Average salaries for quants

[Poomrang]

Hi all,

I'm curious to know what are the average salaries for quants ?

- entry level

- 2/5 years experience

- 5/10

- 10 +

Thanks

[Andy]

Salary Info - Quantnet.org - Financial Engineering Forum (http://www.quantnet.org/forum/showthread.php?t=2129)
http://www.quantnet.org/forum/showthread.php?t=2181

[fshaikh]

That thread says 200k to 500k in a 3-5 yr time frame. Do salaries really hit 500 k in a 3 yr time frame. 3 yrs is nothing, even in this market ?

[Poomrang]

That thread says 200k to 500k in a 3-5 yr time frame. Do salaries really hit 500 k in a 3 yr time frame. 3 yrs is nothing, even in this market ?

yeah, me too I think it's too exaggerated !

[Andy]

That thread says 200k to 500k in a 3-5 yr time frame. Do salaries really hit 500 k in a 3 yr time frame. 3 yrs is nothing, even in this market ?
No. Where it said that?
It said " After 5 years, you can make VP and anywhere from 200K to 500K or more." How you can interpret it to be "500 k in a 3 yr time frame" is beyond me.

[fshaikh]

The actual message had a range but anyway 5 yrs of experience and becoming a VP. 500k still seems to be a lot of money. Some ppl dont make that much with 20 yrs of experience as an Engineering major,accounting or simply even in the medical field. I know several lawyers who went to ivy league schools and have jobs at some of the biggest law firms in the nation with 3-4 yrs in their firm they draw close to 200k which i always thought was a lot of money
Unless your entrepreunial and start out something on your own which is completely different. A paycheck slave making 500k is hard to believe it just makes me wonder what do they actually even do that gets them to that pay. You got my eyes wide open.

S**t when i grew up back in my home country that only think i heard that would make me rich was being a doctor or Engineer. It was so retarded now that i look back :)

[Andy]

Keep in mind that the number quoted is base salary + bonus. Most people will have a base salary of 100-200K regardless of title, experience. It's the bonus that makes the difference. If you are in mid/back office or belong to some small bonus pool, then you will be making more or less the same salary for the next 20 years and it may max out at 100K ish.
what I posted is for front office, best case scenario. In good time, you can make boatload of money. In bad time, you may get a pink slip. It's what it is.
I still think medical career makes more money. I have known people who have their own dental practice and they make consistently millions yearly. So don't think FE will make you rich. You probably live in NYC or London and after the cost of living at these expensive cities, you will barely save any money.

[fshaikh]

I do understand the good & bad times stuff. There is no recession proof profession i think in todays world other than medical field. Everyone should try to make the money while they can. i also very well understand that those numbers are during good times, hey but you can always work in Manhattan and live in a lower cost area and commute from a place thats not as expensive (New Jersey maybe? )
Its easy to talk about medical field, but medical field is quite long , you shud target it when you are very young. Its not practical for some one making close to 100K to quit their job and go full time to medical school for 4-6 yrs with residency. Try calculating the ROI on that :)

[MidasCFA]

could anybody elaborate on how much you can expect to save a year living in newyork, say for a 100k starting salary+bonus? 40k?

assume renting a mid-priced apartment for oneself in or close to midtown manhattan.

[cofibreak]

I think the answer will be very subjective.
Here is an attempt at a rough estimate...
Excluding bonus for a few reasons: only declared/paid after 12-15 months; no guaranteed amount (for that matter, even salary is at risk on wall st!);

gross salary: 100,000
taxes and payroll deductions for health care etc: 35,000
401k/retirement plan savings: 10,000 - tax-deferred
rent and non-food expenses: 30,000-40,000 (rents range from $2000-3500 for 1 bedroom)
[sample link: http://newyork.craigslist.org/mnh/nfb/686011593.html] (http://newyork.craigslist.org/mnh/nfb/686011593.html%5D)
food/entertainment expenses: 10,000
travel/durables/education/misc: 5000

if you need a bigger space to live in midtown, be prepared to cut down on other things, else you may need to borrow from your friends till you get your bonus! -just kidding.

your actually expenses may be about 75-110 % of what is shown above.
if you live very tight, you could save over 20k per year in addition to 401k savings.
If you are an international student, feel free to send me an email/PM for more info.

[bigbadwolf]

The actual message had a range but anyway 5 yrs of experience and becoming a VP. 500k still seems to be a lot of money.

Don't just look at the raw numbers. As Andy has pointed out more than once, the cost of living in NYC (or London) is stratospheric. The only way to circumvent that is to add another three hours to one's commute time -- on top of a ten-hour workday. As for the title, it's meaningless: the finance world is bursting to the seams with VPs and directors. Job stress is very high. The hours are inhumanly long. The Damocles' sword of an uncertain future is ever over one's head. I'm convinced many quants would exchange their jobs for something else paying a fraction of their former salaries for a mix of fewer hours, less stress, and less uncertainty. Part of the problem is that new entrants are transfixed by the sight of the relative handful who are making several million a year -- not realising what an anomaly they really are.

Going into the medical profession makes more sense. Or becoming an actuary.

