By Lydia Tomkiw January 26, 2022
The hedge fund recruiting landscape is as fierce as ever, and while the typical questions around salary remain, managers must be ready to respond to questions on hybrid working conditions, firm culture and burnout, recruiters said.
The questions come amid the broader “great resignation” phenomenon and as the vast majority of hedge funds admit that they are concerned about retaining talent in the near term.
“It still remains super frothy. So many people are in motion, so many people are assessing what they want to do,” said Melissa Norris, founding partner at Jamesbeck, a woman-owned executive search firm.
Candidates are pro-actively coming to recruiters if they aren’t being offered work flexibility, she added.
“People are retiring early, getting out the business early and people are still absolutely adamant about having more flexibility and hybrid [working conditions],” Norris added.
The questions and focus on areas beyond salaries come as hedge funds saw inflows for the first time since 2017 last year, with investors adding approximately $15.9 billion, according to final 2021 data from eVestment.
And hedge fund performance in 2021 hit double-digits, with average returns at 10.3%, according to Hedge Fund Research’s HFRI fund weighted composite index. That includes some of the industry largest funds, including Citadel’s flagship Wellington fund returning 26.2% and the D.E. Shaw Group’s flagship multi-strategy Composite fund finishing the year up 18.5%, as reported.
Despite market volatility this month, the industry has a strong tailwind at its back, said Alan Johnson, managing director at compensation consultancy Johnson Associates. But concerns around office location and work approaches, something people wouldn’t have talked about a few years ago, have become a much bigger issue, he added.
“The whole location and how often you have to come into the office is something that wouldn’t have happened three years ago and now it’s part of every conversation,” he said.
The high-octane recruiting pace that swept the industry last year has continued so far this year, with high turnover the last two years contributing, said Michael Goodman, managing partner at recruiting firm Long Ridge Partners. Demand is high across hedge fund strategies and across roles, from portfolio managers to distribution, investor relations and operations, he added.
Stability at firms has become ever more important. “People don’t want to go to a firm that just churns people out every six months,” he said. Firms are also stepping up to keep talent, with counteroffers “rampant,” he added.
Goodman has also observed a relatively new arrangement, which he describes as a “breakup fee.” With non-compete agreements now stretching to 12 months in many cases, someone who accepts an offer at a firm signing a contract and then several months into sitting out their non-competes later decides to go elsewhere could face a penalty. Some firms are now adding such clauses because of the high opportunity cost and time needed to recruit.
And amid the competitive environment, firms are facing questions from potential hires on how they are maintaining culture and what they are doing to prevent burnout, Norris said.
“Firms are working on ways to prevent burnout,” she said. “They are doing everything they can… to be a culturally attractive firm.”
Examples from across alts firms have included no video meetings on Fridays, not working past 7 p.m. on a certain day, requiring people – including senior staff – to take vacation time and relaxing dress codes, she added.
Amid the competitive environment, firms are now talking about employees’ mental health and the resources they have available, Johnson added.
“They’ve tried to make sure people know there are confidential resources if they are struggling,” he said, adding that “after two years people are really tired.”
Contact the reporter on this story at [email protected] or 212-542-1278.