Becoming a hedge fund manager is the ultimate goal for many in the financial services world. The prestige associated with the job is incredibly alluring, but many don't realize what it takes to be a hedge fund manager. (For related reading, see: Want to Work At a Hedge Fund?)

It's not as simple as just managing money, and the myriad other tasks involved mean hedge fund managers often are short on time to take care of personal matters — including managing their own personal money. For the sophisticated financial advisor, this should be viewed as an opportunity. (For related reading, see: 10 Most Famous Hedge Fund Managers.)

In addition to managing money, hedge fund managers also are responsible for:

  • Gaining and maintaining a deep knowledge of all types of investment vehicles, including but not limited to, stocks, bonds, derivatives, and foreign exchange;
  • Participating in meetings with clients and executives;
  • Hiring and firing personnel;
  • Overseeing accounting and operations department;
  • Performing risk management analysis (business and portfolio);
  • Raising capital;
  • Attending networking events;
  • Procuring compliance and legal assistance;
  • Deciding on prime brokerage firm (can take months to evaluate options);
  • Formulating a defendable investment strategy;
  • Studying the competition (what’s working, what isn’t working, why?);
  • Creating marketing materials (should be produced under the direction of a compliance officer or compliance consultant); and
  • Maintaining relationships with clients.

As you can see, hedge fund managers are extremely busy. Given the variation in the size of hedge funds, there are different levels of busy, but you would be hard-pressed to find a hedge fund manager who claims to have a lot of extra time on his or her hands. This is a positive for financial advisors. (For related reading, see: How to Start a Hedge Fund in the United States.)


Most people don’t see the two worlds of hedge fund managers and financial advisors mixing, but hedge fund managers (like the rest of us) often don’t have time to worry about how they’re going to plan for retirement, pay for healthcare, put their kids through college, pay for home improvements, and so on. (For related reading, see: What Kind of Financial Plan Makes Sense for You?)

You’re probably thinking: Hedge fund managers don’t need to worry about retirement. They make billions!

You’re right and wrong. In 2014, only six hedge fund managers made north of $1 billion. And even if you were to think: Hedge fund managers at least make millions, that’s still only partially true. In 2014, the average starting salary for a hedge fund manager was between $110,250 and $161,250. The amount that any hedge fund manager takes home depends largely on fees and performance. And while the average hedge fund returned only 3.3% in 2014 — poor compared to the 13.7% return the S&P 500 delivered — the good news is that the financial services industry is expected to see continued growth. More good news for financial advisors. (For more, see: Hedge Funds: Higher Returns or Just High Fees?)

Some financial advisors might be intimidated by the idea of approaching money managers, but qualified financial advisors will help a money manager save time. Since time is money — especially to a money manager — that money manager likely will see the benefit in a financial advisor's services. The real concern is competition. (For more, see: Key Steps To Building A Great Financial Planning Practice.)

The Bottom Line

Hedge fund managers are extremely busy. Most of them don’t have time to formulate a long-term game plan for their personal wealth because they’re too worried about outperforming the market in order to retain current business and generate future business. This opens the door for qualified financial advisors to offer their services. It’s a win/win situation. (For more, see: Ways Advisors Should Evolve in 2015 and Beyond.)