Richard Wilson is a hedge fund consultant, author of two books on hedge funds, The Hedge Fund Blog Book and Rainmaker, and the founder and publisher of one of the most visited websites covering the hedge fund industry. This is Part II of our recent interview with Richard on the state of the Hedge Fund Industry.
How would you say the hedge fund career path has changed in the last year or two?
In the last year it has become even more competitive. There are more people out there looking for hedge fund jobs. There are more people with hedge fund experience, which hedge funds probably prefer.
And so with the increased competition, I see more people also applying for jobs with service providers. These people are open to getting their initial experience through a hedge fund service provider. I think people understand that if they can become specialized in hedge fund trading, or hedge fund auditing or accounting, they can take those skills into an individual hedge fund. So I think that’s one way the career path may be changing for people.
Service providers are growing in size. Many hedge funds are built on the business model that they have the strategy and make the trading decisions. But beyond that, almost everything else gets outsourced. Because of that model, service providers are continuing to grow as least as fast as hedge funds. That, combined with a more competitive job market, makes it more attractive for individuals to work for a service provider at first instead of a hedge fund.
Any words of advice for hedge fund job seekers?
I would say that while it’s a really competitive industry, and everybody is very busy, if you can figure out exactly what you want to do, and be sure of that, and move in a concerted effort towards that one goal, and if you’re passionate enough about it and willing to work hard, then nothing’s going to stop you and you’re going to get where you want to go.
The worst thing you could do is say, “Well, I’m going to try for these four things, and hopefully one of them will work out and pay well.” People can sense that psychologically when they talk to you. Or they can sense that in the work you’ve done in preparing for an interview. The number one thing that can be applied to anyone in any position is, if you want to be a hedge fund manager, or if you want to work for a hedge fund auditing firm, figure out what they look for, get that experience somehow, read as much as you can, speak to as many people as you can, and just focus on that one goal and you’ll get there.
It takes hard work. I grew up in Oregon and went to Oregon State University. And I’m working in the industry. I didn’t go to Harvard for my degree. I didn’t grow up in Manhattan. I didn’t have a lot of things going for me. So it doesn’t matter whether you’re from Wyoming or Texas or Florida. If you really want to get into the industry, then eventually you will. Especially if you try hard enough and just keep your efforts focused on exactly what you want and do not compromise.
How can someone get a leg up on the competition for a hedge fund job?
There are 10 different benefits that we spell out on the Chartered Hedge Fund Associate (CHA) Designation website but it really comes down to three or four core benefits.
One of the main benefits is the most intangible. Many people come to the industry with trading backgrounds or a marketing background. But it’s rare that somebody comes to the industry who has learned all of the different facets of what’s going on. Many times people will even start a hedge fund without that broad experience. We have hedge fund managers taking the certification program. That’s because even if you’re running the hedge fund, you still don’t know all of the things about the hedge fund industry that would make you the most effective manager.
For example, there’s the manager of a $50 million hedge fund who is part of the program. A manager of a $5 million hedge fund just signed up for the program a few months ago. These managers joined because they are experts at trading, but they don’t know as much about funds of hedge funds and they need to if they want to start to marketing to them. They don’t know much about hedge fund strategies, what their competitors are offering, or even how an institutional investor or high net worth investor or wealth management firm would classify their own investment strategy.
So I think that one of the main benefits – just getting up to speed on all the diverse areas of the industry that are going to make you more effective in your networking, or more knowledgeable on the job if you are looking for a job.
Having an in-depth understanding of how hedge funds work gives you a competitive advantage in your hedge fund job search. You can craft your resume and experience towards particular jobs allowing you to network more efficiently. And you may not waste time in a job for a year-and-a-half before realizing that there is another area of the industry that would be a much better fit for your skills.
Many people also take the certification program because there just aren’t many classes on hedge funds out there, and you can’t get a formal degree in hedge fund management. There are very few options for distance learning on the hedge fund industry. That’s one of the reasons we have participants from as far away as the UK, Hong Kong and Singapore, India, across the U.S. and a few different places in Europe.
Note: Registration for our second class opens on January 15, 2009. We only have 200 slots available and they do fill up fast.