Investment Management Hiring Landscape: 2020
2020 has been a historically volatile and uncertain year, punctuated by the COVID global pandemic, social unrest, and an unprecedentedly disruptive US election cycle. Unsurprisingly, investors in risk assets have retreated in a meaningful way to the sidelines. Multiple alternative asset classes had a roller coaster of asset flows throughout the year. Despite this generally negative environment, many of our clients have been able to successfully raise new funds and appear to be firmly in a growth mindset across multiple strategies. Building off our earlier updates this year, hiring markets are certainly active at the moment. We are pleased to share some of our key observations across the sectors we cover and remain excited about working with our partners for all talent-related objectives.
Hedge Fund Observations
Unsurprisingly, hedge fund performance for the most part suffered at the onset of the Covid-19 pandemic. The first half of 2020 was marked by several high-profile fund closures and industry-wide layoffs. These forces led to there being a number of candidates on the market in search of new employment. Additionally, we saw many new recruitment processes coming to a grinding halt. Yet, as the public markets have sharply rebounded, we have seen the vast majority of funds still standing seeking talent across the experience spectrum, with notable interest in Analyst and Senior Analyst candidates. Our team has particularly noticed an increase in hiring at firms that invest with the following strategies and/or within the following key verticals.
Long/ Short Equity
Distressed Credit & Special Situations
Private Equity and Debt Observations
In the first half of the year, private market investors appeared to take one of two distinct approaches: focus on their existing portfolio companies or compete to deploy capital and take advantage of the market dislocation. The firms that fell in the former camp largely paused new investment activities. As a result, we saw most new investment professional hiring stop, though we did observe a meaningful uptick in hiring focused on portfolio management and workout/restructuring professionals. Given a limited supply of such talent, we wound up seeing multiple “bidding war” processes, with many incumbent firms having to compete aggressively to retain talent being wooed by third-parties.
Amongst our clients that opted to navigate aggressively despite the Covid-19 backdrop, we saw expedited recruitment processes looking to rapidly position value-add resources. Many of these clients had their conviction rewarded with some of the more yield-rich investment opportunities of the year. More broadly, private markets, like public markets, regained their footing in the back half of the year. As one would naturally expect, we have seen hiring demand across the industry increase in lockstep. Much to our delight, we have seen firms adapt to the realities of digital technology well. Though Zoom interviews, fully-remote case studies, and other interactions with candidates look and feel quite a bit different than in person contact, our clients note certain efficiency benefits of the process as well.
From the candidate perspective, digital recruitment presents a number of benefits compared to the traditional process, the most significant of which is the ability to operate more discretely. Most of the hiring we have seen has occurred at the midlevel (Senior Associate/VP), though we are seeing growing interest in our clients lining up more senior hires in Q1-21.
As we have seen during prior stress scenarios, investors during Covid-19 have rotated their capital to experienced managers. As a result, newer and smaller funds had a more difficult time completing fundraises in process before the onset of Covid-19 and are having a relatively harder time sourcing new investor capital. It does not feel like a stretch to say that very large managers, particularly those with the ability to market well around dislocation strategies, have smoothly grown their AUM despite the crisis backdrop. This is not to say that smaller funds are completely shut out. Consistent with the commentary throughout this update, as market conditions have improved, private market allocators are beginning to open their wallets to a wider universe of managers. As would be expected, most firms have worked hard on tailoring their virtual fundraising and investor due diligence processes.
Several of our clients note that they have long-term plans to incorporate digital technologies into their marketing processes. The general sense we get is that marketing teams are swamped, with many employees working more than they ever have before. With market conditions being so fluid, many marketing departments are being tugged in all sorts of directions. Many are struggling to handle the work-load and seek experienced professionals that can successfully “translate” nuanced (and perhaps somewhat time-sensitive) investment opportunity sets. We have placed, and have many outstanding processes ongoing, for capital raising, investor relations, and product specialist professionals.
Top 3 Areas of Most Demand for IR/Fundraising Professionals:
Distressed Credit & Special Situations Hedge Funds
Opportunistic Illiquid Credit
Venture & Private Equity
One other particularly interesting phenomenon has been managers’ pursuit of non-institutional investors. Retail (high/ultra-high net worth and family offices), though less scalable, is more in demand as managers look to diversify a bit from institutional investors that were quicker to pull or suspend capital commitments in the immediate aftermath of COVID.
Hiring Advice for 2021
Most firms have implemented these processes, but few have perfected them
Move quickly. With all the uncertainty this year, hiring teams have understandably taken their time on moving candidates through processes. Firms seeking out the most competitive candidates will not have the same luxury in 2021. Slow hiring in 2020 has resulted in pent-up demand from a sizeable number of firms looking to grow headcount in the new year. Competition will require timely and efficient interviewing processes.
Pay attention to candidate expectations. The pool for qualified labor is finite. Strong talent expects visibility into career progression and also expects to be compensated competitively. As our team has commented on before, today’s candidates care a great deal about cultural value alignment. We are seeing firms hone their message to attract the “right” talent.
Contact our team at Selby Jennings for compensation trends.
Selby Jennings is a leading specialist recruitment agency for banking and financial services. For more than 15 years, we have given clients and candidates peace of mind that the recruitment process is in expert hands. Our continual investment in best-in-class technologies and consultant training enables us to recruit with speed, precision and accuracy. Today, Selby Jennings provides permanent, contract and multi-hire recruitment from our global hubs all over the world. We pride ourselves in keeping our professional network up-to-date with any changes that will shape the future of work or affect the hiring process. Visit our website to discover more invaluable insights, including exclusive research, salary guides and market trends.