28 - Financial-consulting_EN

Becoming a Quant: some basic information…

Hi everybody,

I’m currently finishing my PhD in Theoretical Particle Physics and I’m looking for a job in finance. A possibility I’m considering is to become a “quant” (I believe somebody already explained what this job is about in another post on this blog). Looking for more information about what I actually need to be hired in this sector I found an interesting thread in physicsforums.com: http://www.physicsforums.com/showthread.php?t=376191

Most of the information is related to Wall Street jobs and then, maybe, it doesn’t apply to “quant” jobs in other places. However I think there you can find answers to some common questions like:

  • What I need to know to become a quant? Programming languages, statistical tools, …?
  • Do I need to be an expert in finance?
  • What is a typical day at work?
  • How much do you earn in the first years?
  • How much competition is there in this field?

I hope you’ll find this thread useful! If you have some other interesting information, please publish a comment or a post on that.

16 thoughts on “Becoming a Quant: some basic information…”

  1. “Quants” don’t exist. One thing that you have to realize is that there is no one job called “quant” anymore. In fact, physics Ph.d.’s in finance take on a variety of different roles, and once thing that makes the game interesting is that the moment you’ve figured out the rules, they change on you.

    Also

    1) because there is a variety of different roles, there isn’t any “one thing” that you need to know. One thing that’s nice about finance jobs for Ph.D.’s is that they aren’t cookie cutter. Every job is different and every Ph.D. is different, so finding a job on Wall Street is a lot like looking for a roommate or finding an apartment.

    2) if they wanted an expert in finance, they’d hire an expert in finance. Financial companies are looking for experts in numerical modelling and computer programming.

    3) for me it’s a lot like graduate school. Go to the office, debug code, go to meetings, debug more code, read some papers. One bit of terrible frustration is that I can’t publicly talk about what I do. Something about banking culture and academic culture is that it’s quite different when it comes to secrecy. In academia, if you find some cool new thing, you want everyone to know. In banking, if you figure out something cool new thing, most of the time you want to keep it quiet. This is not necessarily a bad thing. If you call up a bank and ask for account numbers and credit card information, then it’s a good thing if they don’t give it to you.

    4) Total comp for someone in NYC is about $120K last I checked. Glassdoor seems to provide reliable information. Salaries have been trending down.

    5) Right now there aren’t more people than jobs. A tiny, tiny fraction of jobs in finance are geared toward physics Ph.d.s, but physics Ph.D’s are even rarer.

    Also, the big catch……

    The big catch is that you’ll have to live in NYC, London, or some Asian city (HK, Singapore). Pretty much all physics Ph.d. related jobs in finance are in NYC, so if you can’t stand NYC, you need to look for another line of work.

    1. Hi,

      I’m just two months away from getting my PhD in theoretical particle physics and I’m interested in quantitative finance. I was looking at the web pages of various big investment banks, but I found just a few jobs that required a PhD. On the other hand, it seems to me that hedge funds or other trading companies hire much more PhDs. Is it true?

  2. Not really

    1) The number of Ph.D.-related jobs that an investment bank looks for is a tiny fraction of the total number of jobs available. However, number of Ph.D.’s are even fewer. Investment banks hire thousands of people and only dozens of Ph.D.’s, but then again there aren’t that many Ph.D.’s out there.

    2) Banks aren’t picky about exact requirements. They don’t post that they are looking for a physics Ph.D. because they would be perfectly happen with say a Ph.D. in statistics. For the most part credentials matter less than skills.

    3) Finally, one thing that makes job hunting in finance Kafkasque is that employers will never publicly post what they are looking for. One thing that makes academia different than corporations is that if you apply to an academic position, they will tell you who to send your resume to. With corporations, figuring out who to send your resume to is the first challenge.

    It’s not like academia at all where the requirements and process are specified in detail. In some ways that’s a good thing. Academia can specify exact requirements because there is an oversupply of applicants. Businesses can’t specify exactly what they are looking for, because there isn’t. Also academics know exactly what they are looking for. Businesses don’t.

