On quant careers II: my path, what I've seen and conclusions drawn

Background

I did an international undergrad, 2nd tier math PhD in the US (~top-10 math program, top-30 national uni; I’m likely on a stronger end of people for that program/could’ve done better if weren’t so messed up as an undergrad - but that’s a story for another day), interned at a 2nd tier (middle of top-10) bank in my penultimate year.

I interviewed widely the fall of my final year, applied pretty much everywhere (banks, props, funds, hfts..), talked to many dozen shops, had a few onsites mostly with prop shops but didn’t make the cut (whether it’s technical or fit I’ll never know), ended up returning to the bank for a desk quant role.

I knew I was not staying in academia for a while, so had quite some time to prepare or rather learn for the first time all the things pure math kids in my country don’t learn: writing decent quality code in python/C++, basic data analysis, data science/ML fundamentals, basic stats (a la “all of statistics”). You can think of me as having a pretty well-rounded MFE skillset, plus much more in depth stochastic analysis/math finance thanks to my PhD work. I quite liked finance as a subject so I learned some finance fundamentals (like first chapters of Hull, stuff like “Capital Markets for Quantitative Professionals”, a bit of Bodie-Kane-Marcus plus various online courses) and not just technical stuff, as well as econ 101. I probably knew about enough algos and leetcode for a tech interview.

What I was doing when preparing is learning what I was interested in and what I thought would be useful. In retrospect, I didn’t do enough of pure grinding of the few most critical elements: I never solved all or even a large fraction of “green book” problems, though I did practice dozens of interview questions, nor did hundreds as opposed to dozens leetcodes.

Role 1: desk quant, 2nd tier bank, “core” asset class

Pros:

• Pretty normal hours: 9-6~6:30 was kinda mandatory minimum (that some people lived in permanently),9-7~7:30 would be considered quite hard-working, pretty much never had to do any work on weekends.

• Quite interesting technical, often longer-term projects: I might’ve even used actual stochastic analysis, certainly quite a bit of stochastics-inspired algebra, some involved C++ performance optimization, did some optimization work, wrote both a lot of python research and C++ production code

Cons:

• Low and undifferentiated pay: I started on 125+25, 130+40 2nd bonus season. Afaik the first number is HR-given uniform across bank’s quant associates in the region. I didn’t quite know this at the time, but know understand this is similar or worse than even an unexceptional FAANG offer

• Far from business, perceived irrelevance of work/absence of real business impact: most banks are on JPMorgan model, so quants are a separate reporting vertical and don’t report to business; we were seated in different corners of the trading floor; I’d probably talk to the desk once in weeks on average, and not really at length; they will come to final project presentations but mostly won’t be much involved with projects, for some tools we’d demo to them more often, like once in a few weeks; I didn’t see the positions, not to mention ever discussed trades or anything of that sort; from all that, my strong impression was that the desk doesn’t really care or need all those fancy projects (there are more run of the mill realtime systems things they do care about going wrong); the way I understood my boss explaining the model to me was that you try to come up with those moonshots and hope something would stick/be of interest; for me doing “startups” without talking a lot to clients seemed weird

• Low prestige, minimal perks, politics, bureaucracy, slow career progression..

Why switch

“I can do better”, want to work hard and be rewarded appropriately, want to have direct business impact

Role 2: desk quant, one of the most prestigious hedge funds

Pros:

• Exceptional colleagues: I still might’ve felt I was among the strongest technically, but now colleagues were close, and my throughput wasn’t the strongest as now hardcore technical stuff didn’t matter all that much; combined with my weaknesses in sales and relationships that meant my ranking wasn’t particularly great

• Close to the desk: quants had close relationships with PMs and their analysts, decent chunk of the book of work was driven by them directly (and the rest by the head of business who was directly involved with quants as well, though through quant boss), they would be quite engaged with projects and analyses, as well as ask questions and make small requests regularly outside official projects as well; we had access to positions and pnl and in general a full suite of trading apps the desk used; if the desk was having a great/terrible day we’d hear some details

• Better pay: I got 175+75 guaranteed standard offer first, but my first full year ended up doing really well, getting some accolades and 200+300; second year having switched groups halfway was downgraded to 200+200

• Prestige, amazing perks, no bureaucracy

Cons:

• Long hours at high intensity: I was working in slightly different groups during my years there, in one of them we were doing ~>60 hrs/week average, 9-9 was a norm/min, most weekends saw some work and some saw a lot; another was a bit more chill, with 830-8 norm/min but less often significantly extended, and weekends mostly safe

• Limited upside: we were close to the desk but ultimately observers and external, PMs had their own analysts; we weren’t on track to be analysts or pms, nor were we doing or on track to be doing systematic trading

• Mostly not extremely interesting work: email report this, benchmark that, valuation tool with these options here, run of the mill data analysis there; most projects are pretty short and not particularly innovative or sometimes even particularly technical (unless you count writing run of the mill code as technical); the longer and more technical projects I enjoyed were actually purely on the engineering side

Why leave

For my first group, the workload/intensity combination was beyond what I can handle, lead to a significant deterioration of my health physical and mental. On top of the mounting evidence the research the group was doing was mostly a show for higher-ups rather than material for the desk.

For my second group, workload was still too much, at least on the heels of the burnout from the previous group; work was much less technically challenging and interesting, which also meant it wasn’t really playing to my strengths; partial burnout and dissatisfaction led to sour moods and doing even worse at relationships than I could’ve otherwise; ultimately failing to build great relationships with a few of the most important stakeholders meant there was no good place for me there anymore.

Conclusions

• Bank actually is an appropriate deal for some of the more academically inclined: one can work a chill job which pays more than well enough (both of those qualities especially pronounced for more senior staff) while working on interesting if not extremely relevant stuff; I’ve seen MDs literally publishing a few technical papers a year and having a kinda “academic but with money” time of their lives

• For my preferences, this whole non-systematic quant niche seems like a rather mixed fit, though maybe the “want to do technical work that is core to the business” is just a tough thing to get except at highest levels/with advanced education actually translating into deep technical work (not like most quant roles happy to pick up a lot of disparate stem PhDs or MFEs as core knowledge needed for most roles is quite limited (occasional heavy stochastic analysis bank role being an exception))

• At least from what I’ve seen, systematic vs non-systematic quant opportunities are very materially different: I’ve met two sys guys making mils a year with few years of experience in statarb; folks making quant PM (presumably with corresponding % PnL cut etc) after a few years in sys alpha research; quant group heads at top places can get mils/year (and reasonably senior bank MD gets 1 mil/year) but that’s at least 10-15yrs seniority and a lot of politics and luck