Private equity managers are competing fiercely for talent as they try to develop their ability to raise money from wealthy individuals, a new and untapped source of capital for the industry.
The biggest alternative asset managers have this year dramatically increased the pace of hiring in their private wealth divisions, the units focused on attracting capital from high-net-worth investors. This competition for market share and a relatively small pool of candidates has created intense competition for the best candidates and a wave of talent poaching from traditional financial services firms such as banks and mutual fund managers.
Apollo Global Management, Blackstone, Ares, KKR and EQT have been the most active private hire contractors this year, according to Jensen Partners, an executive search firm for the alternative investment industry.
Private wealth hiring by these firms more than quadrupled in the first quarter of this year compared with the same period in 2021, and doubled in the second quarter through June 24, Jensen Partners said. Those firms have added at least 122 employees focused on private wealth fundraising by 2022, Jensen Partners said.
“There’s a huge talent war between the top five to 10 private equity firms in the world. They’re all making offers to similar candidates,” said Sasha Jensen, the firm’s founder and chief executive. He says he sees candidates weighing multiple offers with attractive guarantees and recruited after a few months in a new position.
“There’s a race to the talent bank,” Jensen said.
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In the US, people with at least $1 million in liquid assets or $200,000 in annual income can invest in private funds.
Until recently, most private equity firms largely ignored these investors. Marketing funds to so many people is expensive and a logistical challenge. For many companies it is also unnecessary, given the amount of capital they have been able to raise from institutional investors such as pension funds and public endowments.
But with public pension funds facing potential overexposure to the asset class, larger private equity firms are now chasing this market for a long time. The hiring competition has not slowed despite recession fears in recent months that have prompted other companies, even on Wall Street, to slow hiring or even begin layoffs.
“There’s a search for talent that on the outside can look a bit manic,” said Raj Dhanda, global head of wealth management in Ares’ wealth management solutions group. Dhanda said Ares’ private wealth count has grown by about 30% in the past year, to about 105 people.
“This is a strong market for people who want to move or who have been in the private wealth channel. They know they are in demand and they have a lot of options.”
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Companies face some challenges in building their private wealth channels. One is the large number of new types of employees they must hire to enter the market: investment advisors; sellers; people with relationships in private banks; and legal, operational and compliance staff.
Jensen calls it a “talent-starved market.” While they have recruited from each other and other alternative asset managers, private equity firms have also been poaching employees from traditional financial services firms such as banks and mutual fund managers.
With ambitious plans to attract individual investors, Apollo has added the most private hires this year, according to data from Jensen Partners. The firm now has about 150 employees in its private wealth group, most of whom have joined in the past year, including about 60 who joined through the acquisition of the asset management group of United States from Griffin Capital, a company spokeswoman said.
High-profile additions to Apollo include Edward Moon, who joined from HSBC to lead the firm’s global wealth business for the Asia-Pacific region, and Howard Nifoussi, formerly of Goldman Sachs, who joined the firm as head of US wealth management for the firm’s client. and product solutions group.
Although competitors are stepping up, Blackstone still has the largest retail arm among private equity firms, experts say. The New York firm’s private wealth group has grown to about 275 employees from about 115 at the end of 2019, a spokesman said.
About 100 of those private wealth employees have joined in the past year, said Todd Myers, chief operating officer of Blackstone’s private wealth solutions group. The company may not maintain that pace of hiring, but “there’s no doubt that the focus we have on the space and building the team will continue,” Myers said.
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This article was published by Dow Jones Newswires, a service of the Dow Jones Group