The rivalry for talent in quantitative research is extremely competitive, and banks are finding that the promise of a large pay check is no longer enough to lure the brightest quantitative minds. As more quantitative analysts leave the financial sector in search of more innovative opportunities, many banks have come to the realization that it is time for a change. If banks want to attract and retain the top quant talent, they need to be more creative with what they can offer.
The Rise of the Quant
Quants talent is in high demand; not only by banks looking to make the most of their data, but also by hedge funds, fintech companies, and tech firms.
In an article featured in the Wall Street Journal, Luke Ellis, CEO of Man Group, explained just how fierce the competition has become: “Google is trying to hoover up every data scientist in the world. Google has got more money than I have. I can’t compete with Google just on that.”
So What Do Quants Want?
While quants may be able to command a high salary, that does not mean they are all driven solely by compensation.
For quants looking to progress their career, banks are not always the most tempting option. Even though the days when investment banking was full of aggressive traders are behind us, most banks still lack the academic research opportunities that other companies can offer to quants.
In contrast, many tech giants not only have the innovative, creative appeal that many quants are drawn towards, but they also are fully engaged with academia. Google, Microsoft and Facebook, for example, all churn out a large number of research papers every year, which is not common in banks.
However, in order to compete, some banks and hedge funds are starting to pitch themselves as research centers where employees are able to work as a team to solve problems and publish original research.
Man Group, for example, financially backs a quantitative research laboratory at Oxford University. Since they are eager to tap into quants’ preference for a more collaborative work culture, the hedge fund has also made its trading data accessible to the public. Man Group is just one company thinking more creatively about how to attract and retain quant talent, and many others are testing similar strategies.
If the Price is Right…
While not necessarily top of a quant candidate’s wish list, salary remains a fundamental part of any employer’s offer.
With the right experience and a good Masters or PhD, quants can earn in the region of $150,000 to $200,000 from the start of their career. According to some sources, tech giants also front-load pay to their top quants, giving them $150,000 to $200,000 in stock over five years – thus making it much harder for those employees to go elsewhere.
With banks and hedge funds often paying their traders double these figures, they have to rethink the allocation of salaries across the organization. It has been reported that some quants on Wall Street feel that they are ‘second-class citizens’ compared to investment bankers or hedge fund managers, due to the difference in compensation. This perception needs to change if banks hope to be an employer of choice for quant candidates in the future.
The Battle for Quant Talent
The nature of quant work is challenging. It uses a complex blend of math, finance and IT to generate profits and reduce risk. Top talent will have years of rigorous study and experience under their belts. It stands to reason that the environment in which they do this should also be as challenging, motivating and inspiring.
But this means that banks are faced with a quandary: how to create a culture that is desirable to quants?
The starting point is to create an environment that is more conducive to supporting the research quants wish to pursue. In the same way Google used to encourage employees to spend 20% of their time on their own passions – for quants, the solutions they are building are more motivation than a large paycheck. Giving them time to explore and invest in their research may help with retention efforts.
Google may have cancelled its policy, but other firms are finding similar policies are working for them. LinkedIn, Apple and Microsoft each have their own versions, offering employees the chance to work on their own projects and ideas, an opportunity that is enticing for quant talent.
Other firms need to follow suit and make their own adjustments – not only to their recruitment strategies but to their wider company culture and values as well.
To learn more about strategies for attracting and retaining top quant talent, get in touch with Selby Jennings today.
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