Hedge Fund Jobs: Best in Finance IT?

If you’re wondering whether to leave your job as a software engineer with an investment bank for a similar role with a hedge fund, you might want to consider more than just the pay. Yes, hedge funds such as Citadel pay technologists well, but they also offer something else that banks struggle to compete with: close proximity to end-users.

“Pretty much everyone here is a massively high-caliber engineer,” said an anonymous CTO for one global hedge fund. “And because the caliber of our technologists is so high, we don’t use business analysts. We never have.”

The hedge fund in question isn’t alone in following this model. Technologists at Citadel praise the fund for avoiding product managers, and say that developers there interact directly with end-users in the business. Citadel’s developers effectively combine the role of architect, engineer, internal sales and product support; technology jobs at the fund are therefore deemed more interesting and innovative than elsewhere.

If an engineer wants to develop something on the back of a user’s comment, he/she can. Citadel’s jobs are also said to require a higher standard of technologist who understands the business as well as the stack. Citadel declined to comment.

The rival fund’s CTO says that eliminating business analysts from the development process means nothing is lost in translation. “We have our technologists sitting right next to our quants and portfolio managers, and therefore the technologists naturally have to be business analysts, too. This best serves the interests of our technologists and our investment team.”

Historically, Goldman Sachs was known for giving its engineers more freedom than other banks. Most banks today, though, have rigorous processes for developing new products; this is partly because of cost constraints, but also regulatory issues. Business analysts (who map the requirements of the business) and product managers (who are similar to business analysts but also responsible for developing the new products) are therefore plentiful in banking. And where BAs and product managers are plentiful, developers are effectively implementing someone else’s ideas.  

Quant fund Two Sigma recently posted an article to its own site on the distinction between product managers and software engineers in tech firms: “Software engineers design, implement, and maintain software systems.” By comparison, product managers aim to “create products that customers love,” making them “the conduit between the users, the business, and the engineers” (and also accountable for those end-to-end user scenarios).

Although Two Sigma employs separate product managers and engineers, it says that the roles at the fund are more likely to be blurred than at big tech firms (and banks): “An engineer working in an area without a dedicated PM may take on PM-like work, whereas a PM working in an area with limited engineering resources on some project may participate in software development.”

This article originally appeared in eFinancialCareers.