After finishing my studies at the University of Warwick I decided to start looking for jobs in the Financial sector with the aim of becoming a Quantitative Analyst (a.k.a. a Quant).
I moved to London, applied for lots of positions, attended career events, sent my resume to tons of people, and had many interviews. Finally, in June 2016 I got my first job and I have been working as a quant since then. One of the hardest part of this process was not knowing exactly what to expect or how to prepare for the interviews. This is why I want to share some insight with students who may find themselves in a similar position.
🔮 Types of Quants
As you may know there are many types of Quants and they do different things and require different skill sets.
- Front Office/Desk Quants/Algorithmic Trading
They implement pricing models, analytics, and algorithms directly used for trading (either by traditional traders or algo-traders) and sales.
These quants develop models to work out the prices of assets on the markets and manage them: what to buy at and what to sell at, etc. The calculations they make also help to provide guidance on risk management and support the traders in the development of their risk strategies. They are also busy on the investment/business development side of things, using their mathematical and statistical techniques to spot potential new investment opportunities.
- Risk Management
Risk quants belong to the middle office and focus on one or more risk areas such as Market, Counterparty, Wholesale, or Liquidity Risk. Quants in this area produce analytics on the different kinds of risk and communicate their findings to risk managers. They also own the regulatory capital calculations and internal risk management measures.
- Model Validation
Independently review and implement pricing/risk models in order to assess their soundness and quantify its limitations. This kind of job is great to learn about many different models in a short period of time.
- 👨💼 👩💼 Researcher
As the name indicates, the job involves conducting research to solve problems that arise within the bank (e.g. creating pricing models for new products, improving simulation models, developing new trading algorithms, etc.) These are the most suitable positions for those who love mathematics. It is also an ideal way to get a smooth transition from academia to finance. These jobs usually require a basic to medium level of coding.
- 👨💻 👩💻 Developer
Again, as the name indicates this kind of job involves implementation. This includes, implementation and maintaining of models (sometimes developed by other people), as well as process automation (e.g. move a process from 100 spreadsheets to a web application). This option is perfect for those who love coding and developing new tools. Unsurprisingly, these jobs usually require a medium to high level of coding.
Hard Skills to become a quant can be classified in three areas: Maths, Statistics, and Programming. Next is a list of concepts that would give you a good foundation for the interviews. This list is definitely not exhaustive but if you are familiar with all these concepts, you will be in a good path to pass your interviews.
Please keep in mind that you don’t need to be an expert on everything. Having some knowledge on the basics of each topic is enough to start your career. Once you start in your new position you can focus on strengthening the areas that you use the most on your everyday activities.
Besides, every interview will focus on different aspects of these areas depending on the requirements of the job. This is why it is very important to read carefully the job description and tailor your preparation accordingly.
🧮 Maths and Statistics
- Probability Theory and Statistics
- Basic Distributions (Normal, Log-Normal, t-Student, Bernoulli, Binomial, Exponential, Poisson, etc.)
- Basic Probability Concepts such as Expectation, Variance, Standard Deviation, Covariance, Correlation, Quantiles (many people in banks prefer to call them percentiles), CDF, PDF, etc.
- Law of Large Numbers
- Central Limit Theorem
- Stochastic Processes
- Brownian Motion/Wiener Process
- Geometric Brownian Motion Solving the GBM equation is a very common question for junior quants interviews.
- Orstein-Uhlenbeck I got this SDE in a couple of interviews as well.
- Ito’s Formula (Mainly to calculate expectations and solve SDEs)
- Black-Scholes Model in terms of SDEs
- Girsanov Theorem Most likely you will need to use this result for a Change of numéraire.
- Forward Measure (also called T-measure)
- Black-Scholes Model in terms of PDEs.
