Banks will struggle to fill top quant roles, says Danske Bank’s Andreasen

Jesper Andreasen, Copenhagen based head of quantitative analytics at Danske Bank, has warned of slipping educational standards creating a new generation of quants incapable of independent thought.

Andreasen complained that the standard of applicants for quant jobs has declined sharply since the subject’s heyday, and has pointed the finger at slipping educational standards.

He said the new generation of quants are incapable of independent thought, with education programmes doing little to encourage creative problem-solving. As a result, banks will be unable to adequately fill the top roles when it comes for the old guard to retire, he claims.

“Where is the next generation of quants? The standard of education has slipped quite generally. Fifteen years ago, there were a lot of very good candidates coming through. Now, the number of applicants has gone up, but the quality has noticeably decreased,” he says.

“Go to a quant conference, and you will struggle to find a speaker under 40. The current generation is going to have to work until they’re 70 years old, because they can’t hand off the top jobs to any of these muppets coming through.”

He claims to have been using the same questions in job interviews throughout his 15 years in the business, but says applicants now cannot answer questions they haven’t seen before, and lays the blame at the feet of the education system.

“I think the problem is due to fundamental flaws in our education system: it is like the current generation has been indoctrinated into not performing any independent thinking at all. In their small minds, knowledge and understanding can be skipped because the answer to any problem can be found on the internet or in some book. It is like a generation of kids that wouldn’t be able to do something sensible with a box of Lego without the building instructions.”

The comments have provoked an indignant reaction from some professors. Darrell Duffie, Dean Witter distinguished professor of finance, and Coulter family fellow, at the Graduate School of Business, Stanford University, in California, defends his graduates. “I would not propose a simple characterisation of this generation of students, or of all universities. Among Stanford students, there aren’t many ‘small minds’ or ‘muppets’. Moreover, we challenge them not only to understand the usual formulas and methodologies, but also to think creatively when faced with new types of problems,” he says.

Damiano Brigo, professor of finance at King’s College, London – and shortly to move to Imperial College, which runs one of the most popular quantitative finance master’s programmes – says it is more likely the problem lies in a kind of selection bias, with the best graduates preferring academia to banking.

“Saying that the best graduates in topology, theoretical physics, geometry, and so on are all incapable of thinking creatively and indoctrinated is unrealistic,” he says. “Can one write a PhD in topology or differential geometry without being able to think creatively? Possibly. Can this be true for most graduates? Very unlikely. So the real question is, why aren’t these candidates applying to banks? Are we sure that front-office jobs, with the crisis, are as attractive today as they were five years ago?”

It may be that the experience of Andreasen is not common to all quant teams. Vladimir Piterbarg, head of quantitative analytics at Barclays, says talent can be found if banks look hard enough. “I certainly think the new generation is still developing talented graduates,” he says.

“At Barclays, we have a great graduate recruitment programme, so we don’t need to rely on head-hunters for graduate recruitment. There are more applicants for sure, but there’s still the same number of really talented ones to choose from. So perhaps the density of quality candidates has gone down, but the talent is there to help solve the problems the subject needs to.”

 

This article was first published on Risk

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