How much am I worth? Senior Quants Analyst (Head of Team), US Bank

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A panel of specialist headhunters give their assessment of typical pay packages.

Salary of Senior Quants Analyst (Head of Team), US Bank: 100,000 - 160,000, total package 300,000 - 600,000

The world of the quant is academic and highly analytical, characterised by giant brains, not giant personalities.

Quants analysts almost invariably have a first class academic background, typically in maths and most have postgraduate qualifications and even PhDs.

Their job is to value stocks, bonds or whatever it is they are analysing. But whereas an equities analyst, say, will arrive at an opinion of the value of a particular stock, by qualitative means, such as talking to the management team and evaluating the corporate strategy, quants look entirely at statistics.

They create complex computer models, into which they feed a range of data, almost entirely historical, and come up with a valuation based on that. They are looking for correlations between a variety of internal and external factors, like sales, profits, debt, interest rates, currency fluctuations, market share, share price etc. to see whether a company is correctly valued - and predict what might happen next.

Simon Miles, a consultant at the headhunter Longbridge, said "You can't get in and learn on the job, you have to arrive with a very strong understanding of mathematics." Most quants, he said, arrive in their mid 20s and stay within the quant world - although a few move into trading, because they can make more money there after four or five years.

Mark Horlock, also a Longbridge consultant, explains that the skill of a good quant lies in two areas: creating or perfecting the valuation model first and then deciphering the information that is regurgitated at the other end.

Different banks, and indeed different fund managers, place different emphasis on quantitative analysis. Some banks, such as Nomura and UBS Warburg, have very large quant capabilities and market some of their products externally to the buy side.

Assessing the effectiveness of a quant analyst, isn't an exact science, said Jonathan Swannell a consultant with headhunter Alexander Mann.

The way in which they make money for their employers is primarily by contributing to the effectiveness of various trading desks. "How closely you work with the business will be one of the measures of performance. If you are an interest rate derivatives quant and you make a very direct contribution to the head of interest rate derivatives, that will affect your bonus," he said.

Demand for quants tends to mirror market activity. In current market conditions, equity derivatives are relatively slow, so demand for quants in that area is slack, but it is higher in interest rate markets.

Overall, however, quants inhabit a small and specialised world. "It's not a big market," said Swannell. "Even in a relatively large team, you probably only have a handful of genuine quants. The rest are IT people or implementors."

Figures and commentary for How much am I worth? are provided by the following firms: Alexander Mann, Longbridge and Odgers Ray & Berndtson