[MidasCFA]

Don't just look at the raw numbers. As Andy has pointed out more than once, the cost of living in NYC (or London) is stratospheric........Going into the medical profession makes more sense. Or becoming an actuary.

The picture you guys are painting here definitely seems like an overpessimistic one. If, afterall, the pay is so unsatisfactory compared to these other career options you mentioned, then why would we come for a MFE in the first place, besides the attractiveness of the intellectual challenges and then again the not so well regarded perception of dorkiness for being a quant as viewed by the rest of the street?

I mean its just kinda discouraging to hear all this from you guys for a would-be quant like myselrf. Seriously you are the role models of a lot of the more junior quantneters. We definitely don't want to end up in misery after forking over the 30k tuition fee.

"convinced many quants would exchange their jobs for something else paying a fraction of their former salaries for a mix of fewer hours, less stress, and less uncertainty."

thats just way too gloomy.

[MikeK]

MidasCFA--I think the point is that many people enter the FE programs thinking there is some sort of guarantee for $500k jobs, and that is obviously not the case. For many people, getting a $90k-$100k base salary is quite a step-up after completing the program, and it is probably the main attraction to these programs. You have a lot of engineers or comp-sci grads who were making $40k-$60k and see an opportunity in learning financial mathematics. Doing well, they can graduate from a masters program and earn twice that. After landing that first job, however, its up to each of them to prove themselves so they can command the $200k+ jobs.

And the hard reality is many of those graduates do not anticipate the reality of the Wall St jobs--long hours, stressful work environments, little job security. For some its worth it, for others its not. There are also less stressful jobs in quantitative finance, though they may not have as much upside earnings potential.

[bigbadwolf]

If, afterall, the pay is so unsatisfactory compared to these other career options you mentioned, then why would we come for a MFE in the first place, besides the attractiveness of the intellectual challenges and then again the not so well regarded perception of dorkiness for being a quant as viewed by the rest of the street?

I mean its just kinda discouraging to hear all this from you guys for a would-be quant like myselrf. Seriously you are the role models of a lot of the more junior quantneters. We definitely don't want to end up in misery after forking over the 30k tuition fee.

Would you rather hear a load of rosy-tinted exaggerations and misrepresentations? You've already got your MFE brochures and MFE professors feeding you overoptimistic nonsense (particularly at the second-tier schools). Quants would be doing you a disservice by parroting all that.

FE is a place where many are called but few are chosen. And from the ranks of the chosen, even fewer graduate to the ranks of the mega-earners. And those who don't become mega-earners have to ask themselves at some stage how long they can handle very long workdays, very high stress, and high job uncertainty. And look at the facts: 1) the financial industry is constantly in a state of flux and reorganisation, 2) at least some of the work will be outsourced to lower-cost destinations, and 3) MFEs are now being churned out faster than ever. The last two factors are going to exercise downward pressure on salaries and make the profession more competitive than ever before.

Yet having said this, I have to acknowledge there aren't that many other career opportunites out there. Engineers and physicists in the US and UK have been gravitating towards finance precisely because of the lack of viable career paths in their own specialities, or because the pay simply isn't enough to start a family or buy a house.

[alain]

The picture you guys are painting here definitely seems like an overpessimistic one. If, afterall, the pay is so unsatisfactory compared to these other career options you mentioned, then why would we come for a MFE in the first place, besides the attractiveness of the intellectual challenges and then again the not so well regarded perception of dorkiness for being a quant as viewed by the rest of the street?

I mean its just kinda discouraging to hear all this from you guys for a would-be quant like myselrf. Seriously you are the role models of a lot of the more junior quantneters. We definitely don't want to end up in misery after forking over the 30k tuition fee.

thats just way too gloomy.

If you don't like it, don't jump into it. It is plain and simple.

[MLBrandow]

alain,

For those of us who speak English.... :)

[MidasCFA]

alain, i did get to read the part about NBA players before it was deleted. the analogy was good so why? lol.


just thought that was funny.

[alain]

I was rambling (not enough sleep) but here is what I meant with the NBA analogy.

In US, a lot of kids are drawn to the NBA because of status and the money they can "potentially" earn. Hence a lot of kids play basketball but only very few of them make it into the NBA. However from the ones who make it into the NBA, only a handful make the big bucks.

You can say the same thing about Financial Engineering. People go into it in droves but only a few make it, and from those who are in the field, only a handful make the really big bucks.

[alain]

And by the way, the picture is gloomy but real. There is absolutely zero job security in this field.

I've been working in finance for 10 years and I have been through 4 or 5 mergers and various crisis (Russian Default, Internet Bubble, 9/11 and now the Sub-prime meltdown). In good times, there is no problems. In bad times, you don't know if you are going to have a job tomorrow.

Also, everybody is "spendable" for one reason or another. The moment you realize you are not spendable anymore, you don't want to work for somebody but for yourself. That'll be the moment when you are in the upper echelon.

[MidasCFA]

i really appreciate the invaluable lessons and experiences you guys so generously share.

two thumps up for the great work!

