Merrill Lynch and hedge fund recruitment

Are hedge funds so desperate for staff that they need the help of investment banks to find them? Or are banks so keen to win lucrative prime brokerage mandates that they're stepping on recruiters' toes?

Financial News reports that Merrill Lynch is launching a new initiative to help hedge funds land staff. Led by a veteran recruiter at the bank, its aims are reportedly to assist hedge funds to recruit, retain and compensate their employees.

Global macro hedge funds may well need all the assistance they can get. After a year of volatility and lacklustre returns, the Financial Times reports that many have made losses - and that Fulcrum Asset Management, for one, is making redundancies and therefore won't need hiring help anyway.

But hedge fund recruiters maintain most funds have little problem attracting and retaining staff, making it unnecessary for Merrill to ride to the rescue. Instead, they say the bank is merely cashing in by broadening its prime brokerage business.

"It's not unusual for prime brokers to offer a recruiting service alongside everything else," says David Durham, managing director of hedge fund recruiter Durham Consulting. "They want to be a one stop shop for their clients."

However, Durham says potential hedge fund candidates may not be as receptive to overtures from a recruiter at Merrill Lynch as to those from a wholly impartial headhunter. "They might be worried about feedback somehow getting back to their employer."

Another hedge fund recruiter says Merrill's venture is unlikely to succeed: "Recruiters in banks lack the subtlety to work in this market. I'd be interested to see how long it is before they give up."