Is the Quant Boom in Fintech Turning into the Quant Bust?

As demand for quants increased at banks and hedge funds in recent years, so too the number of Masters courses in quantitative finance proliferated wildly. A year into the COVID pandemic, however, it seems the quant Master’s boom may be turning into the quant Master’s bust. 

Headhunters in London and New York say they are awash in applications from juniors with Master’s and Bachelor’s degrees looking for new quant roles. Few places want to hire them.

“Banks and hedge funds want individuals that they can trust to work from home in a productive capacity,” said Ben Hodzic, head of quant recruitment at Selby Jennings in New York. “There’s a lot of hesitation when it comes to hiring graduates or junior folks who might need hand-holding and who aren’t familiar with the data.

“The real appetite now is for people with five to seven years experience who can hit the ground running, pull the data and produce a hypothesis,” he added. “There’s big demand for those sorts of profiles.”

Although they might seem junior, candidates with quantitative PhDs are actually perceived as having real experience, Hodzic said: “You’d think a PhD graduate would fall into an entry-level bucket, but if you’re a PhD from a top tier university with years of research experience under your belt, you’re usually joining at a mid- to senior-level and are trusted to work well on your own.” 

It’s graduates and masters candidates who are out in the cold. The situation is arguably worse in London, where one headhunter suggested there are additional junior quants on the street after quant hedge funds like Winton Capital Management made cuts last year. (Winton reduced headcount from 296 to 230 people in 2019, and is thought to have made further cuts last November.) “Juniors are finding it hard now,” said that headhunter. “There’s far more hiring for senior quants, portfolio managers and sub-portfolio managers.” Accordingly, Winton just hired John Ward, a former portfolio manager from Green Park Research, as a PM.

One place that’s likely to make additional quant hires soon is the Abu Dhabi Investment Authority (ADIA). In December, it hired Thomas Schmelzer, the former head of quant research at Lobnek Wealth Management in Geneva, as its quant research and development lead. 

Schmelzer has a degree in mathematics and numerical analysis from Oxford University. Aspiring quants may want to get similarly qualified. “A PhD is a foolproof way to work on your research without having to rely on a company,” Hodzic said. “It will make you a far more marketable candidate.” 

And if you don’t have the time, money, or appetite for a quant PhD? Hodzic advises that you look for data roles at fintech firms and technology vendors as a starting point. “If you’ve worked on different data analytics projects with varying data streams a hedge fund will at least see that it won’t need to do too much handholding if it hires you,” he said.

A modified version of this article originally appeared in eFinancialCareers.