The way Dan*, a strat in Goldman Sachs' New York electronic trading group tells it, you probably don't want to be a quant on the trading desk at any old investment bank.
"Quant is the worst job on the trading floor," he tells us. "You are paid less than salespeople and traders and yet you work more, under greater pressure. Everyone hates you because salespeople and traders think you will automate their job. Most of the work is in regulation and there is no career path after 40."
Quants do the work and wherever possible, he says traders steal the glory: "They're like the F1 drivers. You're just the guy who built the car."
If quant jobs in banks are really so bad, you might wonder why Dan, who's a VP, sticks with it. The reason, he says, is that quant life far better as a strategist ("strat") at Goldman Sachs. "Working here is completely different," he says. "We have the support of senior management - they understand that trading needs to undergo a technological revolution, whereas at other banks you're left to work with old-school traders."
We've written about Goldman's strats before. Goldman loves them. It describes them as, 'developing quantitative and technological techniques to solve complex business problems' and hires 100s every year into electronic trading alone. Strats at the firm come in various guises. There are 'desk strats' who sit with traders and develop derivative pricing models and trading algorithms, 'sales strats' who support the sales team with quantitative research for client questions, 'core strats' who work on the firm's technology architecture using Goldman's own proprietary coding language, and strats in areas like HR and risk.
Arguably, a strat on a trading floor is a sort of glorified quant developer who can implement traders' ideas into code. As time goes on, however, strats - who have ideas of their own - are wondering why some traders are still around, and traders are sensing the threat.
Even so, plenty of quants want to be one, and there are plenty of opportunities. - Goldman isn't the only bank with strats these days and the role is the most desirable on the quantitative engineering spectrum.
"The idea of the strat is to have a quant who really understands who the trades are modelled and priced and who is part of the trading team," says one quant-focused recruiter, speaking anonymously. Most quants want to be strats, he says: "There are a lot of big, monolithic quant teams that are preoccuped with library work, so the appeal of a strat role is clear."
It helps too, that strats - particularly in sales and trading at Goldman - tend to be part of the front office bonus pool, whereas mere engineers or risk quants are part of the middle office technology or risk bonus pools.
This matters when it comes to pay. As the chart below, based on figures from Glassdoor shows, VP level strats at Goldman earn an average of 25% more than VP-level technologists. The difference is in the bonus, which is more than twice as large. And then there are the career opportunties. "Trading strats at Goldman have a good reputation and are coveted by big hedge funds," says another headhunter, speaking anonymously.
This might also be reasons Dan is content as a GS strat, although he insists it's more about his place in the hierarchy. "The traders here treat us with respect," he says. "It wasn't like that at the other banks I worked for."
*Names have been changed.
Photo by Hanson Lu on Unsplash
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