[fshaikh]

Dude,

This day and age their is job insecurity in every field. Finance still gives you the opportunity to make above average salaries compared to many other professions and doesnt have a ceiling or limit to what you can do. You dont have to be in finance to get layed off :) You can be a clerk at a metal plant and still loose your job if the plant shuts down.
Only downside of living in NYC is the high cost, add a little commute time and your fine. Every one work 9-10 hrs a day. I have a freaking corporate Engineering job that makes me work 9 hr days plus have 40 minute commute time. So add one more hour to my day and 2 more hours of commute in NYC and draw 500k. How does that sound ?
As a financial professional you can still be one of the richest paycheck slave out there :)

[Larry Bear]

I think it is very unrealistic to think that these high salaries will persist. First, the latest continuing crash has shown that derivatives pose serious risk to entire system, that derivatives of derivatives of derivatives of derivatives are not possible to model. They will need less people to model. Also, once acceptable models are built, they don't need you anymore.

Think: why should someone with no practical experience & very limited knowledge make $100,000 to start, when average salary of experienced person in the US is $40,000 and these people also have college degrees?

Like internet & other programming, and many technical tasks, a great many of these jobs will be moved to India soon, where a really well-trained engineer who is a whiz in math & programming will do this job for $10,000 per year at their manipulated exchange rate. This will shortly be followed by Red Chinese doing same job for $1,000 per year at their manipulated exchange rate (good pay there), and then for $200 per year by a Vietnamese. Anyone with minimal knowledge and a modem can design simple naive models.

People thinking about a career as a FE should rethink very carefully. Every school in US is offering FE degrees -- just like they offered Internet programming degrees 10 eyars ago. It's a simple way to make a lot of money and expand college. Most jobs left the country. There are thousands of unemployed or retrained programmers. One personal friend programmer is now working as an electrician's "helper" in the NY Subways. India has about 50,000 investment analysts who have taken jobs that Wall Street people used to do. Virtually all X-rays are read and interpreted in India now; most X-ray US technicians lost their jobs. Indian firms are now also writing legal documents for 10% of the cost of US lawyers.

At Columbia U in NYC you can get a degree or major in derivatives in the (1) business school, (2) engineering school, (3) mathematics school, (4) public administration school, and possibly more. I expect music school and theology will add a derivatives major soon to boost revenues. This proliferation is a bad sign.

I recommend learning a job involving the real world that can improve the physical lives of people. We need tornado-proof, earthquake-resistent houses, schools, hospitals etc. There are thousands of diseases to be cured. We don't need every cab driver, supermaket cashier to be writing derivatives or trading them from their iphone. Larry

[Poomrang]

Well, I don't think that the situation is so dark.. May be because modelisation is a technical field, then it can easily be outsourced to low cost countries (just like programming). But such jobs like risk manager or portfolio manager will always require local competences.

[cofibreak]

I think the picture is less grim than portrayed by the thread in general.

At a macro level, the picture is like countries like India and China are trying to catch up with the developed countries which are already at a summit. The vertical distance these countries cover is giving the impression that tremendous growth is happening at those parts of the world. While it is true, they still need the ropes tossed to them by those at the summit.

A tug at the top can make these countries slip a few yards. That is what we are seeing during this credit crisis.

Until all these countries complete this part of the vertical, there is enough work for those at the summit. While maintaining the height differential may not be easy, keeping the lead will require that much more effort and those at the top do realize it. It was not without reason the US and UK have remained the leaders for the last century.

Think of the larger picture. If you are good at what you do, the US/UK is your best chance you can make your mark. If you want to code for money and your heart is elsewhere, there is a larger issue and you are on the wrong forum.

[bigbadwolf]

I think it is very unrealistic to think that these high salaries will persist...

I concur with your post (but have snipped it out to save bandwidth). The only thing I wanted to add is that people thinking of entering the field shouldn't think of it as a "career": no-one knows what the area is going to look like even a few years down the road, let alone a decade or two. So when some pompous know-nothing professor solemnly assures an incoming class that they're making a transition to a "lucrative career," they should take that assertion with a bit of polite scepticism: it's not the prof's tenured academic sinecure that's on the line when he makes these irresponsible claims.

Twenty years ago, people thought skilled white-collar jobs like programming and engineering could never leave the country. Why this hubris concerning quant jobs? A quant is like every other worker: selling his labor for money. If employers can have the same work done cheaper elsewhere, they will. For instance, a bicycle manufacturing company shifted its plant from Ohio to Missouri because the wage rate was $10.50 an hour in the former compared to $8 an hour in the latter. A little later, the plant moved to Mexico, where the wages were $4 an hour, and two years later to China, where the wages were about $0.40 an hour. Now if this can happen to relatively low-paid jobs, why do people insist on deluding themselves that $100-200K jobs are somehow magically immune to the same process?

[Francis]

Considering the avg pay at hedge funds was over 700k a couple years ago 500k doesn't seem to out of ordinary for the experienced.

[MidasCFA]

I think the answer will be very subjective.
Here is an attempt at a rough estimate........
gross salary: 100k
taxes and payroll deductions for health care etc: 35k
401k/retirement plan savings: 10k - tax-deferred
rent and non-food expenses: 30k-40k (rents range from $2000-3500 for 1 bedroom)
food/entertainment expenses: 10k
travel/durables/education/misc: 5k
if you live very tight, you could save over 20k per year in addition to 401k savings.


