Why you're better off working in technology for a hedge fund

If you’re wondering whether to leave your job as an engineer with an investment bank for something similar with a hedge fund, you might want to consider more than just the pay. Yes, hedge funds like Citadel pay technologists well, but they also offer something else that banks struggle to compete with: close proximity to end-users.

Technologists at Citadel praise the fund for avoiding product managers and say that developers there interact directly with end-users in the business. Citadel’s developers effectively combine the role of architect, engineer, internal sales and product support. Technology jobs at the fund are therefore deemed more interesting and innovative than elsewhere. – If an engineer wants to develop something on the back of a user’s comment, he/she can. Citadel’s jobs are also said to require a higher standard of technologist who understands the business as well as the stack. Citadel declined to comment.

Citadel isn't the only hedge fund with this set-up. Other funds also have technologists interacting directly portfolio managers and quants, thereby obviating the need for business analysts or product managers. Developers get to 'own' products as a result.

Historically, Goldman Sachs was known for giving its engineers more freedom than other banks. Most banks today, though, have rigorous processes for developing new products – partly because of cost constraints, but equally because of regulatory issues. Business analysts who map the requirements of the business and product managers (who are similar to business analysts but also responsible for developing the new products) are therefore plentiful in banking. And where BAs and product managers are plentiful, developers are effectively implementing someone else’s ideas.  

Quant fund Two Sigma recently posted an article to its own site on the distinction between product managers and software engineers in tech firms. “Software engineers design, implement, and maintain software systems,” says Two Sigma. By comparison, product managers aim to “create products that customers love.” – They’re, “the conduit between the users, the business, and the engineers.” They’re also, “held accountable for the end-to-end user scenarios.”

Although Two Sigma employs distinct product managers and engineers, it says that the roles at the fund are more likely to be blurred than at big tech firms (and bank). - “An engineer working in an area without a dedicated PM may take on PM-like work, whereas a PM working in an area with limited engineering resources on some project may participate in software development.”

In this way, it says technology staff at Two Sigma have “more personal freedom” to decide what they want to work on.

Photo by Kevin Horvat on Unsplash

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