The quant interview seeks to achieve 3 goals:
This site focuses on mastering #1. Once you have practiced enough, you should be able to answer 80%+ of our questions with relative ease. But before that, you should have some context around how the interview process works and a few things to consider along the way.
Dress one level more formal than employees of the firm. For investment banks, they typically wear a suit, so wear a suit and a tie. For quant trading firms, they typically wear jeans, so wear trousers and a button down shirt, maybe throw on a blazer. Check on the company's website for pictures of their employees in action. Tip: spend at least some time preparing for your interviews in a suit. If you aren't used to wearing a tie, it might trip you up during the real interview. You may also notice that wearing a blazer may constrict your movement while solving probability questions during the interview. Either consider taking it off or just practice with it on to get used to it.
The more hints you get, typically the worse you are doing. It is ok to get hints here and there especially in later rounds of interviews as the problems get harder and you are not really expected to solve them without hints.
These are usually very straightforward. Go over your background a bit. Answer a high level question or two about why you are interested in the firm. Be nice to them. If you are annoying or rude when dealing with the HR person, that will usually find its way to the hiring manager and you won't be hired. If you struggle too much setting up the webex or skype or whatever online assessment program, it could also go against you. If you are a descent person, you should be just fine.
For these coding challenges, you will be given 2-4 coding problems for you to solve on LeetCode or HackerRank. It will take anywhere from 1 hour to 3 hours depending on which problems they give you. These are going to be more standard computer science problems than quant problems. So they may be pushing you into more of a developer role at a financial services firm, which you may or may not necessarily want.
These are less formal and structured than what you will find in the coding challenge. You may be asked to just write pseudo code or solve less canned style questions that you would find in the coding challenges (which are not very creative in nature).
These are your more traditional IQ style, logical reasoning types of questions. These will include questions like visualizing how a strange shape is rotated and what the final picture will be. Or some GMAT styles questions of reading a generic business graph and drawing some conclusion. These have fallen out of style a bit, but should still be aware that you may encounter this. There will be very little if anything related to your understanding of quant or finance.
It is quite hard to gauge the enthusiasm of your interviewer over the phone. If you lose their attention, they may start playing games or read the news on their smart phone. All else equal, you should keep your answers shorter and solicit more feedback from the interviewer to make sure he or she is engaged.
This typically can involve quite a bit of work on the interviewee end, say 4 to 12 hours. We recommend that you actually do this yourself instead of consulting you friends. They will typically follow up the take home with another interview where they will ask fairly in-depth questions regarding what you did. It will likely show that you did not do 100% of the work.
So this could be a more firm wide more standardized test or an interviewer specific test. This can range from analyzing the output from some report, how a statistical analysis is conducted or more logic based games.
For those of you still at university, you maybe be asked by firms to present some project you are working on during you undergrad or masters. Again, we recommend that you know your topic and presentation inside out. Don't try to make things overly complicated, as your interviewers will know if you know what you are talking about or not. It comes off really poorly if you use a lot of jargon and terms that you have heard but don't really understand.
Some firms are now doing this, where they ask you a question and you have 30 seconds or so to think of a response and then they record you 2 minute response from your computer. Based on the job description, you should think about potential questions they may ask and practice answering them. Even if you don't get exactly the questions you practiced, your mind should be in the right place to tackle whatever they give to you.
This is typically the big day where you meet everyone on the team. For the big banks, there will be many of you in your exact same position. The day is long so be mentally prepared. Don't let it get you down if 1 or 2 interviews just go ok. Sometimes only really impressing the right person and doing ok with the others is good enough. Don't hesitate to go to the restroom, go get coffee, etc. The big thing here is to make sure you "vibe" well with each interviewer. If they are a fast talking trader type, then you will need to show some intensity. If they are more laid back PhD intellectual, you should reflect similarly. Be yourself, but we recommend you play towards your audience a bit. At the end of the day, by this stage they are not only judging whether or not you can solve their riddles, but also if they can actually picture themselves working with you.
This is many times the first question someone will ask you during an interview. The length of this answer depends on how long you have with the interviewer. If you have 1 hour with the interviewer, you could spend up to 10 minutes discussing this as the interviewer will likely start asking questions based on what you say. If you have 30 minutes, keep this to 3 minutes or so. But again, you need to assess how your interviewer is responding to your answer. Do they look bored? Are they the fast-talking trader that is only asking this out of formality and doesn't really care about your answer? You should also likely answer the next two questions at the end of your spiel: why this firm and why this position.