At the risk of oversimplifying things, is it reasonable to say that even if you live very tight, the most you can end up saving is around 20% of your salary, regardless of how much you make, living around nyc?

or is it more like (20k + any excess salary over 100k). As the income level goes up, personal consumption may or may not increase as much in proportion, depending on your lifestyle, right?

[MLBrandow]

I concur with your post (but have snipped it out to save bandwidth). The only thing I wanted to add is that people thinking of entering the field shouldn't think of it as a "career": no-one knows what the area is going to look like even a few years down the road, let alone a decade or two. So when some pompous know-nothing professor solemnly assures an incoming class that they're making a transition to a "lucrative career," they should take that assertion with a bit of polite scepticism: it's not the prof's tenured academic sinecure that's on the line when he makes these irresponsible claims.

Twenty years ago, people thought skilled white-collar jobs like programming and engineering could never leave the country. Why this hubris concerning quant jobs? A quant is like every other worker: selling his labor for money. If employers can have the same work done cheaper elsewhere, they will. For instance, a bicycle manufacturing company shifted its plant from Ohio to Missouri because the wage rate was $10.50 an hour in the former compared to $8 an hour in the latter. A little later, the plant moved to Mexico, where the wages were $4 an hour, and two years later to China, where the wages were about $0.40 an hour. Now if this can happen to relatively low-paid jobs, why do people insist on deluding themselves that $100-200K jobs are somehow magically immune to the same process?

bigbadwolf,

Typically the education required to work in a bicycle manufacturing plant is slightly less than that required to work on wall street.

[cofibreak]

At the risk of oversimplifying things, is it reasonable to say that even if you live very tight, the most you can end up saving is around 20% of your salary, regardless of how much you make, living around nyc?

or is it more like (20k + any excess salary over 100k). As the income level goes up, personal consumption may or may not increase as much in proportion, depending on your lifestyle, right?

I think 20% is not like an upper limit on savings. If you make 175K, out of the additional 75K, you may be able to save another 20-40K, if you are very concerned about financial security. It will also matter where you put the savings. People have had their entire 401K balances wiped out.

It is all a matter of personal preferences. But the potential will be there to save substantially over 20K if a single person can make over 150K and has good control over the cash outflow.

[Andy]

The saving will not start until you pay off your student loan which can take years depending on how much you borrow. I know some who borrow upward to 80K for an MFE education.

[MidasCFA]

alain,
For those of us who speak English.... :)

bigbadwolf,
Typically the education required to work in a bicycle manufacturing plant is slightly less than that required to work on wall street.

MLBrandow,
your exacting approach to upholding the high and lofty standards of this forum is sure for the benefit of the entire community. And for that, we offer you the Award of Excellence in Correcting People's Mannerisms.
:D:dance:

[Schaum]

bigbadwolf,

Typically the education required to work in a bicycle manufacturing plant is slightly less than that required to work on wall street.



Well, as you may already know a great portion of MFE students ARE Chinese and Indian. And especially India being the service sectors choice of outsourcing, you cannot deny the possibility of these jobs going overseas. For your info IT jobs requires education too albeit not as much as a MFE. It probably won't happen overnight or in the next year, but there could very well be a big migration of these jobs in the future.

[bigbadwolf]

Well, as you may already know a great portion of MFE students ARE Chinese and Indian. And especially India being the service sectors choice of outsourcing, you cannot deny the possibility of these jobs going overseas. For your info IT jobs requires education too albeit not as much as a MFE. It probably won't happen overnight or in the next year, but there could very well be a big migration of these jobs in the future.

The only jobs we know will remain for sure (and which, incidentally, are predicted to increase) are those where physical proximity is essential: teachers, nurses, food preparation workers, beauticians. Probably include civil engineers as well. Most everyone who sells his labor for money -- skilled or unskilled -- is in jeopardy. Lester Thurow first pointed this out over ten years ago, in his book "The Future of Capitalism." On a related note, take a look at Brown and Hesketh's The Mismanagement of Talent (http://books.google.com/books?id=CJCEnNIP_4AC&dq=the+mismanagement+of+talent&pg=PP1&ots=PkfP4IKbs5&sig=SY4zXWUwInmM1IF9ufJrpsTPlx4&hl=en&prev=http://www.google.com/search%3Fhl%3Den%26q%3Dthe%2Bmismanagement%2Bof%2Btalent%26btnG%3DGoogle%2BSearch&sa=X&oi=print&ct=title&cad=one-book-with-thumbnail). (If you can get hold of the book, look particularly at chapter 9: The Great Training Robbery.)

