Marketing Hedge Funds
Marketing Hedge Funds
Over the weekend I got an email from a hedge fund professional working for a very well known bank in London. He was looking for advice on getting into third party marketing or hedge fund sales. He specifically asked if I knew of any great books on third party marketing or hedge fund sales and wanted details on typical fee structures/compensation, etc. My response is pasted below as I thought it might answer some other people's questions while looking for information on marketing hedge funds.
Thanks for the email. There are no great books on third party marketing that I am aware of, everyone is pretty close vested within the industry. I haven't found a great book on investment sales either, but I know there are a few of those if you look around on Amazon. If you are looking for great books just on sales I really like Jeffrey Gitomer's 3 books: The Sales Bible, The Little Red Book of Sales Answers, and Yes! Attitude. Those books have changed my career.
Hedge fund marketing & sales fee structures vary depending on the type, reputation, and abilities of the third party marketing firm (3PM firm). Some retain only 2-3 clients at a time and charge retainers for this focus of their attention while others might work with 10 money managers (clients) at once and only get paid on commissions. Usually commissions is 20% of both the base fee and performance fee when working with hedge funds.
If you work for a hedge fund you will be restricted to their strategy(s) so if their performance dips or the strategy goes out of favor you might not raise any money and it wouldn't be your fault. If you work for a 3PM firm you would probably get to market 2-3 different money managers in some capacity across diverse distribution channels such as endowments & foundations, broker dealers, and direct to high net worth individuals. If a strategy goes out of favor you just find a new money manager to market as a firm, you avoid that downside of being a hedge fund sales professional. Common compensation for internal hedge fund sales people is 80k-200k with some making 400-800k/year and maybe 3-10 commissions that might trail off over time. Common compensation for a 3PM as I mentioned above is a retainer of 60k-150k (if they get one) and 20% of fees.
I'm not even 30 years old yet so I'm going the third party marketing route because I want to be able to have knowledge of the DNA and powerful relationships in every major distribution channel and I want figure out where the real money and momentum is and be able to shift my focus to that point. I believe it is harder to get a 3PM job because most want you to have a book of business or solid relationships, but it can be done. To work in my first third party marketing position I worked for free for 3 weeks to prove myself and took a big cut in pay coming in the door, but now I'm in my dream job getting experience that I believe will continue to be more valuable each year.
Thanks for the email. There are no great books on third party marketing that I am aware of, everyone is pretty close vested within the industry. I haven't found a great book on investment sales either, but I know there are a few of those if you look around on Amazon. If you are looking for great books just on sales I really like Jeffrey Gitomer's 3 books: The Sales Bible, The Little Red Book of Sales Answers, and Yes! Attitude. Those books have changed my career.
Hedge fund marketing & sales fee structures vary depending on the type, reputation, and abilities of the third party marketing firm (3PM firm). Some retain only 2-3 clients at a time and charge retainers for this focus of their attention while others might work with 10 money managers (clients) at once and only get paid on commissions. Usually commissions is 20% of both the base fee and performance fee when working with hedge funds.
If you work for a hedge fund you will be restricted to their strategy(s) so if their performance dips or the strategy goes out of favor you might not raise any money and it wouldn't be your fault. If you work for a 3PM firm you would probably get to market 2-3 different money managers in some capacity across diverse distribution channels such as endowments & foundations, broker dealers, and direct to high net worth individuals. If a strategy goes out of favor you just find a new money manager to market as a firm, you avoid that downside of being a hedge fund sales professional. Common compensation for internal hedge fund sales people is 80k-200k with some making 400-800k/year and maybe 3-10 commissions that might trail off over time. Common compensation for a 3PM as I mentioned above is a retainer of 60k-150k (if they get one) and 20% of fees.
I'm not even 30 years old yet so I'm going the third party marketing route because I want to be able to have knowledge of the DNA and powerful relationships in every major distribution channel and I want figure out where the real money and momentum is and be able to shift my focus to that point. I believe it is harder to get a 3PM job because most want you to have a book of business or solid relationships, but it can be done. To work in my first third party marketing position I worked for free for 3 weeks to prove myself and took a big cut in pay coming in the door, but now I'm in my dream job getting experience that I believe will continue to be more valuable each year.
Interested in hedge fund marketing? Read dozens of more hedge fund marketing & sales articles along with details on third party marketing within the Hedge Fund Marketing Guide.
Read dozens of additional articles related to Hedge Fund Jobs by visiting the Hedge Fund Employment Guide.
- Richard
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