The idea here is to just show that you did a bit of research about the firm to which you are applying. If you go to their website and they say "meritocratic" and "competitive", then you should say how you relate to those company values. You should probably do a bit of research on who exactly are their competitors. Sometimes, they will ask why this firm and not that firm. Knowing the competitors and what the firm you are interviewing for does well will help you give a thoughtful answer
Again, this is just supposed to be your final point of your introduction about how your background, experiences and interests all align beautifully with the job at hand. Hopefully this will also clarify any potential discrepancies between what you initially expected from the role and what the role actually entails. Also, sometimes you may be interviewing for an undecided division/position until they know what they want to do with you. In this case, you need to either be very specific that you want "x" or you can be more broad and try to keep more windows open by saying how different divisions seem interesting to you.
You should do a bit of research for yourself to determine which subset of the financial services you want to work in. Broadly speaking you have the following choices below. The type of firm will determine to some extent what kind of quant work you likely will be doing, what skills you will learn from them, what your exit opportunities are from those types of firms and even where you likely will end up living (lots of prop trading in Chicago, lots of investment banking/hedge funds in NYC, lots of fintech in SF).
These types of firms make money by getting a fee based on the AUM they manage. These firms will have different funds to attract different types of clients. One big criteria will be alpha (beating the market) vs beta (following the market). Working on alpha generation will be more creative, more exciting, more pay and longer hours. You will learn all about the portfolio construction process, how to backtest strategies and how to trade those strategies. Working on the beta portfolio will likely be more about how to minimize tracking error, is the fund we are trading in line with the prospectus, how do we market the fund to attract new investors. Funds are also focus on different asset classes which will also impact the type of work you do. Is it a US equities fund, or emerging market credit fund, FX momentum fund or volatility fund? Here the thing to ask yourself is "do I enjoy a particular asset class more than another one". Some are more complex than others, some are stylish at the moment while others are less so, etc. So generally, your aim at one of these firms will likely be to eventually become a portfolio manager. Based on the market hours, it is much easier to do this role out of NYC or Chicago compared to San Francisco. Other channels you can explore at these firms are through the risk management side. They also typically have internal platforms that require analytics and modeling so that is another avenue.
So these firms take deposits, lend that money and maintain a treasury portfolio to meet short term liquidity needs. So as a quant you will work on those channels. So you can work on analyzing the deposits for the bank, how they are priced, how sticky they are. You can also work on the credit modeling for making different types of loans and the stress testing/CCAR component. And on the treasury side you will answer questions regarding the liquidity position of the bank, the capital plan, any asset liability management (ALM) issues. You can also work in the risk management functions for either credit risk or market risk. In a credit risk role, you may engage in hedging to reduce the bank's credit risk. Commercial banks are more sleepy than investment banks, so pay will typically be lower and more relax hours. A lot of people who have worked hard in investment banks will leave to commercial banks later in their career to "cash out" to make similar pay at a possibly higher level at more reasonable hours. It is much harder to go from commercial bank to investment bank generally speaking.
Consulting firms make money by charging clients a per hour or per project fee to help with anything that they need help with. Here the work will depend on what type of client you will be covering. Commercial banks hire consultants all the time for CCAR/DFAST/stress testing related work. Here you would work with the bank's internal team to help build, guide the development, and data work flow around these models. A lot of consulting quants also work in complex valuation divisions. This would entail pricing certain derivatives for accounting reasons or to help with their trading. And then another route could be more analytics in a more management consulting type of role. This would be less quant and more business intelligence, dashboard and market intelligence style of "quant". Consultants work fairly long hours as they need to deliver for their clients and the more hours you can bill for your firm the more money the consulting firm makes. Also, you may focus primarily on one client in which case you will know that firm inside out, and may very well become your future employer. Or you may get thrown into different projects at different firms where you will get more breadth in what you learn.
The types of roles here will be similar to that found at an asset management firm, though these endowments typically have much smaller staff and tend to outsource their investments to hedge funds, asset managers and private equity. Some of the particular issues you will face here are integrating all the reports you get from each manager to see how the endowment is performing as a whole. Are the fund managers you hired doing what they are supposed to be doing? Should you hire a new manager or fire an existing one based on poor results? Endowments may also engage in their own trading if they want to say hedge themselves so you may get involved with that as well.
The work found at as a quant at the pension funds will be similar to that found at an endowment, though endowments will be larger firms. This would then more be a matter of preference, though you have more options to transfer internally if you work at a bigger firm.
These firms make money by selling financial software, financial models, risk platforms or data feeds to clients. As a quant, you can get involved in different aspects, be it designing ETL processes, helping enhance models already in the system, helping with client service on the technical side, going on sales calls and being the point person for technical questions.