[MidasCFA]

The only jobs we know will remain for sure (and which, incidentally, are predicted to increase) are those where physical proximity is essential: teachers, nurses, food preparation workers, beauticians. Probably include civil engineers as well. Most everyone who sells his labor for money -- skilled or unskilled -- is in jeopardy. Lester Thurow first pointed this out over ten years ago, in his book "The Future of Capitalism." On a related note, take a look at Brown and Hesketh's The Mismanagement of Talent (http://books.google.com/books?id=CJCEnNIP_4AC&dq=the+mismanagement+of+talent&pg=PP1&ots=PkfP4IKbs5&sig=SY4zXWUwInmM1IF9ufJrpsTPlx4&hl=en&prev=http://www.google.com/search%3Fhl%3Den%26q%3Dthe%2Bmismanagement%2Bof%2Btalent%26btnG%3DGoogle%2BSearch&sa=X&oi=print&ct=title&cad=one-book-with-thumbnail). (If you can get hold of the book, look particularly at chapter 9: The Great Training Robbery.)

bigbadwolf, its fascinating how knowledgeable you are about the markets and the economics literature.=D>

[MidasCFA]

Its because bigbadwolf is somethin like 50 years old and has spent more time observing the world than any one of us here.

do you guys all know each other in real life?

[bigbadwolf]

do you guys all know each other in real life?

It seems he knows me, though his identity is still shrouded in mystery.:) By the way, I forgot to add maintenance workers, plumbers and electricians to my list.

[Poomrang]

It seems he knows me, though his identity is still shrouded in mystery.:) By the way, I forgot to add maintenance workers, plumbers and electricians to my list.

you alos forget that history does not obey to linear approaches..

[fshaikh]

Hey Bigbadwolf : You seem very interesting by the way. I am curious what your educational back ground is and are you indian/chinese & work in the wallstreet if you still have your job. How did you come upon this great nick name " BIGBADWOLF"

[resfranzi]

i'm just amazed by this quant thing. let's say if you are an accountant or a lawyer, you help the society by trying to solve the basic human problem of selfishness(though it can't be solve completely) by maintaining trust. if you are a civil engineer, you help the society by building tall buildings which provide more space(30, 40 storeys as oppose to 1 storey) for use. if you are a mechanical engineer, you probably can help the society by building trains which save time. but what does quant do that deserve a high pay? what good does it do to society?

[cofibreak]

i'm just amazed by this quant thing. let's say if you are an accountant or a lawyer, you help the society by trying to solve the basic human problem of selfishness(though it can't be solve completely) by maintaining trust. if you are a civil engineer, you help the society by building tall buildings which provide more space(30, 40 storeys as oppose to 1 storey) for use. if you are a mechanical engineer, you probably can help the society by building trains which save time. but what does quant do that deserve a high pay? what good does it do to society?

are you in the wrong forum?! :)

seriously,
if doing good to the society is the main criteria, maybe teachers and counselors should be among those paid highest?

Also,
1. all quants do not get paid very high salaries.
2. there are areas where quants help shape the economy and the society, directly or indirectly.
3. ability to tell a computer -in unambiguous terms- to crunch numbers related to money in a precise and superfast fashion is a unique skill and deserves to be recognized and rewarded.

[alain]

...but what does quant do that deserve a high pay? what good does it do to society?

We are able to provide financing when there is no other way so business can keep going and new jobs can be created. We are able to minimize, understand and manage risks from asset portfolios including pension funds and retirement funds.

So, it my eyes, there is a huge contribution to society. The fact that you only hear of financial disasters but you don't hear from the successes doesn't mean that the contribution is not noticeable.

[alain]

... let's say if you are an accountant or a lawyer, you help the society by trying to solve the basic human problem of selfishness(though it can't be solve completely) by maintaining trust.

If you think a trial lawyer helps society, it means that you have never been sued in your life.

[IlyaKEightSix]

i'm just amazed by this quant thing. let's say if you are an accountant or a lawyer, you help the society by trying to solve the basic human problem of selfishness(though it can't be solve completely) by maintaining trust. if you are a civil engineer, you help the society by building tall buildings which provide more space(30, 40 storeys as oppose to 1 storey) for use. if you are a mechanical engineer, you probably can help the society by building trains which save time. but what does quant do that deserve a high pay? what good does it do to society?


If you want to be the model citizen, go and be a model citizen. If having some sort of "yay I'm a helper to society!" feeling is worth the loss of all of those potential dollars that you can reinvest in your own standard of living and building your own family in financial security, so be it. In fact, please do. Anyone that can be deterred from adding to the bazillions of people wanting to work in finance improves the chances of anyone that actually has a dream staked out there.

The way I see it is that Wall Street is a soulless place. You leave your soul, pick up your briefcase, and go to work. You return from work, put down your briefcase, and take your soul back.

In my opinion, I don't care how uncaring I have to be in my decisions, if I'm ever faced with a large financial decision that will always screw over some group of people.

Money isn't lost or made, it's simply transferred from one perception to another.

I'd rather be the perception that it's transferred to, rather than from. I don't care how well the guy next to me does. He's not me. And yes, I realize I'm the guy next to me for every other guy. It doesn't matter. Those that have the talent and the passion and the desire will reap the rewards, or so I hope in my case.

Now as an aside to foreign outsourcing, here's my stance. Remember that this is only my opinion drawn from my own experiences.

