FAQ

What is quantitative finance?

Quantitative finance is math, statistics, and computer science applied to finance. [Video]

What is financial engineering?

Financial engineering is the construction and deconstruction (engineering) of derivative products. For example, options can be built using a combination (construction) of the underlying asset and bonds. Financial engineers can also deconstruct options into parts which are then sold.

Financial engineering is a specific area under quantitative finance. It uses math, statistics, and computer science applied to finance to construct or deconstruct financial products.

Buy Side vs Sell Side

The buy side means those who buy and sell assets (investing). The buy side consists of hedge funds, wealth management, HFT, and trading firms.

The sell side consists of those who create assets to sell (banking and financial services). The sell side consists mainly of banks who create loans, stocks, bonds, and derivatives.

Do you really need a Masters degree?

In countries with developed financial markets, a masters is a bare minimum. The amount of education needed to start an entry level position is at a mastery level. Even when masters students are hired, there is a lot of on the job training required. Many firms will not explicitly train new employees, so it is up to the employee to learn and become valuable to the firm. Those who do not learn enough are often let go within the first year or two. PhD students also have a lot to learn on the job.

In global finance hub cities, the competition for quant jobs is high. With this high competition, companies can be choosy about the requirements. Remember time is money and training employees is an expense. It is far more cost effective to training Masters and PhD students then to train undergraduate students who have much more to learn.

Do I need to be physically located in the US?

Yes! The jobs in quantitative finance pay well and there is a lot of competition in the US as well as other financial hubs around the world (though the US typically pays much better). The majority of quants in the US are actually from other countries. The best of the best from around the world come to the US for a graduate degree because it is the easiest way to get a job in the US. You can also think about this from the perspective of hiring. If you have 100 applicants for a job and 75 are in the US, why would you go through the extra work to bring someone over seas? There are also rules in the US which encourage companies to hire US citizens. Overall the education here prepares students just as good as other places so it rarely makes sense to bring in internationally located talent.