How to Become a Quantitative Analyst: The Ultimate Guide

Avadhut |
June 12, 2020

In the current times, we all are surrounded by numbers in our lives.

Whether you are a student, a working professional, a businessman, or a housewife, numbers are something that we cannot do without.

And quantitative analysis is using these numbers to arrive at a conclusion or a decision.

Each one of us, in our sweet way, does this analysis for managing our money and sometimes others’ money.

But quantitative financial analysis is much more than that.

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Today in this article, I will tell you how to become a quantitative analyst.

But before that, let me tell you what quantitative analysis is.

What Is Quantitative Analysis?

In straightforward terms -- quantitative analysis is the task of measuring anything in numbers.

If we go a little technical, it is a method of systematically using statistical tools and financial modeling techniques to address complex business problems.

However, it will only be fair to say that quantitative analysis in itself is not complete without its counterpart – qualitative analysis.

But more on that later, right now let me dive deep into quantitative analysis and what would it take for you to be a successful quantitative financial analyst.

What Do Quantitative Analysts Do?

Typically the tasks of a quantitative financial analyst can be divided into three broad categories:

1. Back end operations

This is where most of the junior analysts work. In this profile, usually, you will collect financial data from various sources, both internal and external.

You would also work on financial coding models, collating data, and creating reports to some extent.

This profile will not be too demanding, and typically there is an adequate work-life balance for an analyst.

Typically you should have a working knowledge of programming languages for coding; otherwise, your job could be too lengthy and tedious.

2. Analysis

This is the most challenging and demanding task for a quantitative financial analyst.

Here you will be creating various financial models, develop strategies for clients, and will do a lot of number crunching.

This profile requires you to spend long hours at work, and therefore, people in this profile are paid better than the ones in back end profiles.

This profile requires you to be in computational finance and especially useful in financial modeling.

Please make sure that you are right in it before applying for one such profile.

For more on financial modeling, please refer to my earlier posts “Financial modeling jobs – finding & skills” and “Financial Modeling using Excel and VBA.”

3. Front end operations

As the name suggests, these people typically are the face of the organization, including people in the earlier mentioned profiles.

In other words, they are the people who would represent this data to the outworld and the clients.

This profile requires a lot of interaction with business partners, vendors, and clients.

Also, this profile requires these people to travel from time to time.

How to Become a Quantitative Analyst

1. Certified course

For being able to get into the finance world and become a professional quantitative financial analyst, you should have a formal educational degree.

Typically these jobs are offered to people with a degree or a certificate in mathematics and statistics.

There are many institutes and universities across the globe that offer specialized courses in this field.

There are full-time courses, part-time courses, distance learning courses, and also online courses.

The duration of these courses varies from 2-3 months to a two-year program.

However, it is not necessary to have a degree or a certificate to become a quantitative analyst, but it becomes much easier for you to find a finance job and grow faster if you have one.

2. Technical knowledge

Just a degree wouldn’t be enough for you to become an analyst.

You need to have sound knowledge of finance, quants, mathematics, and statistics.

In mathematics, you should thoroughly know probability, calculus, linear algebra, equations, and number system.

In Statistics, you should be well versed with measures of central tendency, variance, coefficients, regression, and correlation.

In finance, you should be quite conversant with ratio analysis, corporate finance, working capital management, and the time value of money. You should know hedge funds, financial engineering, risk management, computer science, data science. You should have independent research skills as a quant analyst.

All these concepts are used in financial modeling and forecasting of the financial data.

You should be conversant in trading strategies, options pricing, machine learning, mathematical models for this quantitative analyst job.

All the topics I just mentioned forms an indicative list and are not exhaustive.

The more you know, the better your chances of succeeding in becoming a good quantitative analyst.

3. Soft skills

For any finance professional, being good with numbers is imperative.

You should have a knack for number crunching and should also be comfortable with handling numbers, equations, and formulae with ease. If this is not the case with you, I would seriously recommend giving a second thought to choose a career as a quantitative analyst.

Also, you should have a very keen eye for detail.

Quantitative financial analysts deal with a lot of numbers in their daily operations, and quite honestly, there are just ten numbers to look at, 0 to 9.

It usually gets tough to catch small differences, and therefore attention to detail becomes very important.

Quantitative Analyst Salary

Typically a fresher or a new joiner will earn anything between 15,000 USD to 30,000 USD per year.

How to become a quantitative analyst

The money offered is usually more in larger companies, but also their selection procedure is more complex and challenging to crack.

After a few years of experience, the money isn’t significantly more, which varies from 74,000 USD to 156,000 USD per year.

The average salary of a Quantitative Analyst is USD 107,000 in the US as per Glassdoor.

But if you have more than ten years of experience in the industry, the money can reach up to 2, 00,000 USD per year.

Quantitative analysts are known for working till wee hours and therefore are usually paid more than other professionals within the finance domain.

Also, bonus and variable pay play a crucial role in the industry. The bonus amount can go as high as 50,000 USD per quarter, given the performance of the analyst.

I hope this article gave you clarity on acquiring the required skills and becoming a successful quantitative financial analyst.

Learned Something? Share The Love!

I know that you have a ton of insights that I didn’t cover in this post.

I’d love to hear anything you’ve picked up since starting in your finance career.

It doesn’t have to be an Earth-shattering insight.

Even a helpful tip would be excellent.

So leave a comment right now with something you’ve learned.

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