Basically, my thoughts can be summed up in the following way: mortgaging the future by outsourcing all labor and letting in massive amounts of foreign students completely screws over the American populace that have paid their tax dollars to Uncle Sam and command regular American salaries. If you wish to work in America, you should be a citizen with strong enough English to teach a class. Why does America have to provide the opportunity for everyone in the world at the cost of its own citizens?

As for how quants aid society--in order for quants to do well, their employers have to do well. In order for their employers (read: investment banks) to do well, their clients have to do well. When these end-clients do well, you get better managed retirement/pension funds, or more people with more money to play with (read: SPEND, thereby boosting CONSUMPTION, which is the main driving force of our GDP), and thereby GDP growth and so on.

Yes, it's trickle-down economics in some sense. But if people are making more money and there is prosperity, everyone wins. Anyone that can do financial optimization, therefore, goes a long way into shortening or preventing recessions, and also goes a long way into prolonging times of prosperity.

And that IMO is no less of a help to society than any other profession.

[alain]

Dude, you do have some issues.

You are an immigrant also so I really don't understand your claim that a person needs to be a citizen to go to an american school. There is a reason why those foreign students were accepted in first place. Probably it is because they are very good and the admission board in such schools deemed it right to accept them.

Maybe you should try to be a politician instead of a quant. You might get a lot of votes.

On the other hand, I do sense a lot of rethoric and anger in your words so, calm down.

[IlyaKEightSix]

Alain, thanks for that. I edited my post to summarize my thoughts. I don't know why those students are accepted, but the phrase I will always remember the most is:

"Ilya, the university is also a business. It's also in it for the money."

So yes, I am really angry at the educational system we have going. Extremely bitter in fact.

I believe that a person needs to be a citizen so they actually would have to live in the country in which they want to receive an education. Is that so much to ask?

As for a politician, no, I'd make a horrible one because I try to be as clear as I can be with my words such that there is no ambiguity. Politicians have to spew enough bullshit so everyone thinks the politician is saying what they want said politician to do.

I'm the exact opposite. I realize that most decisions are zero sum, and for every person that profits, there's someone out there that loses, and I'm secure in this fact.

[alain]

I believe that a person needs to be a citizen so they actually would have to live in the country in which they want to receive an education. Is that so much to ask?Actually it is.

You are in this country but chance since, as you have posted before, you came when you were really young. It means you didn't make the decision to come here, somebody else made it for you (for that you should be thankful to your parents even though you are not to happy with one of them). I'm sure you became a citizen long time ago but it was not your decision either. You were probably too young. Now you would like to restrict the chances of higher education to others that come here looking for a better life and opportunity? Think about that.

People come to this country for the opportunities so, why restrict them? American is for freedom and/or looking for the American dream and it should remain the same for anybody.

[Prateek Bhatia]

Nobody really makes a decision to become a citizen of a particular country. You are born into one by your own luck. That is why patriotism, like religion, is an absolutist notion and a dangerous one at that.

[IlyaKEightSix]

Yes, America theoretically is about freedom. The question is, how much freedom at the cost of our standard of living?

I honestly thought that better education would be the one ground that was the sanctuary from having your work outsourced.

I like operations research, I like optimization, probability and statistics, and finance. I realize I have to really brush up on my programming in order to put it together and so far have had poor experience with it, but I'm not even 22 yet and I guess I still have a little bit of time.

I'm researching the field of working as a quant since I want to continue to use my math and problem solving skills and create a lifestyle for myself in which I can build a family in financial security and provide for the people in my life I wish to provide for.

That's a bit of a fantasy if I have to compete with people willing to work for less than the cost of living in Philadelphia, let alone London/NYC don't you think?

About a year ago, I wrote in a class called Organizational Planning and Control (leadership class) that the way to avoid getting your job outsourced was to have a higher education in order to keep it, so that cheap labor could not replace quality skill and talent.

Was I wrong?

[maxrum]

Nobody really makes a decision to become a citizen of a particular country.

Why is that? I made it myself. As well as many naturalized American citizens did.

[Eugene Krel]

Ilya,

The "nativist" approach you are advocating has been proposed in this country time and again. It has also been rejected time and again. If skilled immigrants are refused jobs that they qualify for (or even more drastically, refused entrance to the country), the country is suddenly short on professionals in disciplines like engineering and medicine. Fewer engineers and doctors lead to a lower standard of living among the general populace. Moreover, those immigrants that are your competition for the highly skilled jobs (such as quant jobs) are not coming here to work for peanuts. Upon completion of their education here they expect to make at least as much as their qualification suggests they should make.

If you are worried about competing with someone who is willing to work for less than the cost of living in (insert city), then I have to ask exactly how these people live in those same cities. It is impossible to outsource everyone, and this is doubly so for high contact jobs such as those that quants hold. There are jobs out there that have very high security. These range from lower paying positions such as teaching to higher paying positions such as those found in medicine. The catch is that the starting pay for a teacher may be several times less than that for someone starting in finance and being a doctor is certainly not for everyone.

I also have to note that the actuarial profession has been ranked highly many times on desirability, stability, low stress and security (compensation is of course at the expense of some other factor such as stress). This is another option for you especially since you have some experience in the field. I am not suggesting that you give up on being a quant, but if you have reservations about the state of the job market, in terms of competition from people willing to do the job for significantly less than you are, then it is nonsensical to close doors on good employment opportunities.

