A FOCUS ON INTERNAL BUSINESS DEVELOPMENT
Business Development within an alternative asset management firm can mean a number of different things. Our focus in this months report is on internal Business Development.
The role of a business development person typically consists of a number of key responsibilities. This includes the mapping out of investment talent across their firm's core investment strategies (via both direct and external sources), along with having responsibility for sourcing candidates and selling their firm to prospective new hires. They focus on ensuring what they offer is competitive in comparison to their peers (often other multi-strategy managers running a similar platform structure).
We usually see such business development positions existing in firms which tend to do a large volume of annual Portfolio Management hiring, typically in excess of 10 additions per year.
While these individuals sometimes look to introduce talent to their business via direct sources, we do find there is often an appetite to partner with external search firms which can assist them in promoting their platform and reaching a wider selection of talent. Often firms will begin their direct search utilising their known talent pool and then complement this approach by instructing an external search firm to focus on other talent areas. This is particularly the case when it comes to analyst related searches where the business development person might not be too familiar with a specific talent pool.
Firms source Business Development talent from a number of backgrounds. One of the most popular places to hire from over the years has been investment banking sales desks. These candidates speak to the buy side trading universe on a daily basis and generally possess a keen awareness of who the most talented Portfolio Managers are within each specific sector. Other avenues for hiring into these seats have been from the likes of Prime Brokerage Talent Introduction teams, leading consultants from Executive Search firms and also ex-Portfolio Managers / Traders who have a strong level of technical expertise and are able to thoroughly screen potential new hires about their trading style and approach.
One particular trend which has emerged in recent times is the tendency for firms to look towards the Multi-Manager space when adding to their Business Development teams. Quality Manager Research professionals tend to have extensive experience in analysing individual Funds and Fund Managers, and ultimately recommending them as potential partners to invest in. This skill set is easily transferable into a Business Development role, with the primary difference being that they are recommending them as a strong hire to the firm's CIO as opposed to a potential investor.
As touched on above, another large proportion of the role is to ensure their firm has a number of strong selling points in comparison to their main competitors and to ensure these are well received by the market. These distinguishable elements can often be in the form of a larger percentage pay out for Portfolio Managers, a more attractive compensation structure (i.e. end of year bonuses being paid fully in cash), a more cohesive and collegiate working environment and full IP ownership. Something that is becoming more of a consideration in recent years is flexible working (allowing PM's to work remotely as and when this works for both sides).
While the addition of a Business Development person can be costly in terms of the remuneration required, we do see these individuals assisting in areas beyond Portfolio Management / Front Office talent. Other areas of coverage include Quant Development, Back Office (Operations/Finance), Risk / Compliance etc. The more established the firm, the larger their Business Development teams tend to be, including specialists within each key hiring area.
As firms continue to grow and diversify their product offerings over the coming years, we envisage additional demand for business development talent. As a search firm, we view the addition of Business Development professionals as a positive as it allows us to act as an effective extension to their team, better understanding both their brand and the calibre of investment talent they target. Ultimately this allows us to form a closer partnership with their business moving forward.
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