Morning Coffee: How 22 year-old baristas can get into hedge funds, and the new qualification that could save your job

Hedge fund placement agents operate in a niche in the financial services industry with a reputation for being a place where you’ll make a lot of money but not many friends.  The expensively dressed men and women who can shepherd “allocators” through the investment process and get them to a point where their assets are in the fund will often take the first year’s management fees as a reward.  But the fund managers, unsurprisingly, regard them as overpriced for what they do while the allocators mainly see them as a nuisance.

Now there’s a new business model of “introducers”, where you make just as few friends but nothing like as much money.  The staff of Murano Connect are generally very young, often lack any kind of financial services experience and don’t have personal networks and connections in the world of rich people and institutions.  What they have is a telephone, a list of allocators to talk to, and a high degree of certainty that if they don’t make their targets they’ll get fired. 

At this point, older hands will be muttering the “b-word” and mentally rehearsing Ben Affleck’s “there is no such thing as a no sale call” speech.  But so far from embracing the dark side, Murano’s principal, Ole Rollag doesn’t like even such milder descriptions as “telemarketing” and “cold calling”.  And unlike brokerages and marketers, Murano doesn’t take percentages of anyone’s money and doesn’t invest in things.  It just calls and calls and calls, then when somebody picks up the phone, they write a short report on the allocator’s wants and needs, then pass on the contact details to a few selected fund managers who look like they might be a good fit.  Maybe the allocator will then take the hedge fund’s call, but if they don’t then not much money has been wasted.  It’s such a simple business model that it doesn’t even need a brokerage licence – even in this day and age, talking to people on the telephone isn’t, yet, a regulated activity.

Cheap labour is pretty intrinsic to the business model – at £20k ($26k) the starting salary for Murano employees would barely buy a ticket to a couple of hedge fund conferences.  But it does appear to be a genuine stepping-stone job; one former employee interviewed by Institutional Investor is now working in-house at an asset management firm, albeit that he doesn’t seem to have very fond memories of his cold calling days.  But if you don’t have a prestige university background, or you started out as a barista in a coffee shop, then you’re not exactly going to be comparing your opportunities with the graduate program at Citadel, are you?  The days of Sidney Weinberg working his way up from janitor’s assistant to chief partner of Goldman Sachs are ancient history.

In a world where recruitment to the world of high finance has been professionalised and credentialised to an extraordinary degree, it was probably inevitable that somebody was going to return to the old-fashioned approach of hiring dozens of ambitious kids and seeing which ones work out.  It’s what Wall Street was built on.

On the other hand, if you’re already in the world of asset management, you’ll be aware of two things.  First, that employment is precarious as employers merge and cut costs, and second, that one of the few bright sparks in the labour market is ESG investing.  The problem has always been, though, that the reason for the hotness of the ESG hiring market is as much to do with supply as demand; there just aren’t many people with a track record in ethical investing, and without having it on your resume, it’s hard to demonstrate that you know how to do it.

The CFA Institute is hoping to close that gap, with the launch of a special “Certificate in sustainable investing”, allowing you to demonstrate your green credentials by passing a difficult exam.  We doubt that anyone’s going to hire based on paper qualifications alone, but if there’s a round of downsizing and your employer is looking at who’s going to be let go, it surely can’t hurt to have some sort of certification that you’re capable of working in one of the areas that’s still seeing AuM growth.

Meanwhile…

Grim tales from Big Four accountancy firms as the FT interviews whistleblowers, with particular concentration on the tendency to require employees to sign non-disclosure agreements as soon as things get to HR. (FT)

Morgan Stanley is rumoured to be planning an expansion of its real estate footprint in New York, taking another floor and 90,000 square feet of the One New York Plaza tower. (New York Post)

An important distinction in investment banking – “We always work as a team” sounds good, “He couldn’t have been acting alone”, less good.  Former Credit Suisse client Bidzina Ivanishvili claims that Patrice Lescaudron must have had help to carry out his frauds; the Geneva criminal court found otherwise, though, and there’s no civil litigation started so far. (Bloomberg)

It’s hard to turn the five year anniversary of a record-breaking fine into a feelgood story, but BNP Paribas’ compliance department has made huge changes and now considers itself to be a model that other firms want to emulate.  Eric Young, head of compliance for North America, describes how the French bank moved key functions to New York and gave the compliance function a direct reporting line into the CEO. (Financial News)

“Honesty Market” snack stands in WeWork buildings are being scaled back, as tenants have apparently become less honest now that the IPO is cancelled. (Bloomberg)

Another data point for the trend of financial firms trying to make some spare money by selling their internally developed software – now you will be able to buy access to (some of) TwoSigma’s risk management and factor investing software.  (Financial News)

Photo by Tyler Nix on Unsplash

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