Last Updated on January 31, 2022
The financial world has become increasingly complex thanks to technology, globalization, and advanced analytics, and that complexity means there’s more data to track and analyze. Finance may not be a hard science yet, but it’s getting there. Quantitative finance (also known as financial mathematics or mathematical finance) is an area of finance in which intricate mathematical models are used to predict markets, set prices, generate profits, and reduce risk. The professionals in this space are known as quantitative analysts, or, more simply, quants (if you’re into the whole brevity thing).
They’re the intellectual elite of finance. They’re in demand, and their salaries reflect that. Becoming one of them requires a unique mix of mathematics, finance, and computer science skills. Some people become quants with MBAs in quantitative finance, master’s degrees in finance with a quantitative finance specialization, or postgraduate certificates in quantitative finance. The best way to join the ranks of the quants, however, may be to earn a Master of Science in Quantitative Finance (MSQF).
How much will you earn with a master’s in quantitative finance? There’s no way to give a definite answer because so many factors play a role in a professional’s earning potential. What we can do is look at salary trends for quants, the kinds of roles MSQF holders typically fill, and things you can do to increase your earnings over time.
In this article, we’ll cover the following:
- What is a master’s in quantitative finance?
- What will you study in a quantitative finance master’s program?
- Where can you earn a master’s in quantitative finance?
- What jobs can you get with a quantitative finance master’s degree?
- What will you earn with a master’s in quantitative finance?
- How much will you earn with a master’s in quantitative finance?
What is a master’s in quantitative finance?
To answer this question, we have to look at naming conventions first. A master’s in quantitative finance is usually offered by the university’s school of business or mathematics department and can actually be one of any number of degrees, including:
- Master of Science in Quantitative Finance
- Master of Quantitative Finance
- Master of Science in Quantitative Financial Economics
- Master of Science in Computational Finance
- Master of Science in Mathematical Finance
- Master of Science in Financial Mathematics
- Master of Science in Financial Engineering
Some quant programs are very focused on derivatives pricing, while some spend more credit hours on data science and machine learning. Some spend a lot of time on theory, while others have curricula firmly rooted in real-world case studies. In general, the MSQF is more of an applied mathematics program, in contrast to financial engineering master’s degrees, which spend more time on finance theory and business principles. However, skimming degree names is no substitute for reading program requirements. In this article, we’ll look specifically at Master of Science in Quantitative Finance programs, but you should check out as many relevant master’s degree programs as possible before choosing your path to quanthood.
Don’t make the mistake, however, of assuming that a master’s in quantitative finance will be all you need to become a quant. Having this degree is not necessarily a one-way ticket to a high-paying quantitative trading role at a hedge fund. An MSQF may be sufficient if “you can demonstrate superior analytical and software abilities, exceptional insights into the financial markets, successful live trading track record, or all of the above,” says Ernest Chan, a capital manager and Cornell University PhD in theoretical physics. However, “If you don’t possess one or more of the above qualities, your competition will be hordes of PhDs in physics, math, CS, engineering, and finance.”
What will you study in a quantitative finance master’s program?
Every quantitative finance master’s degree program is a little different, but most include coursework in investment theory, mathematical modeling, and data science. Some have a programming component or offer programming as an elective. MSQF students take classes like:
- Algorithmic Trading
- Asset Pricing
- Computational Expertise in R and Python
- Credit Risk Modeling
- Data Science and Machine Learning
- Financial Econometrics and Statistics
- Financial Institutions & Markets
- Financial Modeling
- Object-Oriented Programming
- Options, Futures, and Other Derivatives
- Portfolio Theory and Management
- Risk Management
- Stochastic Mathematics
Many colleges and universities offer a generalized quantitative finance degree, but at some schools, students have the option of choosing a concentration or area of specialization like:
- Algorithmic trading
- Analytics and research
- Asset management
- Financial computing
- Quantitative analytics
- Risk management
If you’re serious about making money as a quant, look for programs that:
- Give students opportunities to network with industry insiders
- Help students land internships at top companies
- Offer opportunities for hands-on practice through projects and simulated trading platforms
- Have stellar job placement rates and high post-graduate salaries
You’ll earn more with a master’s in quantitative finance if you choose an MSQF program with a reputation for placing students in high-paying positions at banks and brokerages.
Where can you earn a master’s in quantitative finance?
