Morning Coffee: The "crazy, obscene" recruiters at hedge funds. McKinsey & Co. consultants working for free
You're probably aware of this, but there's a war for talent underway in hedge funds. Top portfolio managers are being paid $120m in sign-on bonuses. Hedge fund bosses are complaining about star footballer-style paydays for mediocre players. Izzy Englander at Millennium thinks doing away with non-competes would help.
In the circumstances, if you haven't had at least one call from a fervent recruiter working for one of the big hedge funds, you're probably doing something wrong. Speaking to the Times, one unnamed senior banker said these hedge fund recruiters have become a menace. Funds have, "a bunch of people that just spend their time meeting for coffees, lunches, dinners, with any trader who will take their call," he said. These professional schmoozers, "know every person, from the first-year analyst to the partner … They have an insatiable appetite and they’re bidding up talent to a crazy, obscene level.”
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Being at hedge funds, these recruiters aren't actually called recruiters. They're called 'business development professionals,' and often have a background in banking themselves - not in banking recruitment. Andrew Peña, Eisler's global head of business development (and investor relations) was previously a managing director at Goldman Sachs and Morgan Stanley, for example. Goli Habbas, who joined Millennium in business development in London in September 2023, previously came from Morgan Stanley, where she too was an MD, and head of prime broking distribution in EMEA.
The Times doesn't have much else to say about the army of business development people who are the scourge of anyone trying to hold a trading desk together in a bank. Independent headhunters tell us business development can actually be a thankless job. As money has flowed into the biggest hedge funds, there's a desperate rush to find people who can manage it. However, as hedge fund boss Dmitry Balyasny pointed out recently, reactively hiring after money has been raised doesn't really work - it takes a long time to find good people and when you do, they usually have to sit out of the market on a non-compete. Adding portfolio managers needs a strategy, but it's high pressure because funds want to raise and deploy capital - which is probably why people are called 'bus devs' instead of simple recruiters.
Pay is higher than for mere recruiters, too. "Junior business developers at the top funds are paid $300k-$500k," says one external hedge fund recruiter. "At a senior level, there are definitely people making north of seven figures..."
Separately, the pendulum has swung at McKinsey & Co. Consultants who have spent long years telling other companies how to restructure their businesses are busy restructuring their own.
Following news in March that McKinsey & Co. was making its biggest round of job cuts for five years, The Times reports that McKinsey is redeploying staff to internal projects so that they can do some consulting on its own operations. At the same time, it says that consultants at both McKinsey and Bain & Co. are offering services for free to a select number of clients to keep their people busy. “It is seen as an investment in a client so they will be more likely to hire you when things look more positive,” one consultant says.
Fortunately, there is still some work out there for consultants to do. Boston Consulting is busy at Barclays and the bank is due to announce its findings and strategic refresh early next year.
Meanwhile...
Citi's restructuring is taking a long time and causing uncertainty but the bank says it's better to be deliberate. “If you were a manager, would you want to be handed what organisation you get or would you want a say in the structure?” asks Citi’s chief human resources officer Sara Wechter. (Financial Times)
Anthony Hourihan, global co-head of M&A at UBS, thinks M&A will rebound next year. "Heading into October, we're already thinking of a 2024 rebound, given what was going on in the equity markets. Also, conversations around the cross-border indicated it may be a reasonably good year. I’d say the end of October and early November have increased that sentiment, particularly among our corporate clients but also our financial sponsor clients." (Seeking Alpha)
George Lee, co-head of Goldman's office of applied innovation, says the bank has almost a dozen projects involving generative AI. (Reuters)
JPMorgan Chase, Bank of America, Wells Fargo and Citigroup made almost half the profits in US banks in the third quarter. (Financial Times)
Incoming Morgan Stanley CEO Ted Pick and potential next Goldman Sachs CEO John Waldron both went to clubby liberal arts college in Middlebury, Vermont, and are friends. (The Messenger)
Moelis & Co. has hired 27 managing directors in the past 12 months — boosting its MD ranks by about 20% — and plans to recruit even more as it readies for a long-awaited rebound in mergers and acquisitions. Ken Moelis doesn't seem to be retiring after all. (Bloomberg)
A psychoanalyst has written a book referring to the time he counselled a successful City trader who feels compelled to seek fleeting hook-ups when trades go badly, even though the sex is joyless and disappointing. The trader has set himself unrealistic trading targets, based on the outstanding results achieved by a former colleague and is driven by dismay and jealousy at failing to match another man’s professional success. (The Times)
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