A quantitative analyst, or quant, is a type of financial analyst who uses math, statistics, and coding to help improve the financial services industry. These analysts typically work for investment banks but can be found at any company where finance and coding can provide a competitive edge. In this guide, we’ll go over everything you need to know to become a quantitative analyst.
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. But, what do quantitative analysts do?
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.
“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.
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 — quants help them accomplish this goal.
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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, while others work in hedge funds, investment banks, and private equity firms.
Quantitative analysts also work outside finance companies, 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.
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Quantitative Analyst Career Path
Education Requirements
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.
Your specific degree matters, too.
“Teaching advanced math and coding is more difficult for an employer,” Fen says, but an employer can explain basic finance concepts.
Fen recommends students focus on hard skill-intensive majors like computer science, software engineering, math, and statistics. These types of degrees are more useful in the long run than soft skill-focused majors like business or 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 highly-technical day-to-day work of a quant.
Certifications
Quantitative analysts may pursue certifications similar to investment bankers, such as the chartered financial analyst (CFA) designation. The CFA shows advanced knowledge in economics, financial ethics, security analysis, accounting, and wealth management. Some companies may even require a CFA certification if the quant works closely with buying or selling securities.
Quantitative analysts have other certification options 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 than the CQF, since the CFA takes at least two to three years to complete. However, a CFA broadens the types of companies and sectors in which a quant can work — bigger banks and sales-focused sectors often require this certification. On the other hand, the CQF only takes six months to complete and is excellent for proving quantitative skills.It is expensive, though, and carries less weight in an investment bank than a CFA.
>>MORE: Gearing up for a quant interview? Learn the skills you’ll need to ace your interview with the Girls Who Code Technical Interview Prep Virtual Experience Program.
Skills
Successful quantitative analysts have an array of hard skills, including proficiencies in:
- Math
- Probability
- Statistics
- Game theory
- Financial concepts
- Investment management
- Software skills
- Programming skills such as Python and C++
- Data analytics
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Quantitative analysts can also benefit from having strong soft skills like:
- Teamwork
- Collaboration
- Problem-solving
- Communication
- Creative thinking
- Organization
Advancement Opportunities
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 to other areas of finance. Those in investment banking may find that a move to private equity or a hedge fund can be lucrative and provide 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 passionate about cryptocurrencies, working for a crypto-focused fintech startup could be a more interesting choice than staying at a big bank.
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Salaries for Quantitative Analysts
According to the U.S. Bureau of Labor Statistics, financial analysts overall have an average annual salary of $108,790. 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, and salaries under that umbrella term can vary. According to Glassdoor, quantitative analysts make about $187,400 , and estimates from Indeed put quants’ annual salaries around $139,800. However, remember that pay is heavily dependent on location, company, level of experience, and other types of compensation offered, like annual bonuses.
>>MORE: Check out some of the best-paying jobs in finance.
Pros and Cons of Being a Quantitative Analyst
| Pros | Cons |
|---|---|
| Salary | Competitive environment |
| In-demand work | Long hours |
| Transferable skills | Isolation |
Quantitative analysts often see high salaries, with the best pay coming from large investment banking companies. The work of quants is also in-demand, especially as fintech continues to be an expanding industry.
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 skills can take them into software development or engineering, while their finance expertise can take them into something like accounting or venture capital.
However, quants work in an industry plagued with long hours and stiff competition. If your job is to beat the competitor’s algorithm and the exchange market, that will naturally come with a lot of pressure. Plus, while analyst positions in banks are numerous, working your way up the ladder can be cutthroat — only so many associate and management positions open up each year.
However, according to Fen, one of the biggest challenges of working as a quantitative analyst is how isolating it can be.
“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.
Similar Career Paths
Other careers to explore that require similar skills as quantitative analysts include:
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