A FOCUS ON INVESTOR RELATIONS

It has without doubt been a testing few weeks for the industry. Every core business function has been impacted and had their day-to-day responsibilities turned upside-down, whether this be front, middle, or back office. One function which has certainly felt the brunt of this is investor relations. To be expected, the turmoil across financial markets has seen a large number of investors looking to cash in on their liquid assets, and investor relations (IR) professionals are having to deal with a substantial increase in the volume of queries and redemption requests. 

But how has this important function changed within the hedge fund space in recent years? For one, there has been a clear shift amongst our clients to focus on candidates with stronger numerical skills and a greater level of technical understanding of their firm’s core strategy. In most cases, it will no longer suffice for an individual to join a fund armed only with a strong communications background and good interpersonal skills. With the IR function broadening, and greater overall due diligence from allocators, IR professionals are required to have a more analytical approach and stronger grasp of ‘the numbers’. We often see this assessed by asking applicants to complete a case study exercise as part of the 

screening process. 

This is a primary driver in why we are seeing an increase in the demand for candidates coming from the likes of sell-side product control backgrounds or even buyside fund accounting positions, though in these instances only those coming from tier one entities are generally considered. Another common space which we are seeing clients recruit from is fund selection / manager research. Multi-manager research analysts have typically developed a detailed understanding of hedge fund investment strategies, as well as being well versed in building out relationships, both highly relevant skills for a role within IR.  Due to the continued consolidation of the fund of fund’s industry, we see much of this talent pool transition from leading investment consultancies rather than FOF’s. 

Often, having a CFA or CAIA qualification is also seen as a big advantage for candidates during an interview process. Not only does this show a desire to advance their careers, but also improves their ability to communicate with their investor base on a higher level technically. 

When hiring, more and more companies are now looking to assess the technical ability of new IR recruits. With automation being a consideration in every aspect of business, the world of IR is no different.  We regularly speak to “Heads of IR” who outline their desire to automate the client reporting function or at least establish a greater interaction with the finance team to accurately convey monthly and quarterly numbers to the investor base. As such, technical skills will often be a consideration when looking to build out an IR team. The skills sought tend to include strong excel / VBA skills as opposed to any sophisticated programming languages.  

So how are companies attracting and retaining the best talent? Generally, what we see amongst more junior candidates is a desire to ultimately progress their career into a sales role. While it is unrealistic for a fund to offer such responsibilities to a junior, firms often lay out a path to a business development focussed remit so long as certain performance metrics have been met. For more seasoned professionals who are happy staying within a pure IR function, companies often look to offer them broader, more project-based roles which go beyond dealing purely with RFPs and DDQs. Additional perks such as remote/flexible working also help keep employees satisfied, particularly if they have young families.  

Written by James Hogan

James is a senior consultant at OCR Alpha and has been with the firm for over 3 years. James is an avid rugby fan and spends a lot of his spare time at Twickenham and the Stoop. If you would like to discuss any potential hiring requirements, please feel free to email him directly at james@ocralpha.com

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