Quantitative Analyst Salary and Skills

Quantitative Analyst Salary

Quantitative Analyst Salary – Quantitative analyst is the rocket scientist of finance world. It’s not enough to have an MBA degree from a top notch B-School. You need to have multiple skills and you need to have what they call the “right stuff” to be able to get an entry in this world of repute. There is a high demand for quantitative analysts, but very low supply, as only few are able to fit the bill.

So what you need to have to be able to succeed as a quantitative analyst or “quants”? First of all, you need to have the right degree. Only a master degree won’t do. Companies who hire quants prefer PhD candidates. So you need to go and get a PhD in Quantitative Finance. Once you have the degree, you need to have the right skills. Only finance knowledge will not do. You need to be an expert in computer programming as well. Once you acquire the right skills, you need to have right experience to understand the secret of the trade. And if you’re able to achieve all these, you will become the “rocket scientist of the wall street”.

However, in this article, we will talk more about how much “quants” earn and a brief about what they actually do in the finance corporations. Why this is relevant? Because everybody who dreams to become a quantitative analyst wants to know whether it’s worthy to put in so much of input or not!

This article is structured as per below – 

About Quantitative Analyst

Before discussing the compensation of quantitative analyst, it’s important for you to get acquainted with the profession. What quantitative analyst has to do in the financial corporations? What are the responsibilities he needs to perform?

Here’s a brief overview –

  • The most important task of quantitative analyst is to design and create financial models that allow the financial corporations to price and trade securities. Without the knowledge of computer programming, it would be impossible to design and create financial models.
  • There are two types of quantitative analysts. The “front office” quants are those who deal directly with traders, providing them the tools and pricing required to trade. The “back office” quants are those who would be validating models, conducting research and would create new strategies.
  • If you are wondering which type of quantitative analyst you should become, it’s totally up to you. Normally the jobs of front office quants are very stressful and compensated well. Whereas, jobs of back office quants are less stressful and compensated less.
  • Usually, quants are appointed in investment banks and hedge funds. But other that, they are also employed in commercial banks, management consultancies and by insurance companies.

Read more on – How to become a Quantitative Analyst

Quantitative Analyst Salary / Compensation

In this section, we will go in detail about the salary of quantitative analyst and we will analyze each and every part of the compensation. Let’s have a look.

If you want to be a quantitative analyst and would like to know what the range of compensation you would get as a result of working so hard, here’s the deal. According to PayScale.com, the median salary of a quantitative analyst per annum is US $83,249.

Quantitative Analyst Salary

source: payscale.com

Effect of Experience on Quantitative Analyst Salary

There’s an interesting conclusion that has come out from PayScale.com’s analysis. It has been seen that people who are employed as quantitative analysts don’t have more than 10 years of experience (in most cases, few exceptions are there). That means to earn a great compensation you don’t need to so long. If you have the required degree and skill, you would be able to earn a great salary in the mid-range of your career. Let’s have a look at the chart –

Quantitative Analyst Salary

source: payscale.com

But one thing you need to consider. As a fresher you wouldn’t make that much money as a quantitative research analyst. So you need to think long term if you are in a look out for a great compensation.

Quantitative Research Analyst Salary Breakup

Let’s look at the break-up of the salary in more detail –

Quantitative Analyst Salary

source: payscale.com

Other than the above (bonus and profit sharing), the quantitative analysts also receive common health benefits. Have a look at the chart below –

Quantitative Analyst Salary

source: payscale.com

It is being seen that most quantitative analysts get medical benefits and dental benefit. 69% receive emoluments for vision. Only 7% don’t receive any common health benefits. So as an aspirant, your chances of receiving health benefits are good enough.

Best Paymasters for Quantitative Analysts

Now you may be thinking which employers are good paymasters for quantitative analysts! As per PayScale.com, here are two companies who are most popular pay masters. Have a look –

Quantitative Analyst Salary

source: payscale.com

According to the chart above, it’s being seen that Bank of America Corp. (BOFA) paid the most salary to quantitative analysts. The average salary they paid to their quantitative analysts is around US $120,000 per annum. The Goldman Sachs Group, Inc. paid the second best. The median compensation they paid to their quantitative analysts is around US $105,000 per annum. However, the conclusion we’re making here is not exhaustive. Because compensation of quantitative analysts depends upon many factors that we can’t ignore! It may happen that all the respondents who reported to work with these groups of companies are experienced and have more than 10 years of industry experience. So let’s say that the salary of quantitative analysts will increase gradually as you get more experience and acquire more skills.

Quantitative Analyst Skills

Let’s look at the skill sets required for being a great quantitative analyst and how these skills affect the compensation.

If you have better grasp on C++, Matlab, Python, Financial Analysis and Financial Modeling, then you will be able to increase your pay by multi-fold.

Quantitative Analyst Salary

source: payscale.com

As per the chart the skills that have most positively affected the salary of quantitative analysts are C++, Python, Matlab, Financial Modeling, VBA and Financial Analysis. It is also seen that what skills like SAS, Data Sensitivity Analysis, Statistical Analysis and Microsoft Excel are losing their relevance. It means that only having these skills are not enough. You also need to acquire skills like C++, Python, Matlab, Financial Modeling, VBA and Financial Analysis.