- Time Series – For a quick summary I recommend this Introduction to the Fundamentals of Time Series Data and Analysis
- Basic concepts as trend, seasonality, stationarity,
- Autoregressive Moving Average Models ARMA
- Autoregressive Integrated Moving Average Models ARIMA
- Vector Autoregressive Models VAR
- Autoregressive Conditional Heteroscedasticity ARCH and Generalised Autoregressive Conditional Heteroscedasticity GARCH models.
- Bayesian Statistics (This one is becoming trendy!)
- Numerical Methods
- Financial Mathematics
The level of programming skills will depend on the kind of job. Broadly speaking junior roles (immediately after graduation or with less than 2-3 years experience) will require a basic to medium level of programming. Programming languages vary among banks but I would say Python, R, Java, and C++ are currently the most popular in the industry.
- Python and R are typically used to prototype models, perform data analysis, and testing alternative models.
- C++ and Java are typically used for production libraries.
- Sorting Algorithms are very popular in quant interviews.
- Complexity of different algorithms. For this purpose, I recommend taking a look at the Big O Cheat Sheet 😃
🧰 Other Tools
- Data Bases
- Scientific Writing
- Version Control. Get familiar with some kind of version control documentation, for instance:
- Office – Yes, this sounds a little bit outdated but I have to say that Excel, Word, and PowerPoint are still very well regarded within banking.
- Financial knowledge. Interviews for junior roles usually do not focus so much on your financial knowledge (you will learn on the job 😃) but it is a good idea to learn a bit before going for an interview. A book that helped me greatly to get familiar with finance was Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading.
⚾️ Soft Skills
In addition to all the technical knowledge, you will need to cultivate your Soft Skills. These are by no means less important than hard skills!
In fact, I have seen many examples where they play a key role in an interview process. Why? because Quants generally don’t work alone. You will be part of a team and will spend many hours discussing and sharing ideas with them.
In every interview, the interviewers want to answer two important questions:
- Can this person do the job?
- Can I work with this person?
The first question will be covered by the technical part of the interview. The second one is more difficult. Here are some important soft skills that you can focus on ahead of an interview:
For this, I recommend to prepare a 5 minutes summary of your PhD/MSc thesis. In many interviews I have been asked to explain my PhD thesis in simple terms. I know that every PhD can talk for hours and hours about his/her dissertation… however the key here is the simple terms bit. Try to prepare a 10 minutes summary of your PhD avoiding too technical terms (this is particularly challenging for theoretical mathematicians but it is worth the effort). Then try to cut it in half the time by making it briefer. Try to answer the following questions:
- What was the topic of your thesis?
- What was the research contribution?
- What are the implications? Theoretical/Applications/Improvements of Existing Results
If you have experience in finance, then you can do the same exercise with the projects that you have listed on your resume. The idea is to practice how to effectively communicate:
- What was the project about?
- What was your role on it? Leader/Individual Contributor/Main Owner
- What was your main contributions? Technical/Implementation/Presenting the project to stakeholders and/or regulators/Strategy and Planning
- What was the outcome of the project? Model submission/ New Algorithm Approved/ Improvement/ Process Automation.
As I mentioned, you won’t work alone. Projects in the industry are so big that is difficult (or impossible) for one person to do everything. Thus, you have to learn to work efficiently as a member of a team.
Banking, as most of the industries nowadays, is changing constantly and at a rapid pace. This means making sure that your education does not stop once you land a job. On the contrary, use the first months in the job to find out what are the most valuable skills in your area. Then, do a self-assessment and identify those areas that need improvement.
📝 Interview Process
Before sending your applications, take some time to update your resume and LinkedIn profile.
Get ready to answer the most common question: Walk me through your resume. Practice at home by trying to describe your academic background and experience in 5 to 10 minutes. The idea is to introduce yourself and give the interviewer a broad idea of your experiences and how they are relevant for the job. This question usually aims to open the conversation so you maybe interrupted and asked to elaborate on certain points.
Be prepared for explaining your resume in full. This means, making sure that you know every single word written on it. If you don’t know it well, don’t write it on your resume. Your interviewer expects you to be able to explain all the things written there.
