The Jumpstart Our Business Startups Act, which is better known as the JOBS Act, is expected to create thousands of jobs and some of them, say industry insiders, are going to be created in the "startup" center of a financial services sector, the hedge fund industry.
The bulk of these jobs will be in marketing, investor relations and client relations, and we can expect additional jobs to be created at vendor companies that either offer these services or will likely spring up as a result of the JOBS Act. Don’t expect an avalanche of new positions, but there should be an uptick.
That’s the opinion of several industry observers.
Act loosens regulations
The act, which was signed by President Obama in April, loosens many securities regulations and encourages the funding of small businesses, particularly startups. Among other things, it lifts the ban on general solicitation of clients and allows funds to advertise and market aggressively.
“It will cause all firms to consider their branding, and it will cause all firms to raise their branding game,” Jennifer Prosek, managing partner of CJP Communications, a public relations firm with a growing hedge fund practice, tells eFinancialCareers.
Heightened interest in branding
Prosek says there is heightened interest in branding and marketing among hedge funds.
“I believe there will be more jobs in financial public relations and marketing,” she says. “Hedge funds are the emerging market of marketing and public relations agencies. Today, every single firm with assets over $1 billion has a PR firm representing it. We’re seeing bigger firms hiring chief marketing officers or chief communications officers.”
Rob Kaplan, a partner at the law firm Kaplan Voekler Cunningham & Frank, PLC, which worked closely with many of Congress as the JOBS Act was developed, agrees that this new law could lead to a boost of marketing and communication opportunities.
“From our perspective, we see this as creating the jobs,” he tells eFinancialCareers, noting that traditionally, he says, hedge funds have been sold to limited audiences.
Smaller companies need to raise their profile
Tom Voekler, an attorney at the firm, says the major components of the act will automatically create a need by smaller or emerging companies to raise their public profile.
“There will be an immediate need to get public awareness of the products,” he says. “There will be an immediate need for financial branding and to get people excited about investing in them.”
Robert “Bob” Olman, proprietor of Alpha Search Advisory Partners, an executive search consultancy and advisor in alternative asset management consolidation, says that in addition to the creation of some jobs he sees a trickle down effect.
“I see it creating additional revenue streams to service providers and some jobs relating to marketing, investor relations and client services because you can now advertise to the general public and because of increased potential for client-facing activity and increased branding," he says.
Prosek says that if every hedge fund with over $3 billion in assets hired just one marketing or communications officer, that could still be a lot of jobs. She believes the new law presents a terrific opportunity for marketing and public relations firms.
“There are only three or four marketing or PR firms I know that have the expertise. I could see whole firms popping up around this industry,” adds Prosek, who attributes half of her company’s 20 percent growth last year to the alternative wealth sector.