Prime Consulting International (www.pci-search.com) is Stewart Koenig’s NY/CT-area recruiting shop. He recruits technology professionals into the financial world, doing up to 50% of his business with hedge funds.
Tell us about your firm.
The focus is the capital markets arena, both buy side and sell side firms. Hedge funds make up about 30-50% of our client base at any given time. Our functional areas are IT and risk management, from the most senior levels down to support positions.
The hallmark of our candidates is their in-depth understanding of the business, in combination with strong technical skills. We also have a fairly good depth in quantitative developers, again with strong business knowledge, which made our transition into Risk Management fairly easy.
And your geographic coverage?
We are in Westchester, right between NYC and Greenwich, CT. Between the two, we probably have over 50% of the hedge funds in the country within a 30 minute drive. But we have clients located all over the US. We have had a couple of US clients who opened up shop in the UK and have asked if we could help them from time to time.
What persuades people to leave a position, when they’re not actively job-hunting?
Usually it’s a few little things, and a lot more money. The client knows up front that it’s going to take quite a bit to motivate him or her to move. From the candidate’s perspective, it’s a time to move to a better firm, negotiate a bigger compensation package, and gain some extra quality of life perks, like vacation time or some remote working capability. I’ve even seen country club memberships thrown in.
What skills sets and technologies are you working with?
We’re all over the map. The actual language, whether VC++ or Java, is less of an issue for us. The harder part is to find someone who really understands what the client needs and knows how to deliver it quickly.
More often than not it’s a combination of three skills: First, experience with the type of business and an understanding of the specific asset class and the business rules that govern them end-to-end. Second, solid software development skills (preferably in the language our client uses) and the ability to write clean code in modules that can be reused. Finally, if appropriate, strong mathematical and quantitative analysis skills and experience applying appropriate models to a given asset class.
How has hedge fund hiring changed in the last 12 months?
I hear things have slowed down among some hedge funds, especially those that are more fixed income oriented, but we have not really felt it. Mind you, we are a boutique firm, and it does not take too much to keep us busy. I think that once the fallout clears from the sub-prime mortgage debacle, things will pick up again.
How do you see that it might change in the next year?
I know as a trend there is still a great deal of money flowing into the hedge fund industry. The number I read this week was a 17% increase in new investment into hedge funds in 2007 over 2006. So I think the future is very bright for hiring.
What makes a hedge fund an attractive place for an IT professional to work?
Hedge fund environments tend to be much smaller, so the candidate will have to cover a lot more ground; that translates into greater utilization of their skill sets and it also creates lots of room for growth. Also everything you do is more visible because there are not 3 levels of management above you taking credit for your work. If you’re good you will be recognized and on a short track to increased responsibility and of course compensation.
What are the backgrounds of IT people who work at hedge funds?
Most of our candidates have a similar path. Most have strong engineering or science backgrounds, (Masters or PhDs) where they develop strong math and software development skills followed by a few years of industry experience. Then they move into financial services usually with a large firm like Merrill, JPMC, or Goldman doing development or quant modeling. That’s when they get exposed to the business and the money. From there they start to move up while honing their skills. Then they go back to school part-time to get their Master’s degree in Finance, series 7 and 63, CFA, and voila, they are hedge fund material.
Concrete skills aside, what personal qualities are important for working in this industry?
Strong communication skills go without saying, but beyond that they have to be able to work fast, multitask, and work with little direction. Also they are likely to be the resident expert within the firm on what ever it is they do, so they have to be very self reliant. It’s unlikely that they will have anyone else in-house they can turn to for answers to technical questions. The guys that really succeed are the most proactive and anticipate the internal client’s needs.
How do you assess candidates?
I am not a big fan of assessment tests. Accomplishments are big. I spend a lot of time with my candidates putting together their story. The initial indicators for me are the candidate’s pedigree. Where did they go to school, and the caliber of companies they worked for, and most importantly what they accomplished there. Compensation over time is a good indicator. I also pay close attention to job stability.
We back that up with references. Great candidates have no problem keeping in contact with old managers, and they are usually happy to put in a good word.