🎯 General Tips
⭐Online Presence⭐ Keep in mind that your interviewer(s) will (almost surely) make a quick Google search with your name on it. So be mindful about your online image. Use your online presence to display your skills. You can use platforms like:
⭐Continuous Learning⭐ Include all your (MOOCs) Massive Open Online Courses certifications in your resume. It shows that you are motivated, committed to your development, and can learn new stuff independently. So, don’t forget all those Coursera, DataCamp, Udemy, Pluralsight, etc. certifications.
⭐Ad-hoc Preparation⭐ Once you have been invited for an interview, tailor your preparation towards that particular job.
- Do a quick Google search on your interviewers.
- Read carefully the job description and find what are the basic and preferred qualifications and match them with your resume and experience. When doing this, keep in mind that you don’t have to meet all the requirements to get the job. The idea of the exercise is to identify strong and weak points to focus your preparation on the latter.
- To give an example let’s imagine that he job description says that Python is the preferred (not required) programming language but you don’t have experience with it.
- Before the interview, you can get some familiarity with Python basic concepts following online tutorials or books. You can install Anaconda on your computer and start playing with Python. In this way, you will get more comfortable with what you don’t know. This will give you confidence on the fact that you can pick up Python quickly.
- During the interview, mention your experience with other languages and that you are keen on learning Python. Most of the questions can be answered in any programming language. So you can just tell the interviewer which language you are most comfortable with.
⭐Keep it Real⭐ Be honest when you don’t know. This is much better than inventing something. Nobody knows everything and the people who are interviewing you know that. So please, don’t be scared to ask for hints or suggestions. I have seen many candidates who are struggling with a question but just need a small hint and then they figure out the rest pretty quickly! This looks great because it shows that you can deal with difficult situations, ask for help, use that help to get a positive outcome!
⭐Show Interest⭐ Ask Questions about the team, what it does? is it a big or small? is everybody in the same location or in different places?, are you being hired for a particular project, for a backfill, or as part of a team expansion plan? what will the main task be? who are the “customers” of the team? what are the main objectives of the team? what are the opportunities to learn and grow? what are the main programming languages used in the team?
☎️ Telephone Round
Almost all recruitment processes include an initial telephone interview. This is usually less formal (which does not imply less technical) than the face to face (teleconference) round. The idea is to get to know the candidate.
- Find a quiet place to have the interview and make sure that you have good reception
- Print your resume and have it with you (or at least have it on the screen)
👥 Face to Face Rounds
Then there are several face to face (or teleconference) interviews. Here you will meet more members of the team and the questions will be more technical. In my experience you may have between 2 and 7 of these in a day (so have a good breakfast before going into one of those super days!).
- Be on time and wearing professional clothes
- Don’t be nervous, these are just people like you and me. I know that as a recent graduate the first interviews can be intimidating. But please be confident and keep in mind that being invited for this round means a high chance of success! You are already in the short list of candidates who passed.
- Bring printed copies of your resume, as well as bank paper and pens to write.
- Listen carefully to each question and make sure you understood it. If you are not sure, ask questions.
- Show interest on the role and the team.
- Ask for the next stages of the hiring process.
These are some of the most popular books for preparation. I bought all of them back in 2016 when I started interviewing with banks. All of them are good (and of course there is some intersection of the questions among them) but I would focus on the first two.
- Quant Interview Questions and Answers by Mark Joshi Amazon Link
- Frequently Asked Questions in Quantitative Finance Amazon Link
- Heard on The Street: Quantitative Questions from Wall Street Job Interviews Amazon Link
- A Practical Guide To Quantitative Finance Interviews Amazon Link
🌐 Free Online Resources
- Brainstellar for math puzzles
- On Becoming a Quant (pdf) document written by Mark Joshi with lots of information similar to what is in his book mentioned above
- Quant Interview Job Questions collection written by Oana Mocioalca, Assistant Professor at the Department of Mathematical Sciences, Kent State University
- Quantopian Lectures great collection of Python Notebooks explaining basic concepts in finance. You can clone the notebooks and reproduce the results. It is a great way to review your basic maths and practice Python at the same time.
