How to get a job in quantitative finance

A career in quantitative finance can be extremely rewarding both intellectually and financially. However, competition is fierce for positions within hedge funds and investment banks. Having straight A’s and a first-class science degree is no longer enough, especially since the downsizing of the industry that followed the economic crisis of 2007/2008. So what qualities should a good candidate possess, and what can you do to land that elusive role as a quantitative analyst?

The term “quant” covers a wide spectrum of functions. Areas like quantitative trading, quantitative research, risk management, derivatives pricing, and numerical software development fit the term. Therefore, the first step is to identify your core skill set. Once you know where your skills lie, you’ll be in a much better position to apply for the right type of position. These days, investment banks are hiring less, while private funds are hiring more. Therefore, there is a shift away from derivatives pricing (due to backlash on mortgage securities models) towards statistical methods of trading.

There are three main routes of entry into quantitative finance. The more traditional method is to earn a Ph.D. in Mathematics, Physics, Engineering, or Computer Science. Useful areas of research include probability, statistics, stochastic calculus, machine learning/pattern recognition, and of course, mathematical finance. A PhD program lets an employer know that he is confident that he is researching material independently and does not need to be “spoon-fed.” This is especially important in some of the research-driven “collegiate” atmospheres of blue-chip hedge funds.

The second, and more recent, route to quantitative finance is through a Master of Financial Engineering (MFE) program. These courses are often taken by people who may lack specific numerical skills in the financial area, but are nonetheless mathematically confident. They are particularly suitable for people who want to make a career change. A good MFE program from a top school will prepare the student in areas like derivatives, probability/stochastic calculus, risk management, and programming (probably C++). Teachers will have good ties to the companies they are looking to hire and the network alone can be worth the high fees (often in excess of $50,000).

The third route is best suited for talented software developers, particularly those with advanced object-oriented experience, with C++ or Java being preferable. These “quant developers” will work closely with the quant analysts to implement the models (often a prototype) in a robust and optimized manner. The skills required can be of a varied nature. A high-frequency goodwill may require low-level operating system and concurrency skills, while a systematic pattern recognition company may be interested in your machine learning talents. One thing is certain, though: programming skills are quickly becoming the differentiating factor in interviews, so the better your C++/Java/Python/Matlab/R skills, the more likely you are to receive that lucrative job offer.