What is a Financial Quantitative Analyst?

A financial quantitative analyst will provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

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What does a Financial Quantitative Analyst do?

Financial quantitative analysts typically do the following:

  • Recommend individual investments and collections of investments, which are known as portfolios
  • Evaluate current and historical data
  • Study economic and business trends
  • Study a company's financial statements and analyze commodity prices, sales, costs, expenses, and tax rates to determine a company's value by projecting the company's future earnings
  • Meet with company officials to gain better insight into the company's prospects and management
  • Prepare written reports
  • Meet with investors to explain recommendations

Financial analysts evaluate investment opportunities. They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. They are also called securities analysts and investment analysts. Financial analysts can be divided into two categories: buy side analysts and sell side analysts.

  • Buy side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations with large endowments, such as some universities.
  • Sell side analysts advise financial services sales agents who sell stocks, bonds, and other investments.

Some analysts work for the business media and are impartial, falling into neither the buy side nor the sell side. Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product. For example, an analyst may focus on a subject area such as the energy industry, a world region such as Eastern Europe, or the foreign exchange market. They must understand how new regulations, policies, and political and economic trends may affect investments. Investing is becoming more global, and some financial analysts specialize in a particular country or region. Companies want those financial analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover.

What does it take to be a Financial Quantitative Analyst?

Financial analysts typically must have a bachelor’s degree, but a master’s degree is required for advanced positions. Many positions require a bachelor's degree in a related field, such as accounting, business administration, economics, finance, or statistics. Employers often require a master's in business administration (MBA) or a master's degree in finance. Knowledge of options pricing, bond valuation, and risk management are important.

Financial quantitative analysts typically start by specializing in a specific investment field. As they gain experience, they can become portfolio managers, who supervise a team of analysts and select the mix of investments for the company’s portfolio. They can also become fund managers, who manage large investment portfolios for individual investors. A master’s degree in finance or business administration can improve an analyst’s chances of advancing to one of these positions.

Financial quantitative analysts must process a range of information in finding profitable investments. Financial analysts must explain their recommendations to clients in clear language that clients can easily understand. Financial analysts must provide a recommendation to buy, hold, or sell a security. Fund managers must make split-second trading decisions. They must pay attention to details when reviewing possible investments as small facts may have large implications for the health of an investment. Financial analysts use mathematical skills when estimating the value of financial securities. Financial analysts must be adept at using software packages to analyze financial data, see trends, create portfolios, and make forecasts.

To be successful, financial quantitative analysts must be motivated to seek out obscure information that may be important to the investment. Many work independently and must have self-confidence in their judgment.

What is the workplace of a Financial Quantitative Analyst like?

Financial Analysts work primarily in offices. Most work full time, and many work more than 40 hours per week. They travel frequently to visit companies or potential investors, and face deadline pressure. Much of their research must be done after office hours because their days are filled with telephone calls and meetings. Many financial analysts work at large financial institutions based in New York City or other major financial centers. In 2010, about 46 percent of financial analysts worked in finance and insurance industries. They worked primarily for security and commodity brokerages, banks and credit institutions, and insurance carriers. Others worked throughout private industry and for government.

How much does a Financial Quantitative Analyst earn?

The median annual wage of financial analysts was $74,350 in May 2010. The lowest 10 percent earned less than $44,490, and the top 10 percent earned more than $141,700. Financial analysts often work more than 40 hours a week. In fact, almost one-third of full-time analysts usually work between 50 and 70 hours a week.

Learn more about being a Financial Quantitative Analyst