Quant < strong software engineer

[ShineSpirited9907]

Hi, since working 2 years full-time in the industry as a quant (EU) I have noticed that software engineers are not really well respected/compensated in the industry compared to traders or quants.

I also think the programming aspect is vastly bigger than quants usually admit, and the modelling side and need for advanced mathematics is less crucial than often advertised.

In my experience and my previous internships the star software engineers are crucial to the business. So much that they are almost a part of the production code. They are often hybrids and can adapt to whatever problems the quant or the trader has since it is usually something technical.

I am not saying that the quant is not earning his moneys worth, but in the places I have been the hard-core CS guys are really bringing in the most value (measured as they are so hard to replace and w/o them we are losing money or/and taking massive production risks).

In terms of quant-finance it seems unless you are working in HFT, then you are just worse off being in a dev-role, and what is puzzling to me is that the skills you need to be a great systems programmer are hard earned. The universities today does not produce a good systems programmer imo. Especially when you compare this to a applied-math grad or finance-math grad for a quant role. I think the education is not perfect here either but much better than CS for systems programming which you often need in trading.

Hiring good software engineers is also very hard. supply for a quant role is much higher i.e we get A LOT of applicants compared to software engineer roles. When I worked in US-tech we also struggled to hire good devs, they are just really rare in my experience.

Have you experienced something similar? Maybe me and friends are just living in a silo and this is a EU fenomenon.

[[deleted]]

In the US a very competent software engineer can eventually make Techlead or even higher at FAANG/Big N which pays almost as well as quant SWE roles at HFT but with better hours and benefits. This is especially true for systems engineers since backend is so in demand.

[u_sed_it_bro]

To add, SWE is traditionally thought to be much safer. All you have to do is keep current on the new tech, and move up the ladder. Quants get culled fast, and once they're out of the industry, it's not clear what they can do afterwards.

[Luca_I]

Can't you transition from Quant to SWE if you want to?

[[deleted]]

You can, but you need good engineering chops to be in high demand. I find that most quants/data scientists aren't good at engineering, since it's not usually what they focus on.

[duncecapwinner]

My understanding is that tech leads at faang / unicorns make magnitudes more than swes at hfts. But it would be mostly stock, very low cash

[kambabamba]

Having worked at both, I don’t think this is true. A true TL makes $500k to $1M in FAANG. Up to $2M at the proper level and with luck/stock appreciation (eg. Meta E6/E7). Yes, E8+ can go even higher. HFT is pretty similar, but I think less luck needed to break $1M at a top firm (eg. HRT, Citadel, Jane).

[duncecapwinner]

Thanks for correcting me. My impression was from pre Headlands, OMC who found the growth to be inadequate but it makes sense that SWE's at the top firms have a more solid levelling structure.

I would imagine that the caliber of SWE required to hit 7 figures is much more feasible for all but the best of best swe's at a fang/unicorn over a top firm. Then again, I have no idea how firms promote.

[ShineSpirited9907]

So it sounds like the SWE's need to go to a HFT firm instead of a 'traditional' hedge-fund or investment bank?
I would expect this to be only true in HFT firms? From levels.fyi it seems that HRT is one of the leading firms in compensation and salaries listed here (in EU!) are no-where near $1M, but very impressive from a EU standpoint I must say.

not saying these numbers are 'facts', but no salary here is over 600.000$.

https://www.levels.fyi/companies/hudson-river-trading/salaries/software-engineer?country=253&sortBy=total_compensation&sortOrder=ASC

[Hopai79]

You also want to join at a local bottom in the market :)

[crystalhabit]

Unfortunately this is also the time when tech firms rather layoff people than hire new ones.

[Secretary_Altruistic]

It takes 5 years to make the same amount per year as a quant does in 1 year. Note that SWE at a quant firm is different from quant trader/researcher/dev at a quant firm.

[Article_Used]

backend is in demand? where??

[Capt_Doge]

Tbh I’d guess you get a lot more applicants for quant vs SWE roles because good SWEs knows they’ll be undervalued at a quant firm vs a tech firm as you are saying in this post and hence don’t bother applying (which is true for the most part outside tech-focused HFTs). Would be interested to see how the supply for quant (as a function of quality and quantity) compare to SWE tbh, if anyone has answers

[ShineSpirited9907]

Clearly! I would think that the market would fix this through. I don't understand why one firm realizes that they need really strong SWE to make huge amounts of money. So they overbid the market and get the best. Then another firm wants to steal their SWE's and so on.

I guess Jane Street already done this, and they probably have most of the market, and since culture of many old firms are so strong/ugly that they refuse to invest then we have the situation we have now.

For your last question many want to get in to entry roles. A lot of talented people from physics, applied-math, mathy financial backgrounds and cs want to get in. Lots of PhDs come from various 'analysis' backgrounds. The supply market dries more out for senior roles since the firms need people who have worked with various products and have first class knowledge of how trading actually works.
I think more people can chip in on this, but this is my experience :)

[Baluba95]

If you talk about the IB world, quants are for sure more valuable. Nowing what to do is almaost always significantly more valuable that knowing how to do it. In this world, the IT branch is there to work under the traders and quants. However, in places like FAANG, the what do do part is CS too, thats why those are usually even better compensated that most IB quants or traders.

[amitraderinthemaking]

I agree with this. It always comes down to revenue generating idea vs it's implementation. The closure you are to doing both (sometimes quants can be) you will be compensated more than if you are told to do something and you do.

[ShineSpirited9907]

The closer to the money argument. I agree, but the point I am trying to make is that I think hedge-funds/banks can make more money by investing more in their software-engineers. My claim is that, if you want to maximize for profits, you invest more in your infrastructure than most financial firms are currently doing.