These firms are typically smaller, more volatile and have less rigorously defined job descriptions. Also, if you join early enough you should be granted a good amount of equity to make up for the risk you are taking. These firms as of late are focusing on peer-to-peer lending, payments processing, crypto currency and student loans. The quant roles here will likely be marketed as data scientist roles. You may be working on some sort of credit modeling, using analytics to help business analytics or some function within the treasury department.
The government plays a very important role in the financial services and you can find quant jobs within this sector. They will likely be more stringent on hiring US citizens but not always. The FED hires a lot of economics/finance PhDs so you would likely be supporting one if you are earlier in your career. The SEC monitors all the banks and there are roles in monitoring the economy, the banks and the markets. Of course, being a government role, the pay will be likely lower, hours shorter and much much more bureaucratic.
A lot of quants would say this is the holy grail of where you want to be. Hedge funds make money on the so called 2 and 20. First they raise money from pensions, endowments, high net worth individuals and charge their clients by taking 2% of the AUM and then 20% of the profits. However, given mixed performance over the years, this fee model has come down a bit. This is where the big bucks are, the stress is high, everyone is focused and you are working with very smart theoretical but also practical people. Here you will likely be developing strategies, backtesting them, refining them and then putting them into production. You will first work with a more senior quant trader/researcher before getting a nominal amount of capital to trade your own strategies. There are of course other quant roles at these firms, be it more on the developer side, the risk side or business analytics side.
You'll learn about "liability driven investing": managing a portfolio of assets (investing the premiums from selling insurance) with respect to your liabilities (what the firm is insuring). It can get quite complicated to model the liabilities. However, pay is typically lower than say your investment banks, but on the flip side competition is easier.
This is the very well trodden quant path. These are massive firms with typically well structured entry level, rotational style programs. You'll likely learn from some smart people, but work will probably not be super creative.
This is not the typical route for a quant, but these firms are certainly using analytics more and more. You will likely be working on the general infrastructure analytics for the firm, though private equity firms do purchase mortgages, rental homes and various types of debt which would require more quant valuation style work. You might find this enjoyable if you are quantitative but still enjoy doing a lot of business related work as it could be a good mix.
A lot of these prop firms are high frequency trading (HFT) market making firms. They are paid by exchanges to maintain liquidity in the market by posting bids and asks and "supporting" the stock. They also only trade their own capital and not clients money like a hedge fund. Here you will again backtest strategies. How do you decide where to put the bids and asks? How do you make changes to those as the market moves without putting the firm at risk but maximizing the spread you are taking? You can be making markets in different products ranging from equities (delta one products) to options (where you would post bids/asks for different underlying, with different tenors and different strike prices).
Here you'll learn about a lot of credit modeling. You can be developing new features for their core software platforms. Quant are also used on the more complex MBS style modeling. And which other industry deals with credit all the time and typically buy RMBS? Commercial banks. So there are good exit opportunities there.
VC has historically not been super technical/quant, but they are, like most firms in other industries, trying to leverage data to make better decisions. This could be interesting work trying to evaluate startups based on whatever metrics these firms can collect. At the end of the day, would be similar role as being a quant at a PE firm; just dealing with different types of firms. Most of these roles will be based out of San Francisco.
Broadly speaking, there are front-office, middle-office and back-office divisions and roles. Front offices makes all the money and gets all the glory and back office pushes all the paper around. Middle office roles will try to market themselves as front office to attract better talent, so keep an eye out for that and don't get duped! Some firms are more organized with what you will do/learn while others will be more flexible, so you should think about what fits your style and preferences best. Front office roles will be longer hours, more pay, more competitive and higher chance of getting fired and more stimulating work. If you get into these front office roles initially, you will have better chances to "cash out" to a more relaxed firm at a higher up position. Basically going from front office to back office is much easier than the reverse. Below are common types of roles you can read about to see what you are most interested in.
For many this is where you want to be. You are building automated trading strategies, backtesting them, torturing the data to get a strategy that can deliver alpha. This is a lot of work and you have to be very skeptical of your results and question everything. It does give you this satisfaction of generating an idea (though initially will be the ideas of more senior people), implementing and refining those ideas and then trading on those ideas. These strategies will vary from more grey-box (half human, half computer) driven strategies to purely black-box (100% automated) solutions. The markets are very efficient, so it takes lots of work to find alpha. But when you do, you are handsomely rewarded, both monetarily and for your soul. The main thing to avoid here is being an execution trader, as then you are just processing orders.
