Thoughts on the hedge fund career marketplace from Chad Dean of Integrated Management (www.integratedmgmt.com).
How long have you been recruiting?
I have been recruiting for twelve years in various industries, mainly semi conductors. I was going back to school, getting my MBA, and the telecom and the semi conductor market crashed, as we all know, in the 2001 time frame. Through contacts, I met Barry Franklin, who is the executive of the firm and has been running this business for over seventeen years. I ran into him, and it matched up with what I was doing in my MBA and where I wanted to go with my career. I love recruiting; I am always going to be a recruiter.
The bottom line is, you go into something and you want to have satisfaction, right? You want to know you are making the world a better place. My satisfaction in this position is when I make a successful placement, and the company calls me up, and says thank you for finding us this good candidate. And I have the candidate saying thank you, because they wouldn’t be taking the position if they didn’t think it would be something good for them. So for everybody it’s a win-win-win situation.
Barry founded the firm in the 1990 time frame. There are seven currently in the firm. We are 100% contingency. And we are very boutique-y even within Wall Street. We cover mostly front office and mostly fixed income. We don’t get too much into the equity side of things. The hedge funds that we are working with are mostly fixed income hedge funds or alternative strategies. We’re all based in Arizona, and we work New York hours.
Who are your clients?
Typical clients are the top twenty investment banks, and then the top fifty hedge funds. We do some work with monolines, no rating agencies, and then some boutique type firms that service these larger banks and hedge funds. We generally cover anything under quants, structures, strategy, research, sales, banking, and then portfolio management and analysts. So literally, anything front office.
How have things in the industry changed in the past year?
It was accelerating up until June and then we started coming into some issues. People started noticing some issues and then obviously this whole sub-prime virus has spread to the point where now we are getting a lot of firms that are saying “whoa, let’s just kind of sit back and think about what we are about to do” and actually putting things on hold. That goes across from banks, to hedge funds, to everybody.
We have a seasonal slow down in the summer. Everybody is excited to get their new positions and everybody gets paid their bonuses. It’s seasonal, but this year it’s just been exasperated by this whole virus and the credit liquidity crunch, or whatever you want to call it. There are all kinds of different facets of it, but it’s a train wreck right now.
We are still getting some play and some movement with our top hedge funds. I would say all the banks have virtually shut down hiring.
What skills were in the greatest demand up until June?
Greatest demand has continued to be quantitative analysts, people that are very “quant-y” but at the same time very market-oriented. So they’ve got to have the market sense but be very quantitative, and that has also been the hardest skill to find across the board. And in hedge funds you’ve got to wear a number of different hats; you’re not so pigeonholed like you are at a bank.
Year after year since 2000 we’ve seen an increase in counteroffers and people accepting counteroffers because banks are afraid. They’ve seen the mass exodus to the buy side. We’ve had a couple situations where people have been exclusively looking for a counteroffer, with the intent of actually accepting it. It looked very obvious when the people were doing that. [But] most of the time they’re making a move for a reason and money is not really going to change that.
What are the trends in compensation?
The buy side tends to pay a little bit higher on the base. For some reason I haven’t seen too much of a change, other than the fact that people are making money hand over fist. I would say the change has all been on the bonus side, because bases have virtually stayed the same and people are making more money, so it’s obviously coming on the back end. But you know, in a lot of hedge funds they are asking individuals to put a tremendous amount of their earnings back into the hedge fund in the form of — I guess you would say — partial ownership, or you know, shares of a private company, however they do it. You see a lot of that, and then if the funds stop performing well you have unhappy employees. So I have a couple of people looking, for that reason specifically.
Do you see that there is a standard career path, or is it really all over the board?
All over the board is a good description. I am amazed at the amount of movement — at least outside of the top 50 hedge funds — the movement of these individuals, the way they hop around at different jobs, is mind boggling. When you get a resume from somebody like that, it is hard for them to get back to a quality organization unless they really know some people and have some good contacts. And then even in the top hedge funds, you see people bouncing around. So it’s dog-eat-dog and huge competition and everybody outbidding the other people, and if they don’t see something that they like, they know they can go right out there and get another position, no matter what their resume looks like.
What makes a candidate really stand out; what makes somebody really shine?
Education, length of time at their current and previous employment, are very important. And then, absolutely: do their qualifications match the qualifications required for the position? Nobody wants, nobody has time, especially in a hedge fund, to bring somebody up to speed.
Often times there is limited data available on a particular hedge fund. How should a candidate do their homework in order to prepare for an interview?
If it’s through a head hunter, they have to rely on their head hunter heavily to find them data and then ask their industry contacts what they know about it, internet. You see, we belong to a number of different rags, websites, and data centers that provide us information on the individuals, on the funds or strategies, their AUM, anything about them.
You’ve got resources that probably aren’t available to the typical career search candidate.
Well, they are available but they are not going to be aware of them, or they are not going to want to go out and spend the money just for a search.
What’s the best way for a candidate to stay in touch with a recruiter that they have already spoken to?
Well, obviously get your resume in front of them; get your desires, your needs, your wants, things that you don’t want. Make sure you manage your recruiter so that they are not sending your paper all out over the street — you know exactly who they send it to.
And periodically ping them, you’ve got to. But you don’t want to call them too much; you don’t want to call them too little. But if the head hunter has a good candidate and one that they think they can place, they will be marketing them if the head hunter is worth his salt.
What do you see as the most common attribute among successful candidates?
Those are the intangibles. They are very responsive, they are very talkative, informative, and they know what they want. Half the time people don’t even know what the heck they want. But a candidate knows what they want, they are not afraid to go out there and get it. They are hard workers, and then obviously they are smart and technical, those are the hard things. But the abstract thing, they know what they want, they are able to express that, they are able to express themselves and their capabilities. Those are the people that I know are going to be successful.
How about the other side of the coin: what’s the most common flaw that you see among qualified but unsuccessful candidates?
They’ve flown under the radar and managed to get into specific positions just due to massive needs at the firms looking to get a body in there to throw at deals or do whatever.
And they are just not as good as they look on paper. That’s the biggest problem. People just extrapolate a little bit too much, let’s put it that way. They put C++ on there, maybe they’ve done a little bit of it in the past, or maybe they say they’re great at working on these deals, when maybe all they did was just do some technical work on it for a little bit. The biggest complaint that I get from managers is probably that he’s not as good as he looks on paper.
It comes out immediately with the managers because we are not most often technical enough to really sniff that out and the managers are, right? That’s their business. So they’ll ask a couple of questions that will sniff the guy out immediately. It comes out real quick, you can’t hide from that.
What’s the most common reason that firms fail to land the people that they really want?
I would say just not having an enticing enough position. Maybe it doesn’t have a big enough scope for that particular individual or it is not offering anything different than any other firm. They can do it at ten other firms and there is nothing that is standing out about that particular firm. They didn’t sell.
Are there certain firms that reliably get the candidate they want?
Absolutely, and that has to do with name and reputation.
Let’s say, I had a guy the other day who’s been in the industry for sixteen years and he said “You know, when I came up in the business, I always said that if I worked for Solomon Brothers that I will have made it to the top.” And so I had him interviewing at Citigroup. He was very interested in the role because of Solomon’s reputation back in the day, and it had always been in his head, whether or not they were at the top of their game for that particular sector at that particular time. He had it in his mind that if he had ever worked for Solomon then he would be at the top of his game, then he had made it.