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Do you need a PhD to be a quant in banking?

Entry level pay for finance quants with a Bachelor's, a Masters and a PhD

Should you bother getting a Masters qualification if you want to be a quant in the financial services industry? Maybe. But if you really want to make a difference to your entry-level pay, you'll need to achieve a PhD. 

So say compensation figures six months after graduation for mathematics graduates from the London School of Economics (LSE). LSE mathematics students have the option of taking a Bachelors in mathematics and economics, a Masters in applicable or financial mathematics, or a PhD in mathematics.

All LSE mathematics cohorts go into banking or hedge funds (although PhD students also have a tendency to teach). But only the PhD students earn a lot more than the rest from the outset.  

For the most recent graduating class, LSE's 161 mathematics bachelor's graduates with jobs earned a median salary of £29.9k ($36.5k). Its 86 masters graduates with jobs earned a median of £30k. And its 10 PhD graduates earned a median of £39.5k. 

So, only a PhD really moves the dial on compensation.

This might be because the longer you stay in education the more chance you have of skipping quant jobs in banks and going straight to the higher paid jobs in tech firms or on the buy-side.

The LSE's quants with bachelor's degrees got jobs with the Big Four accounting firms, plus places like Bank of America, Barclays, Citi, Credit Suisse, Goldman Sachs, JPMorgan and Jefferies. Credit Suisse alone took six, Deloitte took nine, and Deutsche Bank took four of its bachelors graduates last year.

The LSE's quant graduates with Masters degrees also got jobs with banks like JPMorgan, but more turned up on the buy-side at places like Blackrock or Brevan Howard. And the graduates with mathematical PhDs mostly went into academia, with one also going to hedge fund Cantab Capital Partners (a subsidiary of GAM Systematic holdings which paid its 59 employees an average of £240k in 2018 according to company accounts) and another going to Amazon.

Notably, the LSE's pay figures suggest you can earn more doing a Masters qualification in finance (entry level pay of £42k) or economics (entry level pay of £34k) than in mathematics. Some of the school's best paid recent graduates have studied the Masters in Finance and private equity, and command entry level salaries of £45k, reflecting the fact that being a quant is not always the most remunerative career path

Photo by Samuel Zeller on Unsplash

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AUTHORSarah Butcher Global Editor

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