Finance is meant to meet the needs of today’s modern economies, but at times it comes with a certain level of risk that most companies are unable to handle. In order for businesses to make complex decisions such as hedge funds, investments, and private equity, they need to hire individuals who understand these things well.
A quantitative financial analyst, or “quant”, is a professional specialist who makes use of math as well as statistical methods on financial and management risk problems. Their work is to develop and implement complex methods that firms can use to make sound business decisions on issues dealing with pricing and investments.
They must, therefore, have strong abilities in statistics, math, data analysis, data mining, programming skills, and extensive financial knowledge. These skills help them in transforming raw statistical data into smart strategic decisions.
Reasons to Consider Hiring a Quantitative Financial Analyst for Your Business.
For Front Office Quantitative Analysis
A front office quantitative financial analyst’s job is to sell and trade securities. Their role in the company is to identify trades that are profitable, manage the risks, and develop pricing strategies. Before electronic trading took off, quantitative analysts worked separately from the desk traders, but now they are one and the same thing.
Ultimately, if you are doing any trading in the stock market, then this is an important position to have in your company, and you should consider hiring a quant immediately. Their primary focus is to develop great and profitable opportunities that run efficiently for the good of the company.
Now, beyond working with the numbers, they are able to familiarize themselves with a company and offer excellent ideas on how to make decisions that increase the profit levels. A good one should also have high-tech computer skills.
For Risk Management Purposes
Risk Management is another field that needs a quantitative analyst. This area has grown greatly in demand, and it has been perceived as extremely important since the 2008 financial crisis.
Most companies have been taking risks that are not proportional to their returns for many years, and the scariest thing about this is having to lose their company to bad investments. In the wake of a crisis, companies will tend to commit themselves to new strategies, but they do not have to get here if they have a quant in the payroll.
A quantitative analyst fine tunes the risk management practices of a company so they can continue working towards the big profits without having to expose themselves to losses.
Risk management involves developing models that keep the risk factor in check for the company. They conduct stress tests with the aim of identifying worthy causes and checking whether the company can withstand a financial crisis.
A quantitative analyst should test old as well as new models that may have been developed by other sources. This encompasses almost everything the company may have done before and is planning to do in the future.
What Skills Should They Have?
They must first be experts with numbers. Their career does not allow anyone who struggles with math. Even being above average will not suffice. You must be able to outshine everyone in terms of numbers and be a math whiz.
A good one should also have excellent computer skills and be able to work with various software packages that deal with finance. The current trend is towards high-frequency trading, as well as electronic-based algorithms.
This is because of the aspect of trading in the job role. An analyst should also be able to develop algorithms that can spot great trades before the competition.
Although they should essentially have finance skills, they should be able work across various departments of the company, and they must be disproportionately be concentrated in management as well to aid in decision making.
They do require plenty of working hours in order to understand the company and its core values as a whole. You must hire someone with an excellent work ethic, and they must be hardworking and quick on their feet.
The demand for quants has grown greatly in recent times, and it will only keep growing. This is mostly due to the constant changes in innovative ideas, and over the past couple of decades, the world of securities has become more and more complex.
Specialists who can understand these mathematical models are usually behind the security pricing in order to generate profits help to reduce the risks of making loses in these investments. The growth in automated trading systems and hedge funds has also greatly impacted the need for quants in today’s society.
If your company deals mostly on stocks and trading, then this is a position that is paramount for the overall success of the business. If you are planning to venture into this area, you should also consider pursuing a role as a quant!