Starting salaries jump for top quant grads

Quant Guide 2022: Goldman’s move to pay postgrads more is pushing up incomes, says programme director

Pay and bonuses are up again on Wall Street, against a backdrop of high inflation, record profits and a need to attract and retain talent. That extends to newly minted quantitative finance graduates, where a bidding war has broken out for the brightest and best.

This was the finding of Risk.net’s Quant Guide 2022. Across the top five programmes in the ranking, starting salaries for graduates stood at $118,246 – a rise of 3.4% on the previous year. Yet, across the 50 programmes featured in the guide, it was a tale of two halves. Those courses that fell outside the top 25 fared less well in terms of their graduates’ average salaries. For the alumni of courses outside the top 10, the drop in salary levels compared with 2021 was particularly significant. Mathematician Dan Stefanica, the director of the Master of Science in Financial Engineering programme at the City University of New York’s Baruch College – which took second place in the ranking and had the highest graduate salary of$126,983 – thinks earnings for graduates of the leading quant programmes are likely to climb even higher over the coming year.

“The banks are increasing salaries across the board,” he says. “Three of our students accepted offers from Morgan Stanley in August, with [a] $125,000 starting [salary]. Then, in December, they got an email saying: ‘Your base has been raised to$150,000.’” He adds that, on top of the overall increase in demand for graduates, Goldman Sachs’ decision to boost starting compensation will have had a ripple effect across the firm’s peers.

Stefanica notes that the large number of students who opted for deferred enrolment has led to a supply shortage for banks hungry to pick up new talent as the economic impact of Covid-19 begins to recede. Last year’s Quant Guide showed leading courses beset with deferrals, and fewer programmes chose to submit data for the ranking than is usually the case. US and UK programme directors in particular pointed to the impact of travel bans, which reduced student numbers in a subject where the proportion of international students is often more than 90%.

“Next year’s [salary] numbers will be for December 2021 graduates,” Stefanica says. “There will be great demand for talent, fewer students available and the effects of pandemic salary readjustments.”

However, he believes the year after next is likely to be less favourable: deferral students are now piling into quant programmes, as this year’s guide shows. Last year, the average intake for the 10 highest-scoring programmes was 52.9 – this year, the figure has jumped to 60.3, and class sizes in many of the top-ranked courses have expanded. When these students graduate, the supply of talent could outstrip demand.

High achievers

Although the highest-ranked programmes change from year to year, some courses have consistently posted high scores, which makes the top 10 useful for analysing trends. In last year’s top 10 – which comprised seven programmes from the US, two from Europe and one from Canada – the average salary for graduates was $109,888. In this year’s top 10, comprising eight US and two European programmes, the figure reached$112,094, amounting to an increase of 2%, or slightly more than $2,200 – a rise broadly in line with inflation. Risk.net asks universities to provide data on their students’ average salary six months after graduation, adjusted for purchasing power parity in accordance with the World Bank methodology. This statistic is all-important, and comprises 25% of a university’s score under the guide’s own methodology. However, the top 25 is dominated by schools on the east and west coasts of the US, where salaries and the cost of living tend to be higher. By contrast, the average remuneration for graduates of unranked programmes – those in the second half of the table – has fallen sharply, demonstrating a widening attainment gap between the two groups. The average salary for alumni of these programmes is$58,460 – just 12 months ago, the figure was considerably higher, at \$69,293.

As remuneration jumped for graduates of high-scoring courses, there were changes in programmes’ average employment rates, although these were less significant. The employment rate for the entire reporting population in 2021 was 86.4%. This year, it climbed slightly to 86.6%.

However, the number of programmes reporting 100% employment rates rose more sharply, with seven courses – at Princeton, Baruch, North Carolina State, Carnegie Mellon, ETH Zurich, Georgia Tech and the Technical University of Munich – hitting the golden figure, compared with five last year.

Nevertheless, only 25 courses achieved employment rates of 90% and above, compared with 31 last year. Two programmes in each year declined to submit employment figures, although this year’s guide features one more programme than it did in 2021.

More pronounced changes can be seen in the key metric of average class sizes. This statistic – read in conjunction with the student-to-lecturer ratio – provides a sense of the classroom experience, and of the level of individual attention a student might expect to receive from instructors. Last year, the average class size across the top 10 was 50.8 – this year, it climbed to 52.6.

Of the programmes that appeared in the top 10 in both guides, some performed better than others in terms of class sizes: Baruch’s Master of Science in Financial Engineering cut its class size from 21 to 17; and Imperial College London’s MSc in Mathematics and Finance reduced its own from 55 to 52. By contrast, the class size at Columbia’s MS in Financial Engineering swelled from 85 students to 133, while classes at Princeton’s top-ranked programme expanded from 20 to 30.

Although smaller classes are considered better for students than crowded lectures, assessing a programme’s overall student intake can provide a useful indicator of the course’s general health and its popularity among applicants – and higher intakes tend to lead to busier classes.

Editing by Daniel Blackburn

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