How to Improve Your Odds of Getting a Quant Job: Tips from an Expert
Several recent Glass Hammer posts have focused on finance jobs in quantitative analysis, and how to help women break into this mostly male-dominated field. For a background, take a look at “Why Do Girls Hate Algorithms?” and “Breaking the “Quant Jock” Stereotype.” To continue this series, I interviewed a friend of mine, “Mr. B,” who is a strategist as a quantitative hedge fund and asked him to share some suggestions to help women pursue jobs in the field.
Why Are There So Few Women in Quant?
I asked Mr. B to try to help me understand why there weren’t more women in quant jobs. Maybe it’s a problem of lack of information, and the funds need to do a better job of recruiting top-notch female PhD students right out of university. He explained that many firms are interested in hiring women and would like to add more gender diversity to their rosters, but that, in his experience, quant funds receive very few resumes from women. While women might be underrepresented in graduate programs in the sciences as well, there are still many qualified female PhDs who pursue academia, government work or private sector work in biotech, chemistry, engineering or computer technology. So what’s so scary about quant?
Perhaps the fact that most offices have so few women creates a self-fulfilling prophecy, whereby women applicants don’t see a job in quant as a viable option or think that they would be intimidated in the workplace, and thus don’t apply. To a certain extent, plenty of quant guys like their “boys club” environment just fine, and don’t see any reason to change it. When asked about this subject, another male quant strategist interviewed for this article, let’s call him Mr. C, commented “I don’t know why women would want to work in quant, when there are plenty of other opportunities for them to make money. Their personalities would be better suited for sales, no?” All of them? Hmm. I’ll look into it. This attitude is nothing new, but it makes it hard for women to break into the field.
Two Kinds of Quants
According to Mr. B, there are two camps of quantitative investors. The first camp is the engineering/math camp. These people generally have advanced degrees in fields like physics, mathematics, sciences or engineering, but do not have a background in economics. Instead, they have a strong theoretical understanding of statistical methods and experience working with large data sets. These people can be given a set of time-series data and identify the true trends in that data. Accordingly, this type of strategist comes up with trading strategies by looking a data set and trying to decipher patterns and trends in that data and predict the behavior of the markets according to those patterns.
The second camp of quantitative investor is made up of people with a formal background in economics. These strategists might have an undergraduate background in science or math, but they have also done graduate work in finance or economics and have a sophisticated understanding of how markets work. Accordingly, this type of strategist comes up with economic models based on their understanding of the markets, and uses the data to prove of disprove the hypothesis behind the model. Thus, they use empirical data not to create models, but to confirm the validity of models based on economic theory.
Three Tips to Landing a Quant Job
Mr. B had three great tips for how qualified women, or anybody for that matter, could increase their chances of landing a great quant job. Though this job requires the already specialized skill-set of a PhD in a technical field like math, science, engineering or economics, once you have this background, there is more that you can do to prepare yourself to improve your chances at getting a highly competitive quant job.
- Demonstrate your knowledge and intuition about financial markets. It’s not enough to be a math genius. To succeed as a quant, you have to be able to demonstrate a strong intuition about financial markets and a sophisticated understanding of how they operate. To develop this sense, you should read the Wall Street Journal every day, watch CNBC and pay attention to what’s happening in the marketplace. According to Mr. B, “It’s important to be able to demonstrate that you know who the natural buyers and sellers of equity and fixed income are, and that you know the difference between real money and retail money, and that you can articulate that in an interview.”
- Be prepared to answer the question “If you were going to give investment advice today, what would you tell me to buy?” But be careful, this question is more complex than it seems. Interviewers often ask this question in a quant interview, because they want to see how familiar the candidates are with the market process and if they are able to intelligently explain their thought process in a non-abstract way. They also use this question as a test to identify those people with a true passion for financial markets and weed out those who are just seeking a high-paying job, but don’t have a sincere and deep interest in investment strategies.
- Be able to demonstrate how the tools you have used add value to the process of analyzing financial data. One way that lots of highly-qualified applicants with PhDs in technical subjects like math, science or engineering manage to sink their quant interviews is by talking robotically and spewing out numbers that nobody can understand or keep up with. According to Mr. B, “interviewers will know from your resume that you have a strong quantitative background. You don’t have to try to impress them by speaking in numbers.” The best candidates can explain the complicated tools they use to analyze data in layman’s terms and can speak in plain English about how these methods can be cross-applied in the financial sector to add value to investment strategies. For example, if you are an astrophysicist who has analyzed thousands of spreadsheets filled with telescope data, be prepared to explain why the methods you used could be applied in an economic setting. You could be the most brilliant mathematician in the world, but if you can’t explain to investors what you are doing with their money in a language they can understand, then a fund won’t be able to trust your judgment and rely on you to take risks.
Overall, Mr. B recommends that potential quant applicants talk to people in the field and try to canvass friends, mentors and professors who have experience working as quants to find out what is important, what’s not, and what kind of fund would be the right fit for them. This will also help people from a quantitative academic background to get a sense of how things work in the real world, and how market realities differ from textbook models and theoretical expectations.
Armed with these great tips, we hope that our mathematically-inclined women readers will consider pursuing rewarding careers at quantitative hedge funds.
