst Career Path
You need at least a bachelor’s degree to get started as a quantitative analyst. However, some companies may prefer candidates with higher degrees, such as a master’s or Ph.D.
What your degree is in matters, too. Fen recommends students focus on hard skill-intensive majors like computer science, software engineering, math, and statistics. These will likely be more useful in the long run than soft skill-focused majors like business and economics. While business and economics degrees can build a great foundation for a career in finance, they may not be enough to prepare you for the day-to-day work of a quantitative analyst.
“Teaching advanced math and coding is more difficult for an employer,” Fen says. An employer can explain basic finance concepts with more ease, though.
Quantitative analysts may pursue certifications similar to other investment bankers, such as the chartered financial analyst (CFA) designation. This certification is handled by the Chartered Financial Analyst Institute and shows that the analyst is knowledgeable in economics, financial ethics, security analysis, accounting, and wealth management. Some companies may require a CFA certification if the quant works closely with buying or selling securities.
However, quantitative analysts have other certifications available, too. For example, some may choose to get a Certificate in Quantitative Finance (CQF). The CQF Institute and Fitch Learning offer this certification to those who want to prove they have an in-depth understanding of quantitative analysis, risk, and marketable securities.
Ultimately, a CFA certification is much more time-intensive, taking two to three years to complete. However, a CFA broadens the types of companies and sectors a quant can work for as bigger banks and sales-focused sectors may require this certification. On the other hand, the CQF only takes six months to complete and is excellent for proving quantitative skills, but it is expensive and may carry less weight in an investment bank than a CFA.
>>MORE: Gearing up for a quant interview? Learn the skills you’ll need with the Girls Who Code Technical Interview Prep Virtual Experience Program.
Quantitative analysts in an investment bank follow a similar promotion structure to most investment bankers: Start as an analyst, get promoted to associate, and work up the ladder to management positions. Naturally, the more senior the role, the more responsibilities the quant will have.
“Because I was more senior [at A.I. Capital Management], I was often meeting with investors,” says Fen.
Quants can also choose to transition. For example, quants in investment banking may find that moving to private equity firms or hedge funds is lucrative and provides a clearer path to management roles. Additionally, with the rise in fintech (financial technology) companies, quants can transition to startups or software companies focusing on topics they enjoy. For example, if you’re interested in cryptocurrencies, working for a crypto-focused fintech startup may be better than staying at a big bank.
Salaries for Quantitative Analysts
According to the U.S. Bureau of Labor Statistics, financial analysts overall have an average annual salary of $103,020. However, some financial analysts may see higher salaries. For example, big banks like JPMorgan and Goldman Sachs often offer high base salaries for analysts who increase the bank’s profits.
However, not all financial analysts are the same, so salaries within that umbrella term can vary. For example, quantitative analysts make $143,522 per year, according to Glassdoor, though the pay is dependent on location, level of experience, and annual bonuses.
>>MORE: Check out some of the best-paying jobs in finance.
Pros and Cons of Being a Quantitative Analyst
|In-demand work||Long hours|
Quantitative analysts often see high salaries, with the best pay coming from the large investment banking companies. The work of quants is also highly in-demand, especially as fintech continues to be an expanding industry. Even beyond fintech and banks, though, quantitative analysts have a core set of skills that can be applicable in many industries. Their coding knowledge and data analysis can take them into software development and engineering, while their finance skills could take them into accounting or venture capital.
However, quants work in a space consistently plagued with long hours and competition. If your job is to beat the competitor’s algorithm and the exchange market, that will come with a lot of pressure. Plus, while analyst positions in banks are numerous, working your way up the ladder can get cutthroat — only so many associate and management positions open up each year.
One of the biggest challenges of working as a quantitative analyst is how isolating it can be, though.
“If you are a more social person and can’t stand coding on a computer all day, this is probably not the path for you,” Fen says.
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Quantitative Analyst Skills
Successful quantitative analysts have an array of hard skills, including proficiencies in:
- Game theory
- Financial concepts
- Investment management
- Software skills
- Coding languages such as Python and C++
- Data analysis
>>MORE: Level up your data analysis skills with Quantium’s Data Analytics Virtual Experience Program.
Quantitative analysts can also benefit from having strong soft skills like:
Similar Career Paths
Some other careers to explore that require similar skills as quantitative analysts include:
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