Finally as Max mentioned, becoming a citizen is a choice left up to the individual (if not born in the country) unless the person is too young.

[Poirot]

"That is why patriotism, like religion, is an absolutist notion and a dangerous one at that. "

Ah, I respectfully disagree!

"Chauvinism" and "Fanaticism" are dangerous notions. "Patriotism" and "Religion", I would argue, are essential for the well being of a society.

[IlyaKEightSix]

Ilya,

The "nativist" approach you are advocating...

That really helped. I am definitely not worried about an immigrant coming into this country to capitalize on the American dream. Heck, I *AM* such an immigrant, and I *MYSELF* want to do this.

So to all of those that come from China, from India, from my own country of Russia (well, fine Ukraine, when it was PART of Russia =P), I say "bring it on". I believe that if I want it enough, I'll prove myself.

As for professors, doctors, engineers, and people that do things that make society run, I believe they are indispensable, and once again, some of my best professors are definitely immigrants.

It's just that I'm deathly afraid of that no matter how good I am (and let me be humble here, there are many talented people out there, some with a head start on me via family/programming since middle or high school), that my work could be outsourced.

As for being an actuary, I'm definitely not giving up on that. It's just that I wish to be utilized for the skills I have fun using. If there are actuarial firms that love engineers for their operations research and quantitative abilities, hopefully my people (me) can meet their people (them) and we can work something out.

I'm definitely not committing to any one career path right now, but right now, it's a toss up between a quantitative bent on investments (quant, hedge funds, etc...) or actuarial science. Before I found out about all of these opportunities in investments, I said "I WANT TO BE AN ACTUARY!" but was still unsure enough not to go to Temple University and instead to Lehigh (a great choice in retrospect). Now, I've found that there are other careers besides actuarial that encompass my desire to do quantitative work with financial analysis that would allow me to build a family in financial security while still having enough time in my life to enjoy the wealth I create.

Once again, thanks for the reassuring post!

[Andy]

Except Native Indians, doesn't everyone in this country has their root as an immigrant at some point?
How this thread becomes immigration, I have no idea but to get back to the topic, here is why quants are paid high salary.

Supply and demand. As more and more supply going in, salary will drop
Higher entry barrier (why doctors get paid more than factory workers)
It's financial industry. Almost everyone works there has higher salary than their counterparts doing the similar thing in other industry.
So on...

I have no problem sleeping at night because my job is not helping humanity as much as doctors or teachers ;)
I help provide liquidity to the financial market, and by arbitrage, I help investors to realize that they over/underpay the goods.

[doug reich]

I help provide liquidity to the financial market, and by arbitrage, I help investors to realize that they over/underpay the goods.

More than just that: as we have seen clearly since July of last year, you need liquidity for the rest of the economy to function properly. Without a place to raise investment capital, things come to a grinding halt. Whether you are considered a bottom-feeder (which I think is pretty accurate) is just a question of which cog you are in the larger financing machine.

[Prateek Bhatia]

Why is that? I made it myself. As well as many naturalized American citizens did.

I meant that when you are born, you become a citizen of a country without any choice of yours. The citizenship you get later on is of course your own doing and your own decision. And that sort of thing should be encouraged, rather than being inhibited (as was being insinuated in some posts. )

[IlyaKEightSix]

I have no problem sleeping at night because my job is not helping humanity as much as doctors or teachers ;)
I help provide liquidity to the financial market, and by arbitrage, I help investors to realize that they over/underpay the goods.

Well if you ever run out of energy to play the game yourself, Andy, go be a professor and pass on your knowledge. My algorithms professor was a quant working for Axioma at one point. I just regret I didn't catch onto the fact that aside from software development, finance is the biggest employer of programmers everywhere.

[maxrum]

why quants are paid high salary.

Supply and demand. As more and more supply going in, salary will drop

I don't think it's true. The higher salary aimed to insure proper level of quality. If quant makes a typo while coding something it can result in billions of losses for the bank. While if teacher makes typo on the board there will not be severe consequences to that. Therefore, quant takes more risk and has to be paid more.

[Andy]

Max,
I pray every night that you are right, BOSS.
The rule indicates that what goes up must come down but I have no problem with our salary being the exception to the rule ;)

[resfranzi]

it's not just some vague idea of humanity or model citizen that i care about. in every university degree that is being offered, there is certain problem that the professors are exploring and trying to help students to solve. and in so doing, the university contributes to the good of the society. but for fe/qf, the problem it is trying to solve is not so obvious, is it? some may say that fe improves market efficiency and helps create instruments to transfer risks. but is that too trivial a task to solve and one day may become automated or standardised?

[MikeK]

some may say that fe improves market efficiency and helps create instruments to transfer risks. but is that too trivial a task to solve and one day may become automated or standardised?

I'm sure there is a long-term need for financiers with mathematics and programming skills, though the academic focus will evolve over time.

If you want to talk about salary injustice, think of the best, most influential elementary school teacher you had growing up. Think of how much he/she inspired you, taught you, motivated you. Think of how you are now a better person in life because they helped you. Now, realize that Ben Affleck made more during bathroom breaks on the set of "Gigli" than they will make in their entire lifetime.