- Quantpedia They describe themselves as “The Encyclopedia of Algorithmic and Quantitative Trading Strategies”. You can browse around 70 strategies for free.
- QuantStart Focus on Algorithmic trading techniques.
- Top 40 Python Interview Questions & Answers by guru99.
- 100 Essential Python Interview Questions (Edition 2019) by TechBeamers
- 50 Python Interview Questions and Answers by Dev.to
🖥 Coding Practice
For learning and practicing coding, I recommend
Finally, I want to talk a little bit about recruiters. In my experience, having a recruiter can have a huge positive impact on your job search.
- They know the market and have tons of experience with Quant interviews. They can help you to identify your strengths and find jobs that are more in line with them.
- They know people in all the banks and can give you insights on what is happening. They may know if a team is growing (which probably means that they have exciting projects coming… or lots of people leaving) or if a team is looking for juniors rather than experienced candidates.
- They really want to help you to get a job (that is what they do for a living :)) So, even if there is no positions at the moment, they will keep a copy of your resume and may call you later when something new comes up.
- They can help you to negotiate your salary. As a junior (especially as a recent graduate) negotiating a compensation package can be intimidating. Discussing your salary expectations with your recruiter can help you in two ways: (1) it will give you an idea of the salary benchmarks for someone with your profile; (2) it can give you confidence to talk about these topics.
- Speaking with recruiters can be useful to get familiar with long telephone conversations. They talk to people every single day and are very confident (you can learn from them!)
- They are part of the business. You will establish long lasting relationships and every time that you want to take a look at the market you will know who to contact 😉
You may be wondering how to find a recruiter. See the FAQ section below.
Can I become a quant if I have no experience in banking?
Yes, absolutely. I did not have any experience (no summer placement, no internships).
How to find a recruiter?
The truth is that they may find you first. That is what they do. When I was still at Warwick recruiters started calling me and sending me messages about opportunities. In case they have not find you yet, there are a couple of things that you can do to find them:
- Ask people in your network to recommend you a recruiter
- Go to LinkedIn and try to find them either by finding connections or by applying to jobs. There are two useful features:
- In your profile there is an option that says “Show recruiters that you are open to work”
- Moreover, when you apply for a job in LinkedIn there is an option to let the person who post it to see your profile
- Attend Career Fairs and Networking events
- Upload your resume to sites such as e-finalcial careers
I want to finish this telling you that my experience with recruiters has been terrific so far. However, not all recruiters are the same. Some are amazing and others not so much. Only experience will tell you who to keep in contact with but a general rule is to look for someone who listens to you and makes an effort to understand what you are looking for (or even more, helps you to see what are the options and find which one is more suitable for your profile and preferences). Finally, don’t let recruiters push you to apply for positions that you don’t like. It will be a waste of time for both most likely.
How do you overcome nervousness in an interview?
Be confident in your technical skills and remind yourself that nobody knows everything. Moreover, as a recent graduate you will bring novelty and fresh air to the industry! So, please keep in mind that you have something very valuable to offer to the team.
What does your typical day look like?
As a risk management quant a typical day consists of
- reading and replying to e-mails
- working on my main projects (I usually have several short term projects and one or two long term ones.) This can include: reading and writing technical documentation (mainly documents in latex) about mathematical models; writing scripts (mostly in Python at the moment) or running scripts (written by me or by others) to get some analysis done; meeting colleagues for discussing results; preparing slides for internal and external meetings.
- attending various meetings for administrative purposes such as planning, prioritising, and organising future work;
Do I need a certification (e.g. CFA, FRM or CQF)?
Not really but it can help you to differentiate yourself from other candidates.
What has been the hardest part of transitioning to Finance?