    For example, if you have a Ph.D. in some odd topic like oceanography or biostatistics. I’d like to talk with you. Since I know nothing about oceanography or biostatistics, I have no idea how you could be useful to our firm. That’s exactly why I’d like to talk with you to see if you can explain to me what particular skills oceanographers have that are useful to Wall Street. Ironically, because people on Wall Street care only about the money, that makes people open minded.

    It’s really funny if you think about it. You are trying to apply for an unknown job with an unknown contact in which neither you or the employer knows what the requirements are, because there aren’t any.

    Fortunately, because there is money to be made there is an entire industry that exists to fix this issue.

    So where to start:

    Headhunters. There is an entire industry that matches people with jobs. Go to http://www.dice.com, http://www.efinancialcareers.com, http://www.phds.org, or http://www.wilmott.com. You’ll find a list of head hunters offering positions. Even if the position listed isn’t the one that you want, send it in anyway since it’s likely that the HH has some unlisted job available.

    One thing about head hunters is that they are used car salesman. The quality of HH’s both morally and technically runs across a huge range so that you have to be careful. On the other hand, I’ve found looking for jobs in finance to be an ego boost because when you talk to a HH, you can see the dollar signs in his eyes. If he lands you a job, he gets a bonus, and being in a situation where people want you is rather unfamiliar.

  3. Also some more information about how the HR/HH system works.

    The problem with the internet is that you can get flooded with information. If you put out a job ad for a experienced string theorist, you will get thousands of resumes, most of which come from people who are totally unqualified (i.e. I have a high school degree and played with strings, does that count). People deal with the problem by being very quiet about jobs available, and then relying on someone with good clerical skills to filter out the junk and come up with the few resumes that are serious. That’s what human resources and headhunters do.

    So in writing a quant resume, you have to aim for two audiences. One is the HR/HH person that forwards your resume, and then hiring team which consists of Ph.D.’s that actually evaluate it. Just mentioning that you have a physics Ph.D. will help a lot with the first filter.

    The other thing is that hiring is a team process. You will be interviewed by people in the team. The final decision will be the manager, but he will take feedback from the team (and all these people are technical with maybe one HR person thrown in). The purpose of the resume is not to “apply” for the job, but to make people interested enough in you so that you get to the next level. Think of the resume as a movie trailer or short commercial.

    Some resume tips:

    * avoid talking about your personality or work habits. Focus on skills and accomplishments. Show don’t tell.
    * make life easy for the HR/HH person. For example they likely have no idea what monte carlo is. However they may be told to look for people with monte carlo experience, in which case you want the word in your resume
    * always include work status – i.e. do you need visa sponsorship.
    * avoid the word theory (except in string theory)
    * get technical. Write your resume to include enough information so that another Ph.D. will know what you did. This will likely confuse the HR or HH who first reviews it, but this may be good. If you confuse them, then they’ll likely assume that you are smart and forward your resume.
    * keep it short. two pages maximum. When you include publications, include about two or three of the major ones. The format for an industrial resume is very different from that of an academic one. The industrial resume is a movie trailer whereas the academic CV is a novel.

    1. These are very useful tips: there are big differences between writing a CV for consulting firms (my other field of choice) or for financial companies. For example for the consulting CV I tried to stay away from technical words..now I have to rethink this part..

      1. For quantitative finance resumes you actually want to confuse the gatekeeper. If you start taking about third-order Feymann diagrams, the HR or HH person looking at your resume is going to have no clue what you are talking about. This is good, because they will they pass your resume to a manager who more than likely is going to have a physics Ph.D.

        One of the reasons I like Wall Street, is that it’s one of the few industrial areas in which you have managers with physics Ph.D.’s.

        One other difference between industry and academia is the number of resumes. In academia, you typically apply to five or six institutions. My last job search, I think I sent my resume to over 100 places, and I got about 25 or so phone screenings and maybe eight or so interviews. The fact that you need to spam your resume is why it needs to be two pages rather than twenty.

        1. Hi Twofish,
          thanks a lot for the useful comments.
          When you say that in academia one usually applies to 5 or 6 places, you meant for faculty jobs?
          In my field (Particle Physics), when one applies for postdocs, one usually applies to a huge number of places (easily over 50). If one is applying for faculty positions, then you don’t apply to so many, simply because there are not so many openings.
          Maybe in your academic field it was different…

          1. I’m in computational astrophysics, and maybe things are different there. You can usually figure out from the rumor mills if you are at all competitive for a position, and there isn’t much point in going for a post-doc you know that you have no chance at getting.

