- Quants, Wall Street’s so-called rocket scientists, remain in high demand across fixed-income desks.
- Base salaries can swell towards half a million dollars for the right candidates.
- A slew of senior hires at firms like BlackRock and Citadel have been made in the last year.
Banks, asset managers, and third-party trading platforms like Tradeweb or MarketAxess that move billions of dollars throughout fixed-income markets are hunting for quants to build out electronic trading offerings.
Citi and Goldman Sachs among others have bolstered digital capabilities to include investment-grade and high-yield corporate bond trading, while also incorporating products for exchange-traded funds and interest rate derivatives, according to a report from financial recruitment firm Selby Jennings.
“Vendors, banks, asset managers are all placing this kind of talent,” Ben Hodzic, an executive director at the firm, said of hiring more tech-savvy math whizzes.
Quants in the US can expect to make big money, especially if they work for a hedge fund, Selby Jennings outlined in its latest global quant market update. Banks are offering annual base salaries between $125,000-$155,000 for PhD graduates, but this can swell to as much as $225,000 when incorporating incentives.
Mid-sized hedge funds go as high as $175,000, while larger funds and trading firms can offer candidates up to $300,000 at a base level, according to Selby Jennings.
Sell-side firms with third-party trading platforms offer associates $160,000, while vice presidents and directors can snare base salaries of $225,000 and $300,000, respectively. Managing directors can earn up to $500,000.
Selby Jennings noted a slew of fixed-income appointments in the last year. Insider reported Isaac Chang left investor AQR Capital Management to lead global fixed income trading at market-maker Citadel last September. Scott Carson, a portfolio manager at alternative investor Brevan Howard joined in April from Capula Investment Management.
The hunt for quants, dubbed the rocket scientists of Wall Street, comes as banks and their sell-side clients ramp up digital fixed-income trading in lieu of the telephone.
Banks racked up record numbers in credit sales and trading in the last year as the coronavirus pandemic ruptured financial markets and traders moved quickly to take advantage of market dislocations and hedge clients’ risks. They’re also paying up for the right traders in a wild poaching war, Insider reported in June.
The rise of third-party platforms in recent years has also pushed investment banks to bulk-up electronic capabilities as they bleed clients who cut out bank traders and transact amongst themselves through the likes of Tradeweb.
“There’s a lot of challenges. Candidates are more risk-averse”
Despite the allure of Wall Street and a competitive salary, these quant roles aren’t the easiest to fill, Selby Jennings’ Hodzic said.
Motivating talented individuals to move shops amid economic uncertainty is tough. The grass isn’t always greener at a rival, while some have grown fatigued by the regimented grind of financial services.
“Candidates are more risk-averse. The reality is that people are thinking about [moving] but there are a lot of factors to consider” he said.
Recruiters focused on financial services have also lost offers to cashed-up tech behemoths from Facebook to Amazon, according to Hodzic, as sought-after individuals grow enamored with tech’s flexible work-life balance.
And despite Wall Street’s deep pockets, finding an ample skill set can also be a challenge.
Wall Street loves quants with physics and tech know-how, but the ability to grasp the nuances of trading helps. Hiring is easier if prospects bring a few years of experience on the Street to the table, according to Hodzic.
“There’s a war for good talent. Firms are bidding up compensation packages for the top contenders,” Selby Jennings noted in its report.
“As the market continues to mature around these strategy sets, we have seen more talent coming out with three-to-five years of experience navigating systematic fixed-income, which makes hiring in this space much easier.”