There’s no regulating organization that accredits graduate programs in quantitative finance, but the International Association for Quantitative Finance (IAQF) does maintain a useful list of quantitative finance degree programs. On the IAQF website, you can compare MSQF programs to related mathematical finance degrees at different colleges and universities. Some of the best master’s in quantitative finance programs can be found at:
- Columbia University
- Fordham University
- Georgia Institute of Technology (Main Campus)
- New York University
- North Carolina State University at Raleigh
- Rensselaer Polytechnic Institute
- Rutgers University – Newark
- Stony Brook University
- University of Chicago
- University of Minnesota – Twin Cities
- University of Washington
What jobs can you get with a quantitative finance master’s degree?
Quants come in three flavors: front-office quants, mid-office quants, and back-office quants. Front-office quants are out on the floor with the salespeople and traders. They develop price-setting models, support the development of risk strategies, and spot new investment opportunities. They also tend to be the highest-paid MSQF graduates. Mid-office quants assess different assets and markets for risk, keeping traders and sales reps in check. Back-office quants develop complex mathematical models used to program automated electronic trading platforms.
MSQF graduates work in investment banks, commercial banks, accounting firms, and brokerages in roles like:
This job title is used to describe professionals who work in many areas of quantitative finance. If you become a quantitative researcher, you might model risk, develop and evaluate investment strategies, price new financial products, or work in automated trading. The average quantitative researcher salary is about $100,000.
These quants use math and modeling to make trading more efficient by improving trading protocols and strategies. Companies use their findings to make data-driven decisions about investments, risk management, and pricing. The average quantitative analyst salary is about $84,000.
Quantitative risk analyst
In this role, you’ll be responsible for analyzing large data sets and time series and applying machine-learning algorithms to keep risk manageable. You’ll also use analyses to support model validations. The average quantitative risk analyst salary is about $93,000.
These quantitative finance professionals create mathematical models, trading strategies, and software tools that drive trading decisions at banks and investment firms. The average quantitative trading strategist salary is about $100,000.
In this role, quants are responsible for developing comprehensive, data-backed investment strategies that turn making money into a science. The average investment manager salary is about $99,000.
Quantitative model developer
These quant engineers develop and maintain quant models used for analysis, pricing, and risk management. Coding is a big part of this quant specialty, and developers are paid more than some other quants. The average quantitative model developer salary is about $133,207.
What will you earn with a master’s in quantitative finance?
Quants tend to be high-earners, so you may find it surprising that PayScale reports the average salary for a professional with a master’s in quantitative finance is just $78,000. The reality is that the highest-paid quants work for hedge funds and trading firms, and the competition for those jobs is fierce. Having a master’s degree probably won’t be enough to land you one of the hot jobs.
Sure, there are $250,000+ jobs out there for quants, but getting the “right” degree or specialty certifications like the CFA Institute’s Certificate in Quantitative Finance won’t necessarily do much to help you land one of them. How much you can earn with a master’s in quantitative finance will depend on whether you have experience at top tech or finance firms and what skills you have nurtured over time in your past positions.
It’s worth considering that your earning potential may also depend on how much you can earn for the company you work for, which means that if you’re amazing at what you do, you could earn a lot more than the figures above.
How much will you earn with a master’s in quantitative finance?
If you’re looking at this degree because you’re interested in finance and you want to earn big bucks, think carefully before sending out applications. There are plenty of less technical and less competitive roles in finance that pay more. A master’s degree in quantitative finance won’t turn you into a standout quant if you don’t have a head for abstract mathematics, a knack for finding answers to tricky questions, and the patience and single-mindedness required to spend your days working with columns of numbers and computer code. Human interaction? What’s that?
The people who get the most out of this degree are the ones who have a single-minded passion for math programming, not finance. They aren’t in it for the money, either. It’s a nice perk, but if it’s your only driver for getting an MSQF, you may end up disappointed.
In a Quora thread about what it’s like to be a quant, Joseph Wang had this to say: “The compensation has gone down over the last few years as bonuses have been replaced by base salary, but it’s slightly higher than in the other tech industries. You, however, will feel more poor than you have ever felt. When you are in a room full of people who make more than $1M/year, and you make $150K, you feel really, really, really poor.”
It’s hyperbole, sure, but if you have broad skills and interests and want to make top dollar, there are many areas of finance you should explore before settling on a quant degree.