Killing non-competes will make hedge fund managers more boring people

Working in financial services is bad for your personality. As an anonymous commentator wrote here in July, an inability to think beyond all-consuming-jobs makes financial services professionals boring. Johnny Hilbrant Partridge, a Boston-based fitness instructor, has put this observation to good effect on Instagram after being barraged by private equity professionals at weddings who did nothing but talk at him about themselves.

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However, there is a mitigation for the inexorable deterioration of the financial mind: non-competes. In banks, non-competes can last up to six months. In hedge funds and electronic trading firms, they can last for two years and maybe more.

Time spent on a non-compete is known as "gardening leave." When you spend your career working 60 hours+ a week, gardening leave is great. It is a chance to travel. It's a chance to read. It's a chance to become an academic or to do anything that doesn't constitute directly competing with your former employer.

The master of the non-compete and of the pleasures of gardening leave is Giuseppe Paleologo, the indubitably interesting global head of quantitative research at Balyasny Asset Management. During the past decade of his career, Paleologo has spent over four years on gardening leave. During that time, he's assembled an impressive reading list, written books, taught at various universities and cultivated a self-deprecating sense of humour. Without all that gardening leave, Paleologo might be a lesser human.

Now, however, there are calls to restrict gardening leave again. Bloomberg notes that the UK government published a paper on the topic along with the budget and that hedge funds are apprehensive. Restricting gardening leave will boost "labour market dynamism," "reduce barriers to recruitment," and "protect workers," says the British government.  

Calls to restrict non-competes are nothing new, on either side of the Atlantic. In 2023, the previous British government said it planned to limit non-compete clauses to three months. It never did. 

The latest UK proposals include clauses that might allow senior bankers and people at hedge funds to escape the new restrictions. There are suggestions that non-competes might be restricted only at companies with more than 250 employees, or for people earning less than £125k ($167k).

If so, the Paleologos of this world should still be able to work on their personalities. It will be the junior bankers and the middle and back office professionals who will become less progressively interesting.

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