  4. One other thing, keep in mind that I’m rather detached from the current job market, and if you hear me say “try X, Y, and Z” and “X, Y, and Z” doesn’t work, let me know. Things change.

    One other piece of advice is that job hunting hints will help if you are about to get your physics Ph.D. in the next year. However, anything I say will be totally outdated over time scales of two to three years, so it’s rather useless information for people just starting their Ph.D.’s. It’s perfectly possible that the field will saturate over the course of two to three years, and people who are just graduating will be a better source of information for what is happening at the ground level.

  5. Fillig different applications for bank jobs I foudn questions like “Describe a recent event that impacts the quantitative finance field”. A part from the Wall Street Journal or similar newspapers, do you have any advise on where I can find useful information to aswer this kind of questions?

  6. I have a very strong suspicion that you are applying for the wrong jobs if they are asking you these sorts of questions. One rule that I have for job applications is never fill out a web form since web forms go nowhere.

    You might get this sort of question in an interview. In that situation you might want to go to http://www.arxiv.org and look at the quantitative finance section. Also reading the forums like wilmott and nuclearphynance will give you some idea of the problems that people are working on.

    1. I don’t know TwoFish, maybe you are right about applying for the wrong job, but I got these kind of questions looking for a quantitative research job in a big bank. Moreover all the banks use now web forms, so it seems that to go that direction there is no choice. On the other hand, for jobs outside banks is like you said: it is better to go through headhunters or to apply directly.

      1. Web forms in big banks generally go into some large database which no one looks at. Generally HR will give the quantitative finance people a dump of the database only when someone asks for it, which is almost never.

        The problem with web forms is that there is absolutely no incentive to look through them. If you put your resume in a web form, and no one looks at it, no one is going to get fired, and no one is going to lose money.

        The main channel for jobs in both banks and hedge funds is through either head hunters or through personal contacts. The trouble with web forms is that you have no idea if anyone is even looking at the application (and more often than not, no one is). When a HH or a personal friend, you know at least that someone has reviewed the resume, and if you get rejected, you know that you’ve been rejected and if you are lucky why you have been rejected.

        Getting past the web form is step one in getting a job.

        1. The three ways of applying for a job on Wall Street are:

          1) Have a friend submit the application. The standard procedure is that your friend submits the application and then you get entered into the standard hiring process. If you get hired, then usually there is a small (i.e. a few hundred dollar) bonus for the person that submitted your name. In general, your application is going to be evaluated by people with no person connection to you, but your friend will be able to keep your application from getting lost.

          You need to network very heavily here. The people you want to network with are your peers, and after you get a job, you can do your alma mater some good by keeping in touch with old professors and classmates.

          2) Go through campus recruiting. In that situation, the fact that the bank wants to keep a good relationship with the school keeps applications from getting lost.

          3) Headhunters. Headhunters get paid a lot of money if you get a job, so they are very interested in submitting your name if you seem qualified for the position. At the same time a headhunting company will likely lose any sort of credibility if they submit lots of bad candidates.

          The main goal in this situation is to keep your application from getting lost. In every situation, there is someone that will lose something if your application disappears so you have someone with an incentive to keep your application from getting lost.

          If you submit your application via web form, there is no one that has any incentive in keeping your application around, so the odds are that your application will get lost.

  7. One other piece of advice. Your first interview is likely to be a disaster. You’ll say the wrong things, make the wrong points, and it will be a total mess. That’s why it’s a good idea to get your first interview over with, so that you can learn what you need to say for your second interview.

    One reason that it’s useful to go through headhunters, is that companies will provide feedback to headhunters about what you did wrong. Also headhunters will typically have several jobs so that once you mess up on your first interview, you’ll do better on your second or third.

  8. One other resource is Dommick Connor over at wilmott.org. He is a headhunter that’s rewritten a very complete guide to looking for jobs in quantitative finance. He will give it to you for free if you let him at you to his database.

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