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Bad news for 25 year-old quant developers demanding $1m

It's not easy being a hedge fund quant or quant developer. After Matt Greenwood, the chief innovation officer of Two Sigma, the New York-based hedge fund, said a few weeks ago that mid-ranking quants are in a slough of despair, a New York recruiter says hedge fund quant developers on $600k probably need to prepare for a pay cut.

"There’s a reason your base salary is $200k when you earn, say, $600k total per year," says Peter Wagner at search firm Affinity North in his latest newsletter. "Compensation structures allow firms to adjust salaries down when the market warrants it. The toppy money of the past couple of years has come off the table..."

That's bad news for the young hedge fund quant developers who've got used to earning enormous money. Salaries may remain at $200k. Those $400k bonuses could prove transient.

Wagner says recent pay rises for hedge fund quant developers were “unusual” and “unsustainable”, and fanned by a rising stock market, increased venture capital, record bank earnings and a resurgence of hedge funds. This all coincided with an uptick in tech hiring following Covid.

Now, however, Wagner says those factors are coming off the boil, and that 20-something quant developers in finance are therefore having to moderate their expectations. "I had a number of conversations with individuals in their mid-20’s telling me that if I had anything that was 7 figures, we could talk," said Wagner. "Those conversations have changed."

While quant developer pay is moderating, Wagner says quants themselves are still very much in demand. While quants create the complex mathematical models that underpin pricing, risk, or trading algorithms, quant developers translate those models into code. And quants are still earning very handsome amounts.  A recent report by recruitment firm Selby Jennings suggests that PhD graduates going into hedge funds and trading firms can command salaries of $175k-$325k Their total compensation is anything from $300k-$750k. 

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Have a confidential story, tip, or comment you’d like to share? Contact: alex.mcmurray@efinancialcareers.com in the first instance. 

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Photo by Celyn Kang on Unsplash

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AUTHORAlex McMurray Reporter

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