As you can understand, without acquiring a toolbox of skill-sets, your chance of success as quantitative analysts is bleak. So better that you start working on the skill-sets that is shown in the chart below. According to PayScale.com, these are the most popular skills for quantitative analysts.

Quantitative Analyst Salary

source: payscale.com

It’s being seen that there are five most important skills that are most popular. Previously we have seen few of these skills mentioned above are losing their relevance. So having all these skills together is what will make you prepared for becoming a great quantitative analyst.

Quantitative Analyst Skills and Effect on Salaries

Let’s look at each popular skill and the median salary quantitative analysts receive as a result of having this particular skill.

Quantitative Analyst Salary

source: payscale.com

According to the chart, if you have SAS skill (as per the 99 respondents reported), your median salary as a quantitative analyst would be around US $86,000 per annum.

Quantitative Analyst Salary

source: payscale.com

Microsoft Excel is very basic skill. But according to125 respondents, if you know Microsoft Excel, it may help you earn a median salary of US $80,000 per annum.

Quantitative Analyst Salary

source: payscale.com

According to 109 respondents, if you have SQL skill, you would be able to fetch a median salary of around US $88,000 per annum.

payscale 11

source: payscale.com

According to 195 respondents, if you have Data Analysis skill, you would be able earn a median compensation of around US $84,000 per annum.

payscale 12

source: payscale.com

Data Modeling as a skills fetches the highest median salary among all. It is around US $91,000 per annum. But the most popular skill is data analysis as 195 respondents chose this to be their favorite.

The irony is the skills which are most important to grasp like C++, Python, Financial Analysis, VBA, R and Financial Modeling are not chosen by participants as their favorites. Because they are tougher skills to master than the favorite skills mentioned in the “most popular” chart!

So instead of preparing to build popular skills develop skills that pay more money. It’s said that there’s no crowd along the extra miles. Run on some extra miles and your chance of getting a huge compensation will increase by multi-fold.

Quantitative Analyst Job Satisfaction

Now let’s see how satisfied quantitative analysts feel after being employed for 5, 10, 15 years. And in the chart below, we will also be able to see the gender composition who go for quantitative analyst profession.

Let’s have a look –

payscale 13

source: payscale.com

It is being seen in the chart, that the job satisfaction of the respondents according to PayScale.com is 100%. So we can assume, you will able to enjoy the same level of job satisfaction once you join as a quantitative analyst.

Secondly, as per the gender composition shown in the chart, we can see that quantitative analyst profile is male dominant as 75% of the respondents are male. Only 25% respondents are female according to the survey.

Quantitative Analyst vs similar job profiles

So where the compensation of a quantitative analyst stands compared to other similar job profiles.

Let’s have a look and then we will analyse the whole scenario.

payscale 14

source: payscale.com

From the comparison, it’s found that only 2 profiles can be compared with the quantitative analyst profile. They are – financial analyst and senior financial analyst. It can be easily said that if you go for quantitative analyst profile, you would get much better compensation that being a financial analyst or an experienced financial analyst.

We feel that only one overview is not enough. So we will look at what Indeed.com has to say in regards to compensation of quantitative analyst.

indeed 1

source: indeed.com

According to Indeed.com, it was found that the average compensation of quantitative analysts is US $77,000 per annum. This median compensation is almost US $6,249 less than what PayScale.com portrayed.

Quantitative Analyst Salary Trends

Let’s look at the salary trend of quantitative analysts between July 2012 to April, 2014 to get an idea how compensation of quantitative analysts over the years.

indeed 2

source: indeed.com

The trend of compensation looks interesting. During July, 2012 to November, 2012, there is steady drop in the compensation. In December, 2012, the compensation remained same. During January, 2013 to February, 2013, the salary experienced a slight growth. From March, 2013, there is again a steady drop in the curve. And it stayed same during June, 2013. From July, 2013, the salary suddenly started reaching the second best peak and slightly dropped during September to October, 2013. It dropped again in November, 2013. From December, 2013, the curve has reached upward again in January, 2014 and dropped in February, 2014, it dropped again. In March, 2014, it went higher again and finally in April, 2014, it reached the highest peak i.e. around US $105,000.

From the trend, it can be clearly said that the compensation of quantitative analysts would vary every month. As there is a huge demand for these professionals and not enough supply, often with good skills and experience, quantitative analysts can bargain for a higher salary. But if they lack in skill even with the years of experience, their compensation may drop. As this is the calculation of average salary we take into account, we can’t take this trend as the most exhaustive conclusion.

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The bottom line

The substance of this entire discussion is this – more tougher to acquire skills you have, better would be your pay as a quantitative analyst. If you want to make your mark as quantitative analyst, you should start working on C++, Python, Matlab, R, Financial Analysis, Financial Modeling and VBA. If you don’t have these skills, expect an average compensation of around US $80,000 per annum. But if you have these skills, the salary per annum would go beyond six figures. The choice is really up to you. You can choose to develop popular skills and become an average quantitative analyst or you can get a PhD, acquire all these hardest skills and get paid as the top 1% of the whole quantitative analyst domain.

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