If you’re a quant or technologist and you haven’t heard of Goldman Sachs’ strats group, you’re probably living in a deep hole on the outskirts of civilisation. The Goldman strats group is huge and integral to the functioning of the firm – particularly since CIO Marty Chavez was handed control of both strats and technology two years ago.
Chavez manages 9,000 people across technology and strats at Goldman, so the group is pretty huge. It’s also integral to the future – strats are said to be working closely with Raj Mahajan who was hired from Fox River in 2015 to improve Goldman’s electronic trading business and is in the process of creating a “one stop shop” for trading across all products, for example.
For all that, however, some strats at Goldman seem stifled. Privately, there are complaints of a lack of career progression and problems moving internally into other groups. Before you step into a strats role at Goldman, this is what the firm’s current strats staff say you need to know.
1. There are literally loads of different strats groups at Goldman
There is strats, and there is strats. Most groups at Goldman have strats teams aligned to them. You’ll therefore find GIR (Global Investment Research Strats), prime services strats, and Federation strats (eg. Human Capital Management Strats). Insiders say there are probably around 70 different teams in total.
“Some of the strats groups are allied to the front office – the revenue divisions,” says a member of a Goldman strats team, speaking off the record. “But plenty of the others are aligned to the back and middle office – the Federation divisions, things like market risk, treasury and HR.”
2. Because there are so many strats teams, there are plenty of strats jobs – but only in some locations
The good news is that plenty of jobs at Goldman Sachs are in the strats teams. – 12% of the jobs Goldman’s currently advertising in Europe are in the strats group, for example.
If you’re working in a strats team in London or New York City, you’re likely to be supporting a front office function. Strats teams in India are more likely to work on the Federation roles.
3. And some strats jobs are better than others…
“The best to be in is a very subjective question,” says one GS strat insider. “From a monetary perspective, (no prizes for guessing here) front office strats tend to be better rewarded, but Federation strats are growing faster.”
The best strats jobs used to be aligned to electronic market making, but insiders say these are less exciting now that banks are essentially moving to agency trading models in which they take less risk. Instead, some of the more interesting strats roles now are in areas like structuring, where strats get to work with particular products and markets to devise solutions for internal and external clients.
4. Being a strat at Goldman Sachs now has less to do with math(s) and more to do with programming
“The common feature among all strat teams is that they comprise of people who specialize in the application of mathematical and statistical methods,” says one Goldman insider. “But the rigour and the skills required differ from team to team.”
If you work in a strats team that’s aligned to the Federation, for example, it’s a lot less about being a quant than about being a programmer. “The Federation strat teams lay a greater emphasis on programming ability,” says the Goldman strat. “The revenue divisions tend to be math heavy.”
“You need to be a programmer first and a pretty good math person second,” says another strat. “Quants are scarce around here. Those jobs just don’t exist. We have maybe three guys on the floor who could implement a partial differential equation exotic option pricer. We just don’t need a lot of quants. But do need a lot of people to keep the software infrastructure up and running and be OK at the math.”
If you’re interviewing for a Federation strats role, insiders say you won’t even need to know much about finance. If you’re interviewing for a derivatives pricing or market risk management strats role, you’ll need to know a lot about finance.
5. And the big strats areas historically are becoming less important
Insiders say some strats roles are growing “The only growth space for quants is in capital calculations, stress tests, and the like.” On the other hand, the trading strats teams which used to be the backbone of the function are said to be much smaller than they used to be in the “heyday of the front office quant.” Strats teams at Goldman are reportedly being “realigned” as the bank continues to merge its strats and technology functions.
“Basically strats is now a lot more about regulation and technology, and a lot less about being a quant,” says one insider.