'The smartest people are quants, the dumbest are engineers'
If you're a STEM graduate and you working in finance, there are many choices. Investment banking or trading are of course options, but many will want to instead become either a quant/data Scientist or a technologist/software engineer. The terminology of these roles has changed over the years since the rise of BigTech and the blending of functions, but whether you go down one of the other they’re effectively two sides of the same coin - using mathematics and computer science to solve problems within finance organizations. But before you do, it's worth having an awareness of what they each entail, and where they sit in the hierarchy of perceived prestige in the industry.
For more quantitative roles, some banks use the terms quant research and quant devs. At Goldman Sachs however, they’re famous for using the term “strat” which is a more open-ended inclusive quant role whose real-world specializations depend upon the specific business the strat is aligned to - trading strat vs. sales strat vs. market strat vs. systematic market making strat etc…
There are multiple definitions of intelligence, but if you're talking about academic intelligence alone, people with maths PhDs will generally become quants/strats. When you work in a bank, it's all about how close you are to the money. Of the STEM job categories, quants/strats are usually closest to the money (although not always as quants now can be found even in HR departments). Quants can work directly with traders, building pricing models, and have a claim to a share of the profit and loss (pnl) that their traders make for the firms. This makes quant trading jobs particularly desirable - They are high prestige, and they can pay.
If you work in technology, you will usually be a few more steps away from the pnl, making it difficult for you to claim that you have generated a particular share of revenues, and therefore equally difficult to get paid. This will particularly the case if you're not working in a front office software technology role, like in core technology divisions.
This is why a lot of people in technology want to become quants/strats. Many succeed. It's also why a lot of people who are quants/strats want to become traders and to run their own money. Very few people go from being a quant/strat to being a pure technologist, unless it is a very senior leader whom the firm has specifically asked to help bring the front-office commercials mindset into a possibly slower-paced middle/back-office technology department.
It might be said that the “smartest” people are quants, but this is a simplification. Just because you're a quant with a PhD and a sparkling educational background, that doesn't necessarily make you better than the technologist coding the underlying trading systems. Quants can be arrogant on the basis that they're better educated than the rest, but they underestimate the importance of other types of intelligence, including emotional intelligence and/or the software design/systems architecture understanding that underpins the backbone of the business and enables it to scale.
Xavier Baume is a pseudonym
Have a confidential story, tip, or comment you’d like to share? Contact: email@example.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)