Jensen Partners Q3 Newsletter: Retail Is All the Rage
As we enter the midst of the holiday retail season, a different ‘retail’ market has become top-of-mind throughout the alternatives industry – retail investors.
Across the industry, hiring activity shows that alternative investment firms are pegging future growth on a new type of client—retail and high-net-worth investors. This isn't an overnight trend. Alts firms have been making noise about expanding to the retail/HNW market for several years now, no doubt intrigued by the possibility of raising more funds and assets while also diversifying their client base. But what was once a faint murmur has turned into an undeniable roar in recent weeks as a growing number of prominent financial powerhouses have signaled their intentions to market themselves to the Main Street investor.
Jensen Partners has witnessed this trend firsthand. In recent months, there has been a noticeable increase in the number of talent searches we’ve conducted related to retail channels like wealth management. We’ve also had a number of reporters calling us to confirm hiring data backs up the claims being made about the growth of dedicated client service and wealth management teams.
And as anyone paying careful attention to this trend has noticed, there have been many recent high profile announcements, including:
Ares Management, which announced the formation of Ares Wealth Management Solutions last month. That team will be staffed with more than 90 fundraising and client service professionals, making it "one of the largest teams dedicated to the wealth management channel in the alternatives industry," according to Ares.
Blackstone recently announced plans to double its private wealth team, with a particular focus on the European market.
Neuberger Berman announced a partnership with iCapital in September, aimed at boosting distribution of its $300 million private markets fund to financial advisors and high-net-worth investors. For iCapital, this adds to similar existing partnerships with BlackRock, BlackStone and Carlyle Group.
Earlier this year, Apollo Global Management announced plans to create a new business designed to expand its offerings to "an increasingly broad base of individual investors via a variety of wealth management channels."
Even Vanguard, the titan of retail investing, is partnering with HarbourVest to offer private equity investments to individual investors.
Several other private equity firms, including Partners Group, have established funds that are offered as part of defined contribution plans. While this is still a very small market, the potential for growth has many alts firms understandably excited, especially now that Pool Employer Plans (PEPs) – the latest entry to the retirement marketplace authorized under the SECURE Act – have opened new avenues for growth in the 401(k) market.
Industry hiring data also demonstrates a clear emphasis on growth in retail channels.
Our data on marketing moves across the alternative investment industry shows a clear surge in hiring among private equity firms (153 moves in Q3, 458 YTD) and some multi-asset firms (199 moves in Q3, 538 YTD), with several firms rapidly expanding their wealth management credentials by hoovering up entire teams. Much of this talent (not surprisingly) comes from the wealth management industry, with PE firms alone adding 34 professionals to their wealth management units.
The wealth management industry is also hiring at record numbers—both to replace professionals that have left for greener pastures and to satisfy the growing demand for access to alternative investment products. Marketing professionals with retail or wealth management experience are in very high demand right now, particularly those who already have familiarity with alternative investments.
We are hearing a few potential reasons for this trend, all of which appear to have significant tailwinds to propel the long-term growth of private assets in the retail market:
Fundraising is at a record high, with private equity firms raising some $535 billion in Q3 alone. Many private equity firms have signaled they plan to continue launching new funds and raising more capital as investor demand (among both retail and institutional investors) grows unabated.
Low-interest rates and a jagged economic recovery have led many investors to seek investment opportunities in the private markets. Meanwhile, more companies are choosing to stay private, creating more opportunities for private markets firms to find good deals.
Recent regulatory changes are making it easier for alternative investment firms to go after the retail market. In September, an SEC advisory panel recommended that "ordinary investors" should have easier access to private equity, real estate and private debt funds. This follows an expansion of the definition of "accredited investor" by regulators in 2020.
Private equity's embrace of ESG and impact investing strategies gives firms investment products that may appeal to a retail or HNW investor. Multiple industry studies have shown that retail investors are among those most interested in aligning their investments with their values.
We may only be in the early innings of private equity firms and other alts firms building out their distribution teams to go after the retail/HNW market. Given how few individual investors currently have exposure to alternative investments in their retirement or investment portfolios, there is a strong possibility that the wealth management channel can drive the next generation of growth for the private equity industry. Competition among firms is already fierce, and it is only going to get tougher in the months and years ahead.
As always, the Jensen Partners team will be here tracking trends and sharing insights as we help the global alternative asset management community recruit, hire and retain the industry’s top talent.
