When quanting is a dead end job
To read The Quants by Scott Paterson, anyone would think that all quants are wealthy brainiacs who spend their time devising mathematical methods of winning at poker, or accidentally stumbling upon ways of beating the market.
This is not the case.
While some quants are earning seven figure sums working at the likes of Renaissance Technologies, a large coterie of quants are employed far away from the front office. And they are not all happy.
A quant commenting on our recent MBA article expressed his frustration. "The PhD programmes only lead to quant work (which is rubbish if you ask me) and the hours are the same as the REAL FO."
Dominic Connor, director at P&D Quant Recruitment, estimates that only around 20-25% of quant roles are truly in the front office. The remainder are in the middle or back office , where they typically earn around half as much, and have a far lower chance of making serious money.
Front office quant titles include, 'structurer,' 'desk quant', 'quant strategist', or 'quant trader.'
Structurers use models and tools to create customised products for clients; strategists look at the way the market is behaving, and customise the output of modelling quants to assist trading decisions; desk quants and quant traders implement models to make trading decisions.
Connor points out that front office work is more about adapting models for use in the real world: "The actual model design happens elsewhere and they customise it for the realities of their market".
Those other quants
Away from the front office, quants are employed to build the models, in quantitative risk, and as model validators. They're also employed as quant researchers, although at some banks quant researchers sit on the trading floor and are therefore deemed part of the front office.
Of this breed, recruiters say so-called, 'modelling quants' are paid the most. Top modelling quants with several years' experience can reportedly earn up to 250-350k. Model validators are paid far less.
However, even 250-350k seems like small change compared to top traders. "One of the reasons that front office quanting is so much more attractive is that average pay there is higher and there is the potential to earn obscene amounts of money," says Connor.
Quant modellers find it easiest to move into the front office. The head of the quant team at another recruitment firm, says most people do it internally: "It's not easy, but plenty of people have done it."
And for those who can't make the move? A middle office career beckons.
Connor says this is not so terrible "Modelling quants work shorter hours and their jobs are more secure. Traders work vicious hours under enormous stress and they have a 25% chance of being fired each year."