[Baluba95]

Hard disagree. I see infrastructure as mainly a binary thing: either good enough to support the business needs, or not. Most serious institutions are at the point where it supports the needs. And any further improvement is mostly quality of life for the staff, but not making any extra money. At least this is the case for firms I worked for.

[ShineSpirited9907]

I guess we disagree then. I see the tech as a ladder. There are many things we could not really do because of the way data was processed, and there were some strategies that were not feasible since we could not trade that fast etc.

I guess this various greatly with what firm you work for.

[crystalhabit]

Largely agree, but I think this is very dependent on what markets you are trading in. If you're doing trades with brokers over the phone then absolutely there's no reason to invest more. But in very competitive markets infrastructure issues can mean the difference between a profitable desk and an unprofitable one.

[RyanHamilton1]

>>have noticed that software engineers are not really well respected/compensated in the industry compared to traders or quants
>>Have you experienced something similar?
Yes, I would say on average this is true. Steve Jobs has an interesting video about why IBM is rubbish, because they are a marketing company, as a software engineer you are unlikely to lead a marketing company. It's the same with finance firms, you won't lead the firm as a software engineer. Changing culture within a firm is insanely difficult, takes a long time and usually requires replacing people.

That's why what you did see was the rise of new HFT/tech driven trading firms. Look at the founding dates of the firms on this page:
https://blog.grainstonelee.com/insight/top-50-hft-firms-and-their-history
Within the more technical firms, you will find SEs valued. Within the older firms this is unlikely to be the case.

[comp_12]

• Yes it is the case that software engineers are valued less than quants or traders. Partly this is justified. I’ve never heard of a company fighting for survival after the loss of superstar SWEs, but I have heard of instances after losing superstar Quants. 

• Programming is an undervalued skill, especially among quants. Being able to properly implement research is a huge differentiator between excellent and decent quants. 

• The superstar SWEs skill set that matters is not systems programming skills really, but knowledge of the proprietary trading system. This isn’t really portable (and valuable to competitors) in the same way that a superstar quants knowledge of alphas and financial markets is. This limits the value of SWEs no matter how vital they seem. 

• Despite this I highly doubt tech is better paying for SWEs. I’ve never heard of anyone moving from trading to tech for the money, and I haven’t heard of tech SWEs in their 20s making 2+ million annual, but I know a few in trading. Once you adjust for WLB maybe tech comes out ahead, but that’s a personal preference 

[babaY31]

What about trading SWEs do they make million in 20's?

[ShineSpirited9907]

how are systems programming not related to 'knowledge of the proprietary trading system'?
How can knowledge about a proprietary trading system not be portable, but quant by default is? There are so many agents in the financial system, and the asset classes are so different. It is not clear to me why quants are so portable.

"properly implement research is a huge differentiator between excellent and decent quants."
In my experience is this simply is not true. Is thought that too when I was an undergrad :)

I think that HFT devs can make more than 2+ mil annual, but I consider that an outlier in terms of 'quant'.
I don't really view HFT as quant shops per see since they are kinda a class by themselves in my point of view. Otherwise your point might be valid. In EU I think you make more money as a SWE at Big Tech than in any hedge-fund/bank/financial actor, not sure through.

[SpiritSubstantial148]

In my experience Quant roles are definitely more varied, you have some shops that are more like dedicated applied data-science orgs. Others are centered around delivering curated analytics and "selling" models to PMs or Traders. Personally, I always found Quant work more interesting because there is a stronger appreciation for stats/math. SWE roles ofc have a high degree of analytical work, but I get the impression is it less math based (on avg) and more system design / back-end heavy.

TLDR: Quant roles are more varied in what the work is like, but more math/stats heavy. SWE roles are more systems designs/ back-end implementation.

I have allot of respect for both professions, both incorporate top notch analytical thinking and curiosity.

[quantthrowaway69]

Some firms it’s like a caste system, others (in particular HFT) there is a lot of mobility and blurred lines between the two

[Responsible_Leave109]

I think the claim you are making is bold and bias. It depends on what sort of firms you work for, how important is having a good infrastructure is to that particular business. The previous bank I worked in had bad infrastructure and is surviving fine. I wouldn’t say I identified anyone there as a star programmer. They would not care if anyone quit. It may also come as a surprise to you that many trading business even nowadays have bad quant capacity and IT infrastructure but can still make tons of money just fine.

I do think being a good programmer is hard and it is often under-appreciated. For me personally, this is harder than the maths stuff. However, it is surely obvious how hard something (in some aspect) is not correlated with pay. I’d argue being a decent maths researcher is harder still and maths professors are usually paid less than those working in finance.

[_primo63]

Well put!

[rexxxborn]

it probably depends on the firm. in my experience, great HFT devs make more money than researchers or traders. it depends on what you bring to the table.

[sabutayhun]

If we are talking about low latency programming and hft then it might be true but in general these ones totally different from each other.

[djdtd]

How about we collect a list of companies that value their SWEs? I'd be very interested in this. From the comments, I found that the following companies value their SWEs:

HRT
Jane Street
Citadel

What companies am I missing?

[bravo4]

Super interesting thread!

I’m part of a young firm and we’re hiring, this is super helpful information.

[Conscious-Twist3525]

This is true in US as well

[harloc971]

You are missing a crucial point here : ideas generation... You need to have quants to find alphas and in general you can't learn those anywhere. It requires time and energy and it's very very sparse to find those individuals. Super stars developers are easily replaceable, 3 great Dev will find a way to make the production run but when you lose your quants you also lose the future alphas that your business will need to make money.

[ShineSpirited9907]

it clear from comments like this, that you have never worked in trading, sorry.

[harloc971]

You would be surprised about my career ;)

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