Here are the 3 harder things from my transition from PhD student to Quantitative analyst:
1. Missing Academia. In banking, especially as a junior, you will have to do some tasks which are not particularly challenging from an intellectual point of view. For example, cleaning data, copy-paste tasks, updating spreadsheets, organising files, etc. This is totally normal and part of the learning experience. But in those moments you cannot help but miss academia (the old good days when you were doing frontier research with your supervisor). However, you have to be patient and don’t stress too much about it. I can guarantee that there are plenty of interesting areas and problems waiting to be solved in the industry.
2. The noise in the office. As a student I was used to work on a very quiet environment (either sharing an office with other graduate students or at home on my own). So, when I went to banking the noise was a shock to me. So many people sitting on an open space having telephone conversations or video-conferences at the same time. I remember thinking how can these people focus and read a technical document in the middle of this chaos? … After a couple of months I got used to it (and of course now I am also one of the people constantly over the phone ☎️😏 probably annoying new comers!). Top secret (not so secret) I got a pair of noise cancelling headphones 🎧😄
3. Change happens slowly in big corporations. As a PhD student you have all the freedom and control on your projects, priorities, and timelines. In a big company you will be part of a team (which is in turn part of a bigger team, division or department) with a hierarchical structure, where things work on a certain way and you won’t have as much freedom and control on the decision making process. So, you may encounter that improving/changing something (a methodology, a process, a way of doing things) can be a slow and hard process. But you have to learn and adapt to the new rhythm. There are things in banking that move super fast but others not so much and you have to learn to be persistent and patient at the same time. If you have an idea 💡 that you think can help the team to do things better ⭐, share it with your manager, push for it, try to make it happen. Don’t be discouraged if it cannot be implemented immediately. Sometimes change takes time.
What has been the most enjoyable part of transitioning to Finance?
1. Growing Horizontally. As a graduate student I spend years deepening my knowledge on a small area of mathematics. When I moved to banking I started expanding my knowledge horizontally. This is possible because there is a great variety of projects that you can work on. I started working on credit scorecards for retail. After only one year I had experience working on wholesale models, interest rate models and inflation models!
2. Working on a multidisciplinary team. I have been fortunate to work along colleagues with academic background in Computer Science, Physics, Chemistry, Economics, Business, Pure Maths (Topology, Algebra, Number Theory). Working on a multidisciplinary team has been an enriching and amazing experience.
3. The Market is very Exciting. You cannot get bored in banking. There is always something happening in the markets. From regulatory changes and political turmoil to interest rates cuts and tax wars among countries. This constant change brings new challenges and opportunities.
Do you need a PhD to become a quant?
No, you don’t need a PhD but if you have one, then you have already acquired a bunch of transferrable skills that will be super valuable in finance.
Many MSc’ students have asked me if they should do a PhD before starting a career as a quant. My advise is, don’t do a PhD for any other reason than pure intellectual curiosity. If you are passionate about science and want to spend 3-4 years doing research on a particular subject, go for it! But don’t do it thinking of helping your future career (as a quant or anything else). You can have a brilliant career with or without a PhD (there are plenty of examples of both cases).
In my opinion, the key is being passionate about what you are doing. Once you start working as a quant, you will learn (all what you need to do your job) by doing instead of studying.
Some further thoughts on the PhD element
Transitioning from Academia into Finance can be a hard decision. But you can be sure that PhD are very welcome in Finance. Don’t be afraid and please remember that you have acquired lots of transferrable skills. At the end of the day, working as a quant means solving difficult problems using mathematical tools and you have experience with this. Here is a short list of the skills that I learned during my PhD and have been useful in the industry.
- Solving problems using a scientific approach
- Look at the Big-Picture
- Get to know the Literature
- Break the problem into small ones
- Managing your Time
- Working under Pressure
- Writing technical documents
- Presenting your work to others
Finally, If you have any further questions please feel free to leave a comment below and connect with me.
All the best in your job hunting, I am sure you will do great 🌟