Quantitative analysts 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. 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 quantitative analysts produce is 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.
What does a Quantitative Analyst Do?
Some quantitative financial analysts begin working in entry-level roles as research analysts after completing a bachelor's degree in a field that provides practical quantitative skills, such as statistics, finance or economics. However, these positions do not typically lead to long-term, permanent careers in the field. Rather, junior quantitative research analysts usually either return to school or transition into closely related jobs, such as investment analyst positions researching companies and stocks.
In the securities industry, quantitative analysts are typically hired for their expertise in complex mathematical modeling techniques, skills that require many years of training to develop. Consequently, most quantitative analysts come to the field after completing a master's degree or doctorate. Top candidates for analyst positions typically hold doctorates and have experience conducting independent research and designing mathematical models.
A long-term career as a quantitative analyst generally requires a graduate degree in a quantitative field such as finance, economics, mathematics or statistics. Degrees in theoretical physics, engineering, computer science and other fields that deliver high-level training in mathematical modeling and other advanced quantitative techniques may also be acceptable. Some doctorate-level professionals who want to transition into the financial industry from quantitative careers in non-finance fields choose to return to school to earn a master's degree in majors such as financial engineering or mathematical finance.
Other Qualifications and Skills
Few employers in this field require job candidates to hold a professional certification. However, some positions may require an appropriate license from the Financial Industry Regulatory Authority (FINRA), the organization in charge of oversight for securities firms and brokers in the United States. To begin the FINRA licensing process, a candidate typically must have official sponsorship from his or her employer. As a result, any licensing requirements for a position are usually handled after a new employee begins work.
Most quantitative financial analysts must have high proficiency in the database management skills and computer programming skills used to develop and implement mathematical models. The C++ programming language is generally considered the most important in the field, although requirements vary depending on the position. Other programming languages used in the field include Python, SQL, C#, Java, .NET and VBA. Quantitative financial analysts should also have expertise in a statistical analysis software package such as Matlab, R, S-Plus or SAS. Advanced skills in Excel are also required.
Analysts must also have excellent written and verbal communication skills. In addition to developing new mathematical models and analytical approaches, analysts must be able to document and present the results of their work to others in the firm so that it can be put to use in day-to-day business. Analysts may be required to work with technology staff to design appropriate systems to run the models they create. Analysts should also expect to communicate with firm management and various business units to set research and design priorities.