[IlyaKEightSix]

it's not just some vague idea of humanity or model citizen that i care about. in every university degree that is being offered, there is certain problem that the professors are exploring and trying to help students to solve. and in so doing, the university contributes to the good of the society. but for fe/qf, the problem it is trying to solve is not so obvious, is it? some may say that fe improves market efficiency and helps create instruments to transfer risks. but is that too trivial a task to solve and one day may become automated or standardised?

How about this: good financial engineering allows anyone to take risks or manage risks in any way they wish to. Say you want to hold a stock for one year but want to sell it for at least $35. You then buy a $35 American put option and wham, insured stocks. Now you can hold onto them for a year, and if they drop past 35, you can get out with $35 a share, and if they go higher than that, you make a profit once you pay off the option premium.

Say you wish to speculate on the fact that a new advertising strategy by google will make it go through the roof a year from now. You can buy naked calls, or even enter into forward contracts to do just that.

Financial engineering revolves around the fact that you take some basic building blocks, such as underlying assets and derivatives, and essentially create any sort of investment strategy for anyone on any agenda.

Remember:

Humans are generalists in consumption and specialists in production.
They have unlimited wants and limited resources.

You do not go wrong by putting more money in people's pockets.

If a civvy builds a new building, I won't give a ****.
If a bioE invents a cure for AIDS, I won't give a ****. (I don't have AIDS and hopefully never will)

Know why most engineers don't get paid jack **** compared to financiers? Because the problems they solve not a lot of people give a **** about.

If you're making people money, who doesn't like more money?

[maxrum]

The rule indicates that what goes up must come down but I have no problem with our salary being the exception to the rule ;)


Rule #1: No rules for quants :) ;)

[Ka Wai]

If product life cycle of quants repeats that of vehicle, it may tell us what will happen to quant salary.

Vehicles started out as luxurious items. Demand overwhelmed supply and privileged group were paying premium for cars to stand out from the crowd.

Ford then mass produced vehicles. Prices dropped and cars with similar qualities flooded the market. A bigger general public were now able to afford vehicles.

The privileged crowd felt underserved by the general model of vehicles. GM realized these markets and started manufacturing customized vehicles for vertical markets. At the end, we ended up with the bargain market for the general public and the customized/luxurious market for the high-end market.

I think it’s unavoidable to see quant salary drop before the quant markets diverge…

[doug reich]

Salaries in the finance industry have always been high, and will continue to be high. Have you seen investment bankers lately or in the last 200 years? Nobody is selling quant services to a "bargain" market, unless you're talking about mutual funds or index fund composition.

[bigbadwolf]

If product life cycle of quants repeats that of vehicle, it may tell us what will happen to quant salary.

...

The privileged crowd felt underserved by the general model of vehicles. GM realized these markets and started manufacturing customized vehicles for vertical markets. At the end, we ended up with the bargain market for the general public and the customized/luxurious market for the high-end market.

I think it’s unavoidable to see quant salary drop before the quant markets diverge…

I agree with your argument. The same phenomenon can be seen in the MBA market: there are MBAs from schools like Stanford and Wharton, who command a premium, and MBAs from Swampwater University, who have to take whatever they can get. The same will happen -- is happening -- with MFEs. Until and unless quants can organise themselves as a professional guild, like the American Medical Association, with their own professional standards and certification, and control who and how many can achieve chartered status.

MFE programs have sprouted up all over the place. There will be a deluge of would-be-quants. Columbia has admitted some of its alumni have started on as little as $45,000.

[Ka Wai]

...MFE programs have sprouted up all over the place. There will be a deluge of would-be-quants. Columbia has admitted some of its alumni have started on as little as $45,000.

Columbia probably should keep its students in the program than graduating them without job (or jobs with subpar conditions) and risk tarnishing the brand. I have strong impression that it is a school with very good students but a not so good career service...

[Andy]

It doesn't help that Columbia has many competing programs some with class size of 60+
Add very difficult year for the financial firms and you can start to see the effect on many of mass produced programs.

[chrisd]

MFE programs have sprouted up all over the place. There will be a deluge of would-be-quants. Columbia has admitted some of its alumni have started on as little as $45,000.

To be fair, we don't what the job was... maybe it was a bonus/equity heavy job at a start-up. Or maybe they're the high-minded sort and took a government job.

[bigbadwolf]

Or maybe they're the high-minded sort and took a government job.

You are joking, of course.

[Andy]

Look at the UMich salary stat file I posted on the other thread. Some of them got starting salary at $25K. UMich did add a footnote that the low salary are for students got jobs in Asia.
But still, it's not exactly the plan coming to UMich, paying 50K+ for tuition and get $25K job in HK, SG, is it?
Keep that in mind when you think there is a high correlation between high tuition fee and high starting salary. Or there is a correlation if any.

[chrisd]

You are joking, of course.
Sort of. I read somewhere (Wilmott, probably) that there were government quant jobs. The entire discussion was framed in the context of the state's inability to attract good quants, namely because they were low-paid. Hence, my inference.