Here is a selection of recent articles and studies about hiring, marketing and fundraising in the alternative investment industry:
FundFire: Neuberger Taps iCapital for Alts Push
Private Equity International: Blackstone plans to double private wealth team, eyes Europe expansion
Private Equity International: Carlyle to focus on institutional capital as peers build out wealth units
Private Funds CFO: Partners Group says 'great deal of interest' in 401(k) market
Wall Street Journal: SEC Panel Backs Letting Ordinary Investors Into Private Equity
Here are a few of the most interesting data points from Q3:
❖ We tracked 730 marketing moves in Q3, a 28.07% increase from Q2 2021 and only a -2.01% decrease from the 745 moves in Q1 2021, making it the seventh straight quarter that hiring activity has surpassed 400 moves.
❖ The biggest movers and shakers for Q3 included: Multi-Asset firms (199 moves), Private Equity firms (157 moves), and Hedge Funds (74 moves). These are also the three sectors that generated the most hiring activity in Q2—Multi-Asset firms (153 moves), Private Equity firms (107 moves), and Hedge Funds (86 moves)—and YTD, with Multi-Asset firms (538 moves) again leading the way, followed by Private Equity firms (458 moves), and Hedge Funds (276 moves).
❖ We observed that several strategies saw a jump in Q3 2021 when compared to Q2 2021, including: Infrastructure (24 moves, or +200.00%), Credit (65 moves, or +91.18%), Real Estate (36 moves, or +89.46%), Private Equity (157 moves, or +46.73%), Multi-Asset (199 moves, or +30.07%), and Wealth Management (62 moves, or +26.53%). The remaining sectors experienced a hiring slump, according to our data, including: Fund of Funds (0 moves, or -100.00%), and Hedge Funds (74 moves, or -13.95%). Both the Private Fund Group and FinTech/Venture Capital sectors, which are more niche, have not experienced a change in hiring activities since Q2.
❖ When compared to Q3 2020, we observed a similar trend, with Infrastructure, Credit, Real Estate, Private Equity, Multi-Asset, and Wealth Management experiencing a boon in hiring, although in a different order, with Multi-Asset leading the way with a 220.97% increase (or +137 moves from Q3 2020), followed by Private Equity +86.90% (or +73 moves), Wealth Management +82.35% (+28 moves), Real Estate +80.00% (or +16 moves), Infrastructure +71.43% (or +10 moves), and Credit +16.07% (or +9 moves). Compared to Q3 2020, Private Fund Group also experienced a jump in hiring with a 96.97% increase (or +32 moves). Similar to above observation, Hedge Funds and Fund of Funds are two sectors that witnessed a slump compared to Q3 2020, with Fund of Funds experiencing a 100.00% decrease in the number of hires (or -4 moves) and Hedge Funds -13.95% (or -12 moves).
❖ Similar to previous quarters, we continue to also track hiring activity in the more niche sectors of the alternative investment space. In this category, number of hires remained the same for FinTech/Venture Capital with 3 moves in both Q2 2021 and Q3 2020. Unlike the second quarter, the Secondaries sector, which saw a 17.65% decrease in Q2, experienced a 25.00% increase in marketing hires with 35 moves (or +7 moves) in Q3. Similarly, when compared to Q3 2020, we observe that the Secondaries industry saw a 218.18% increase in hires (or +24 moves).
❖ Unlike Q2, in Q3 we observe improvement in marketing hires across majority of the regions with the exception of NORAM, which had 152 moves (or -192 moves, a 55.81% decrease), and MENA, which had 2 moves (or -2 moves, a 50.00% decrease). Specifically, in the third quarter of 2021, the UK had 426 moves (+306 moves, a 255.00% increase), APAC had 86 moves (or +41 moves, a 91.11% increase), and the rest of Europe had 64 moves (+8 moves, a 14.29% increase).
Data on Diversity
With diversity emerging as a top-of-mind issue for alternative investment firms in 2020, we take a deep dive using Jensen Partners’ newly launched DiversityMetrics(TM) data visualization technology to see how well the alternative investment industry is improving diversity among the ranks of marketers.
❖ In Q3, we tracked 387 diverse moves (304 female candidates + 83 male BIPOC candidates) representing 53.01% of all marketing moves in the quarter. This is roughly consistent with Q2, when we tracked 320 diverse moves (213 female candidates and 107 BIPOC candidates), representing 56.14% of all marketing moves in the quarter.