This is likely where you want to end up if you are making a career at an asset management firm. These are the guys who drive the investment decision at these firms using quant decision criteria. You are responsible for driving investment ideas, seeing whether those work or not and managing the day to day activities in the portfolio.
This is the classic quant role you will find at investment banks in the front office. You are working right along side the traders, supporting all decisions around modeling and making money for the bank. This is a great place to start your career. Depending on which desk you are on, you will learn all the ins and outs of that product. It is then a nice exit to work at a fund, prop trading firm or asset manager running a fund of the product you supported. This is more run on the fire drill mode, where everything is go go go as each day changes and you need to deliver. You likely won't have long term types of projects to work on as you are taking care of the day to day.
This is a catch all division/role for anything about applying data to improve some business process within a financial firm. There is probably going to be a good amount of flexibility of what you can learn, just make sure whatever you are doing analytics on will be transferable and you are building some sort of expertise in it. To get to more senior ranks, you'll start to gravitate a bit from the daily analytics to leading where the analytics need to go/be improved. And to lead these types of teams, you need to have deep understanding on what you are working on and be able to present those findings to even more senior management.
This is likely where you will need to start if you have a CS style background but want to pivot to a more quant research/quant trader/portfolio manager role. You likely won't have the stats or finance background required at that point so will have to learn that on your own through online classes or doing an MFE/master in stats style degree to fill the gaps. This is not going to be much different than being a developer at any other firm, just you are going to deal with finance data/topics which presumably you are interested in.
So these are roles you will find at hedge funds, asset manager or investment banks. You will be doing research and using quant methods in producing that research. At a hedge fund, you will be researching to build trading strategies. At an asset management firm, you will research on how to improve asset allocation or reduce risk in the portfolio. At investment banks, you will be helping doing research that will likely help other divisions within the bank make money or sell that research as sell side research.
This broadly includes: market, credit, counter-party, operational, enterprise and liquidity, and the type of work will depend on which subcategory you choose. Here you are well into the middle office land so expect more relaxed hours and lower pay than your front office counter parts. Lots of quants end up working in risk, so your hope is to become a head a risk division.
Investment banks and commercial banks will have all MRM teams. Not a super sexy career path, but competition will likely be easier than in other types of roles. You'll be given a few models to review within the bank, and then work back and forth with the model developers to understand why they made certain decisions. Are there things they could have done better? Are there any flaws that need to be corrected. You will then document all this is a report and then conduct annual reviews of models that have already passed.
This feature is still in beta and we are working on adding more quant roles in the financial services.
Work with 1 or 2 headhunters at first and as long as they can get you interviews, then there is no point is talking to any others. Headhunters will send you to 1 or 2 interviews to see how you do. If you do well, they will get you interviews at a bunch of places. If you don't do well, you will probably have to find another headhunter. Headhunters are paid by commission (a % of your first year salary, so 10k-30k per placement) and they need to maintain long term relationships with hiring managers in the financial services sector. Note that some headhunters post job openings on their websites, so check them out!
|Description||Impact on you|
|They want to place you|
|They want to get the highest salary possible|
|They would rather place you faster for lower salary than more slowly for a slightly higher salary|
|They likely value the relationship with the firm/hiring manager than their relationship with you|
|They may not work with you in the future if you do something stupid|
You should now have a fairly good lay of the land regarding the interview process, working with headhunters and the different types of firms/divisions/positions in the financial services industry.
Don't get discouraged if it takes you a while to get interviews. Don't get discouraged if you don't pass your first few interviews; consider these to be warmups. You may even go through an interview and feel like you got all the answers right but maybe the interviewer wasn't warming up to you. He or she could have had a rough morning on the trading desk, and is taking it out on you. Nothing you can do there, just move on. Also, remember that your average quant gets pulled away from his or her work for 45 minutes to interview you. They may likely have to stay later because of you so they may not be in the best of moods. Moreover, some will not be great interviewers. They aren't trained to interview, so why should they be good at it. They could be reusing questions that were asked to them at some point in their career without giving it too much thought. Don't come off desperate, things will eventually come in your favor.
Remember the interview is as much as an opportunity for you to interview the people at this potential firm. Could you imagine working with them? Were there people there with whom you could see yourself joking around with and being friends with? Do you like the culture of the firm? Make sure to gather as much information you can on whether or not you would actually join this firm if you were to get a solid offer.
Think of the interview as a heads up poker game. Sometimes luck isn't on your side. However, with practice you should be able to give yourself an edge. The name of the game is practice, practice, practice.Create a Free Account