What is a Financial Quantitative Analyst?
A Financial Quantitative Analyst is a specialized type of Financial Analyst. Also known as: Quant, Financial Quant Analyst, Quantitative Financial Analyst, Quantative Research Analyst, Quantitative Analyst.
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A financial quantitative analyst will provide guidance to businesses and individuals making investment decisions. They evaluate investment opportunities and assess the performance of stocks, bonds, and other types of investments.
How to Become a Financial Quantitative Analyst
What does a Financial Quantitative Analyst do?
Financial quantitative analysts must process a range of information in finding profitable investments. They must explain their recommendations to clients in clear language that clients can easily understand, and must provide a recommendation to buy, hold, or sell a security. Fund managers must make split-second trading decisions, paying attention to details when reviewing possible investments, as small facts may have large implications for the health of an investment.
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 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 quantitative analysts generally focus on trends affecting a specific industry, geographical region, or type of product. Investing is becoming more global, and 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. Companies want analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover. They must understand how new regulations, policies, and political and economic trends may affect investments.
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How to become a Financial Quantitative Analyst
Financial quantitative analysts must have at minimum 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.
What is the workplace of a Financial Quantitative Analyst like?
Financial quantitative analysts work primarily for security and commodity brokerages, banks and credit institutions, and insurance carriers. Others work throughout private industry and for government. They work primarily in offices, work full time, and many work more than 40 hours per week. Much of their research must be done after office hours because their days are filled with telephone calls and meetings. They travel frequently to visit companies or potential investors, and face quite a bit of deadline pressure.