❖ From a gender perspective, female moves in Q3 represented 41.64% of all hires, up from 37.37% in Q2 2021 and 34.55% in Q3 2020. We also observed that, unlike in the second quarter, both female and male moves increased in the third quarter. When compared to male moves, female moves increased by 42.72% from Q2 2021, whereas male moves only increased by 19.33% from Q2 2021. Similarly, when compared to Q3 2020, we observe that female moves increased by 101.32%, whereas male moves increased by only 48.95%.
❖ In terms of racial ethnicity, we continue to see Caucasians make up the bulk of all marketing moves—74.52% in Q3, although slightly decreased from 79.65% in Q2 and 78.03% in Q3 2020, which sends a positive signal. Unlike in Q2, where we observed a decline in marketing moves across all ethnicities (with the exception of Hispanic hires), in Q3 we note that marketing hire activities picked back up. South Asian moves, which experienced the highest decline in Q2 (-53.33%, or -16 from Q1), saw the highest increase in Q3 by +107.14% (or 29 moves, +15 moves from Q2). The increase in South Asian hires is followed by East Asian hires with 82 moves (or +27 moves, a +49.09% increase), Middle Eastern – 13 moves (or +3 moves, +30.00%), Hispanic – 10 moves (or +2 moves, +25.00%), Caucasian – 544 moves (or +90 moves, 19.82%), and Black – 22 moves (or +3 moves, 15.79%).
❖ Earlier this year, we noted that the number of Black marketing professionals hired as a percentage of all hires decreased by about 12% from the pre-protest period (Q4 2019--Q2 2020) to the post-protest period (Q3 2020-Q1 2021), with Black professionals remaining a minority across the alternative investment industry with just 3.1% of all hires in Q1 2021. In Q2, we observed a continuation of this negative trend with Black professionals representing only 3.33% of all hires, which showed a very minimal improvement. In Q3, we observe that the number of Black marketing professionals hired as a percentage of all hires dipped again, representing only 3.01%, reversing the slight improvement we witnessed in Q2.
❖ In terms of diversity hiring across strategies, we observed that 28.22% of all hires were non-Caucasian in Q3, up from 20.53% in Q2 (or +37.48%). The following strategies had the highest number of non-Caucasian hires: Credit (34 or 52.31%, and +385.71% from Q2), Infrastructure (8 or 33.33%, and +700.00% from Q2), Wealth Management (19 or 30.65%, and +280.00% from Q2), Private Equity (45 or 28.66%, and +60.71% from Q2), Private Fund Group (17 or 26.15%, and +41.67% from Q2), Secondaries (9 or 25.71%, and +80.00% from Q2), and Multi-Asset (49 or 24.62%, and +36.11% from Q2).
|See below for a partial selection of current mandates. Contact us at firstname.lastname@example.org to learn more about each search.|
|HIRING: $200B Private Equity Firm|
ROLE: Managing Director, ICS Product Specialist
DESCRIPTION: Our client is searching for a Managing Director level professional with 12+ years of experience of executing an investor relations or project/product management role at a private equity firm. The successful candidate will focus on the firm’s U.S. and global funds, partnering with the investment team, running point on external messaging, attending meetings with the fundraising team, and spearheading the entire fundraising process. The main areas of focus will include marketing materials and investor communications, new product launches, investor due diligence, and support of the fundraising team. The ability to demonstrate strong leadership and project management skills is key for this position.
HIRING: $200B Private Equity Firm
ROLE: VP, Institutional Distribution
DESCRIPTION: Our client is seeking a VP level hire for their Institutional Client Solutions team. The responsibilities for this role include developing and executing a long-term business development/ marketing plan for the firm’s broad product set and new business initiatives, introduction of new LPs to the firm, driving business development across a wide range of products. The successful candidate will have 6-10 yeas of professional financial markets experience with a process driven approach to asset raising.
HIRING: $200B Private Equity Firm
ROLE: Principal/MD, Liquid Credit Distribution
DESCRIPTION: Our client is seeking a Principal/ MD Level hire who will focus on helping drive AUM growth for the firm’s liquid credit strategies business. The main responsibilities for this role include developing long term relationships with major fixed income allocators in North America, working closely with firm’s existing institutional client solutions team to cross sell liquid credit solutions products to large firm relationships, an identifying new product development opportunity. The successful candidate will have 10+ years of experience calling on intermediary/ institutional clients, with a proven track record of raising assets, developing relationships and identifying new business development opportunities across multiple client channels.
