Recruiters Swamped by Traders’ Resumes
It’s becoming increasingly difficult for traders to find work in the hedge fund industry.
The field of execution traders has grown steadily over the past few years as banks have cut proprietary-trading operations in response to Dodd-Frank Act mandates. At the same time, fund operators continue to increase their reliance on technology to handle a range of investment functions. The upshot is a large and rapidly widening gap between the size of the talent pool and the number of openings for traders who fulfill buy and sell orders.
“You have big launches now with only one trader in some cases, when they used to have three,” a veteran trader said.
He noted that Diamondback Capital, at its peak, employed 10 execution traders, whereas similar-sized firms today typically have less than half that number. (Diamondback, a once-$6 billion fund operator, is closing down after being tarnished by the federal insider-trading probe.)
Executive-search firm Broadreach Group handled a recent assignment that illustrates the dynamic. It was hired by a blue-chip hedge fund manager to fill a position for a trader. After putting out the word, Broadreach fielded responses from more than 2,000 candidates, said managing director John Jaenisch. By comparison, openings for portfolio managers typically draw about 250 applications.
In general, the number of traders approaching Jaenisch about work opportunities has increased by 25% from a year ago.
The situation is better for what Anthony Keizner of recruitment firm Glocap Search calls “value-added” traders, such as specialists in quantitative investments. There also continues to be demand for traders with experience handling complex instruments such as derivatives, as well as those familiar with non-U.S. markets.
Michael Martinolich, a partner at search firm Caldwell Partners, said the key is specialization. “There are thousands of guys who can do execution trades, and there are many hundreds of them on the beach,” he said. “Traders have to be unique and add value, at the least, to be well paid.”
The hedge fund job market looks quite a bit brighter for other types of positions, according to executive recruiters specializing in the fund industry (see list on Pages 6-8). On the investment side, for example, there’s strong demand for seasoned equity analysts and portfolio managers, as the stock-market rally has rekindled investor interest in equity vehicles.
And there continues to be ample opportunities for fund marketers and investor-relations professionals — particularly those experienced in dealing with institutional investors. Brian Blake, a partner at Green Key Resources, said he’s also noticed an uptick in hiring for back- and middle-office positions, mostly related to compliance functions.
But the competition can be stiff. One recruiter noted that just after the financial crisis, managers typically filled entry- and junior-level positions with candidates fresh out of business school. Today, with so many financial-services professionals looking for work, hedge fund firms are more likely to fill those same positions by hiring candidates with several years of work experience.