With the demand on Wall Street for fresh talent to create automated trading strategies and code algorithms still surging, on-campus recruiting has become critical for capital markets firms looking to scoop up the next generation of quants. Facing a host of new regulations, financial services companies more than ever are relying on quantitative professionals and their tools to strengthen risk management and solve problems like Big Data, as well as to uncover alpha.
To scout for the best and the brightest math, computer science, and quantitative finance or financial engineering students, each year Wall Street firms descend on recruiting events at college campuses. "We are definitely concentrating more time and effort in going out to the campuses," comments Unson Allen, VP and global head of recruiting at Knight Capital Group, who started a mentoring program within Knight's electronic trading group for quantitative strategists.
Allen is based in the firm's Santa Clara office, which is conveniently located near the University of California at Berkeley and Stanford. "We want to be on the cutting edge of technology and quant strategies, and we want students to know that Knight is there," she says.
Though recruiters tend to target the big name schools, they also keep a close eye on some schools you may not have heard about previously. Knight's Allen says her top 10 quant schools include the University of Illinois at Urbana Champaign, the University of Maryland at College Park and S.U.N.Y. Stony Brook on Long Island, all of which are known for their computer science departments.
Is Supply Greater Than Demand?
But is the demand for quants increasing fast enough to keep up with the growing supply? Or are schools looking to capitalize on the quant trend churning out too many candidates with master's degrees in computational finance and financial engineering than Wall Street can actually absorb?
Though hardly scientific, it's reasonable to assume that the largest sell-side electronic trading groups -- Morgan Stanley, Goldman Sachs, J.P. Morgan -- are hiring more quant graduates than smaller hedge funds and asset management firms. In Knight's case, as the firm's electronic trading business has grown, it has expanded across asset classes and geographies, adding strategies for foreign exchange, fixed income, options and international equities, according to Allen, and a number of the firm's new quantitative hires support that expansion, she says.
"In order to be successful, we need to hire more quants and add more strategies," asserts Allen, who notes that she began visiting and actively recruiting from the quant schools about three years ago. For the past two years, Knight has looked to hire anywhere between 15 to 20 quantitative strategists, Allen continues. But in the past two months, that number has gone up. "With our firm exploding as it has been, we're realizing there is an untapped market for these schools."
But there are signs that quant hiring is slowing this year compared to the past two years. In 2010 and 2011 New York University's Courant Institute had no problem placing as many as 99 percent of its quant students within three months of their graduation, says Petter Kolm, director of NYU Courant's master program in mathematics in finance. But just a little more than 85 percent of this year's class was placed as of April 2012, marking the first decline in placement figures since the financial crisis years of 2008 and 2009, when the placement rate was just 75 percent, notes Kolm.
To help its students find jobs in what is shaping up to be a more challenging job market, NYU Courant hires adjunct professors who work in quantitative finance at Wall Street firms. "They not only teach but share the real practitioner models," Kolm explains. The program also offers career advice and workshops on resume writing and how to prepare for interviews, which is all tailored for geeks who may not have a natural proclivity for schmoozing with executives.
"While the academic side is important, networking is absolutely critical in today's market," insists Kolm. "If you are going to be a successful quant today, it's not just grades that count -- it's who you know that counts."
[Thanks to electronic markets, high-speed trading and intelligent algorithms, today's buy-side trader must evolve to survive.]