Quantitative Finance and Investments

A significant drop-off in FSA recipients occurs between Health & Group and Quantitative Finance and investment; in fact, this third most popular track has fewer than half the amount of passers as health and group, and less than a quarter of the amount of Life and Annuity passers. Quantitative Finance and Investments (henceforth QFI) offers one of the most unique paths for an actuary, as these specialists effectively forego insurance and consulting to assume the role of a quantitative financial analyst (henceforth quant), a position that typically requires a masters or PhD in Financial Engineering. The type of work given to a QFI actuary and a quant may differ slightly, however, because actuaries tend to have a risk-management focus allowing them to focus on the risk of a firms potential investments, whereas a typical quant will focus more on developing general investment strategy with a greater focus on return than risk. Due to the nature of each career, much of this post’s description of QFI actuaries’ professions will overlap with the quant career path; just keep in mind that the two positions function very similarly except that quants typically create a promising investment plan and QFI actuaries analyze its risk to ensure that the company will not go bankrupt if something goes awry.

Long hours, high pay, and mathematically rigorous work succinctly define the quant profession. Similar to any other Wall Street financial analyst, quants work “as long as needed,” with the typical minimum work-week lying in the upper-forty hours range, and the maximum reaching eighty hours. Some solace for the strained work-life balance comes in the form of immediate compensation and soaring career prospects. Beyond the nearly six-figure average starting salary, with a couple years of experience, quants average about $130000 annually and they still lie fairly low on the “totem pole”. Quants have limitless growth potential within a company as analysts often set sights on a C-suite position, with CFO and CEO being far from unattainable for especially successful financial engineers and developers. Further, if a quant has a proven ability to predict markets and grow a company, other firms have the ability to “poach” the analyst and put him/her in a higher position; the current company would then have the opportunity to counter both salary-wise and position-wise to keep quant. Hypotheticals aside, any job in the quantitative finance profession involves rigorous mathematical and programming work, hence the necessity of a masters or PhD in quantitation or computer science.

Diving briefly into the path for a QFI actuary: candidates for this track must also take three written exams, two of length five hours, one of length 2-2.5 hours. The first two exams cover introductory and advanced Quantitative Finance (respectively), while the last exam covers the candidate’s choice of Risk Management for Investment or Enterprise Risk Management. As with all other tracks, QFI candidates must take the Enterprise Risk Management Module; however, QFI has two modules unique to itself in Financial Modeling and Financial Reporting (whose names define their contents fairly accurately).