How should candidates who want to build a hedge fund career be networking?
Read the trades online like Hedgeworld and HedgeCo, look for opportunities to attend conferences when they are in your area. I am a big fan of LinkedIn as a networking tool for keeping track of people you have met along the way. Also joining associations like PRIMA and SQA is good. And of course your blog is a valuable resource too. Most importantly, identify a good recruiter; let them know you want to be made aware of opportunities that would be a fit for your career path.
Do you see it happening that a year of poor performance affects employee loyalty to a fund?
We see it all the time, and it’s understandable. If you are not a principal, and you made $250k or even $500k last year, and you are looking at 50-70% of that for this year, no one is going to blame you for making a move.
What else might drive a move from one fund to another?
The management team is weak, and they are not managing their employee’s expectations or needs.
I approached a very good candidate whose job it was to support a trading system and automate trade reconciliation processes for which he was responsible. The problem was it took so long to do the manual operations that there was no time to develop the application that would alleviate the problem. So he asked his management to hire a consultant for 3 months to help build the application. It might have cost the firm $30,000 but would have freed up 80% of the time of a $250,000/year employee who could be adding value elsewhere.
First he couldn’t get his management’s attention, and then he was told they didn’t want to hear it. It was his problem. When I happened to call him the next week he was open to listening to any opportunity I had for him.
We hear from all sides the importance of being both a good communicator and a generalist in the hedge fund world.
Very often firms that are small want to have one or two IT people to do everything. The Portfolio Manager needs a model built to back-test a trading strategy. While you are doing that the server supporting the FlexTrade OMS goes down and so you have to jump in there. Then while you’re trying to fix that problem you find out the sales guy is still stuck in Chicago, and since you created the sales presentation and are familiar with all the data that went into it, the president of the company needs you to go with him to pitch a pension fund with $200m to invest with your firm. At any time, you can find yourself dealing with top levels of management, and even clients on occasion.
So it’s not enough to just be a strong technician. You have to be able to work with and manage people, projects, and vendors. It all takes good communication and presentation skills.
What is a career trajectory you’ve witnessed that has been especially brilliant?
My favorite is a candidate that had a PhD in Computer science from MIT. From there he went on to be the CTO of a big University here in NYC, where he architects and manages the buildout a state of the art soup-to-nuts system for the whole school, and all for $110k a year in salary. When he finishes the project we connect, and I tell him about a hedge fund that is about to embark on a large buildout, and I know he’s got the skills and potential.
He pushes back because he has never heard of the company and he wants Goldman or JPM, and he wants to keep his title CTO. The fund pushes back because he looks like an academic and as far as they are concerned has never worked a day in the real world. Yet, I get them together, and they hit it off. They offer him the job but with only a modest increase in compensation, and no title except manager.
Again I convince him to accept it for all the right reasons, and within a year he gets his CTO title, and within 4 years his total compensation was over $700k/year. Needless to say, both client and candidate lived happily ever after.
As an experienced recruiter, you know how to provide guidance to your clients.
We have had some good experience developing small IT organizations in the 10-100 person range, and have helped a few clients manage through rapid growth to maintain control over their expanding organizations. In other cases we have been able to make recommendations about the scope of a given role that allowed us to increase the potential candidate pool and save the client some money.
What is an example of when you most strongly affected the overall direction of a search?
A mutual fund wanted to staff up a development team from scratch, and the group director developed the specification for the first hire. The market was tight, and he wanted a technical leader / project manager who would go from 90% hands-on development to 90% management as the team filled out. The rest of the team would consist of two developers, (a senior and junior), and a business analyst.
The issue is that a real technical lead developer does not want to be 90-100% management. And if you can find someone like that, they are unlikely to be a good manager. After trying a few other search firms, they finally call us in. I immediately recognize what the problem is and recommend that they combine the business analyst and PM positions and hire a good technical lead architect to start right away.
This increased the candidate pool from 1-2 people that were not very good, to 10-15 solid candidates for each position. We got the first 2 positions closed within 2-3 weeks.