The financial services industry is suffering a severe shortage of accountants who know anything about hedge funds.
This was the verdict of a recent article in Accountancy Age, and industry insiders suggest it may indeed be true. "There's no shortage of people interested in working in the hedge funds space," says Stuart McClaren, director of hedge fund services at Deloitte & Touche. "But there is a big difference in being interested and having the right experience."
As the number of hedge funds increases, McClaren says it's increasingly difficult for them to find suitable accounting staff to work in-house, and increasingly difficult for the Big Four to find staff to work hedge fund accounts externally. "There's only a finite pool of people with the right experience, and more and more people are dipping into it," McClaren says.
Recruiters confirm the conundrum. "There's been a real rise in the number of small boutique hedge funds," says Neil Owen of recruiter Robert Half City. "Hedge funds need people with knowledge of complex derivatives products and it's hard to find them. There's a lack of good accountants in financial services as it is."
He adds that matters are complicated by the fact that small hedge funds rarely employ more than a handful of accountants, meaning that accountants who work in them need to be comfortable across a spectrum of roles. It's not enough just to know about credit derivatives, familiarity with regulatory and management accounting may also be required.
Richard Gander, senior consultant on the senior finance team at recruitment firm Morgan McKinley, says 80% of the accountants going into hedge funds have worked in product control roles in the trading arms of investment banks. He says banks are likely to reward these people well in the coming bonus round, making it harder than ever for hedge funds to lure them away.
It's little surprise, therefore, that hedge funds are dangling tempting pay carrots as inspiration for accountants to defect. "Accountants who move to hedge funds can typically earn a 10,000 to 15,000 premium on their base salary," says Owen. This is in addition to the potential to earn a bonus averaging 50%.
It doesn't bode well for the Big Four, who are also keen to grow their hedge fund units but can't compete in terms of pay. McClaren says Deloitte is looking to grow, and possibly even to double, its 15-strong hedge fund team in the coming years. Like hedge funds, Deloitte's hunting ground is the accountancy departments of investment banks. But having made the lucrative move into investment banking, McClaren says not many accountants are keen to come back.