Quantitative analysts, or “quants,” working in the financial industry use mathematical and statistical techniques to study, measure, and evaluate financial instruments, financial markets, and the behavior of market participants. Quantitative financial analysts work in all kinds of firms in the securities industry, including commercial banks, investment banks, wealth management firms, and hedge funds. Insurance companies, management consulting firms, accountancy firms, and financial software companies also employ quantitative analysts.
While a quantitative analyst’s focus can vary quite a bit from job to job, the basic work typically revolves around the development and construction of mathematical models designed to provide insight into complex financial systems.1 These models may be used to price securities and derivative instruments, to inform the timing of trades, or to assess and manage various types of financial risk. Whatever the focus of the job, the information and insight produced by quantitative analysis are generally used to develop and carry out investment strategies and to inform the decision-making of the firm’s investment managers or its investment clients
Educational Requirements for Quantitative Analysts
Becoming a quantitative analyst typically requires a master’s degree in quantitative finance, financial engineering or a related quantitative field, such as physics, statistics or math. Some employers may require a Ph.D. for senior-level positions. Students often minor in economics, and some schools offer dual programs in quantitative finance and applied mathematics.
Quantitative finance coursework often includes statistics, linear algebra, accounting, financial reporting and several semesters of calculus and economics. Students also take courses in computer programming, learn about financial markets and investments and become familiar with methods used in financial and numerical analysis. Many programs include an internship.
Career Information
Quantitative analysts, also known as ‘quants,’ often work in the finance industry, analyzing statistics and developing mathematical models used to make decisions regarding risk management, investments and pricing. They may be employed by hedge funds, investment banks, securities and commodities traders, brokerage firms, accounting companies and financial consulting firms. Other employers include engineering firms and government agencies. The information they gather is generally used in algorithmic trading, statistical arbitrage, derivative pricing and quantitative investing.
Required Skills
Quantitative analysts must have excellent written and verbal communication skills and outstanding abilities in mathematics, statistics, data mining and data-intensive analysis. They must also have strong computer programming skills, including object-oriented programming and familiarity with programming languages such as C++. A strong understanding of systematic and discretionary trading practices, interest rate derivatives and financial modeling is also essential for quantitative analysts.
What About Certifications?
There aren’t many certifications explicitly targeted at quants. So before you invest in the Chartered Financial Analyst designation or the Certificate in Quantitative Finance , ask your professors and professional mentors if certification will have a measurable benefit to your career.
Chartered Financial Analyst (CFA)
Offered by the CFA Institute, this credential is geared toward investment professionals. To become a CFA charterholder, candidates must complete an independent study program and pass three exams. Each exam requires approximately six months of preparation. In addition, charterholders must prove they have four years of qualified, professional work experience in investment decision-making.
Is the CFA worth it? The jury is still out. Some quants, like financial engineers without a Ph.D. who want to boost their qualifications, may choose to pursue the CFA in order to give them an edge over their peers. But it’s not often mentioned in job requirements for quantitative analysts.
Certificate in Quantitative Finance (CQF)
The CQF is more of a training course than a certification. This part-time, online financial engineering program is targeted at individuals interested in real-world quantitative finance. That includes derivatives, quantitative trading, insurance, model validation or risk management. Courses, workshops and the final exam can be completed as one six-month program or divvied into two three-month levels.
How much does a quantitative analyst earn in South Africa?
The average salary for a Quantitative Analyst is R 557 548 per year in South Africa
Quantitative Analyst Similar Careers
Whether they’re energetic front office quantitative analysts or quietly working away in the back office, quants spend a lot of their time looking at screens. If you’re fascinated by the finance world and would like a broader set of job tasks, your alternatives include:
- Actuary
- Business Analyst
- Financial Analyst
- Financial Engineer
- Investment Banking Analyst
- Quantitative Developer
- Quantitative Trader
You also have the option to retreat into academia or research as a pure mathematician or buff up your programming skills to investigate engineering roles. Opportunities for senior-level quants include:
- Portfolio Manager
- Hedge Fund Manager