HIRING: $44B Multi Asset Firm
ROLE: Global Head of Investor Relations / Distribution
LOCATION: New York
DESCRIPTION: Our client is looking for a Head of IR/ Distribution who will manage the global distribution team. This person will be responsible for building distribution strategies for the firm’s fund and various business verticals. The successful candidate should have significant experience managing a large and global team, possessing a strong EQ with the ability to motivate and manage a broad team whilst consistently focused on business development.
HIRING: $158B Private Equity Firm
ROLE: AVP/ VP Product Specialist, Product Management- Client Solutions
LOCATION: Los Angeles
DESCRIPTION: Our client is seeking a AVP/ VP level hire for their Product Specialist Group. Some of the responsibilities for this role include serving as the subject matter expert for the firms Special Situations strategy both internally and externally, supporting fundraising initiatives by partnering with marketing and investments teams, creating and maintaining product/ strategy content, and collaborating with the marketing and investment professionals to research, propose and implement new product ideas. The successful candidate will have 7+ years of experience in a product specialist, sales or client facing investment role.
HIRING: $12bn Global Infrastructure Fund
ROLE: Associate – Managing Director, Infrastructure Investments
DESCRIPTION: Our client is one of the leading Global Digital Infrastructure Funds and is looking to add multiple Investment hires spanning North American, London and Asia. The successful candidates will be an Infrastructure Investment specialist with relevant sector experience across digital / telecommunication infrastructure or related investment channels. They will have hands-on investment origination and deal experience to work with an established global team of over 250 people. Diversity initiatives are key priority for this progressive and highly innovative Infrastructure Fund.
HIRING: $23bn Hedge Fund / Alternative Investment Fund
ROLE: Principal – Managing Director, Capital Raiser – North American Investor coverage
LOCATION: London or NYC
DESCRIPTION: Our Client is seeking to hire a candidate with 12+ years of Fundraising experience to target North American Investors. The successful candidate will have a deep knowledge of private credit and/or real estate strategies, as well as established relationships with demonstrable track record of raising capital from North American Institutional Investors. This position will work closely with the global business development and fundraising team, but will be tasked with further developing the firm’s institutional footprint in North America.
HIRING: Global Private Fund Placement and Investment Advisory Firm
ROLE: Director or Principal, North American Distribution – Midwest and West Coast
LOCATION: New York, Chicago or West Coast
DESCRIPTION: Our client is seeking to hire a Private Markets Distribution specialist. The successful candidate will have 7+ years of experience working in private equity fundraising and covering Limited Partners, for either a third-party marketing firm, private capital allocator or as an in-house fundraising professional. They will have a proven track record of building credible and trusted relationships with investors and generating private capital commitments from a broad cross-section of Limited Partners with a preference for embedded LP relationships in the Midwest or West Coast. Product knowledge is important and a deep understanding of the fundamentals of the private equity industry, including current trends, deal structures, investor requirements and competitive landscapes.
HIRING: $14B Global Alternative Investment Firm
ROLE: Product Specialist Analyst, Business Development & Investor Relations
DESCRIPTION: The Product Specialist Analyst will be a key contributor within the Product Specialist function, which is part of the firm’s global Business Development & Investor Relations effort. The key responsibilities of this role include interacting and coordinating across a variety of business functions to gather critical investment-related information. This hire will support the senior product specialists on the team with a wide range of activities including engagement with existing and prospective investors, as well as internal investment professionals. The successful candidate will have 2-5 years’ experience working in an investment bank or asset management firm, in a trading, sales or product specialist capacity.
HIRING: $14B Global Alternative Investment Firm
ROLE: Product Specialist Associate Director
DESCRIPTION: Our client is seeking a Product Specialist Associate Director who will serve as an internal expert of the firm’s products and portfolios to the Business Development & Investor Relations team. This person will be responsible for assisting in the development and maintenance of competitor intelligence in specific markets and products, supporting the efforts of regional managers, and assisting colleagues on new product development initiatives and fund launches. The successful candidate will have 5-7 years of financial services experience in alternative investment, asset management, or investment backing in a trading, sales, or product specialist capacity.
HIRING: $6.5B Hedge Fund
ROLE: Senior Marketing Manager
LOCATION: Chicago, NY, or Naples
DESCRIPTION: Our client is seeking a senior level marketing professional who has deep relationships and a track record of raising assets for special situation strategies. The successful candidate has either equity or credit experience.