Hedge fund consultants are individuals or firms that provide a variety of different services to hedge funds and hedge fund managers. These individuals or firms typically have significant industry expertise and a strong network within the investment management industry. These groups also tend to have a strong working knowledge of the mechanics of the hedge fund investment process. Accordingly, managers will utilize hedge fund consultants for a variety of reasons in order to get the most out of their hedge fund.
Hedge fund consultants are mostly known for helping managers to raise money for their hedge funds (either through direct third party marketing services or through introductions to capital raisers). Hedge fund consultants are also known for helping managers to choose the best hedge fund service providers for the fund’s specific investment programs. For example, a consultant may suggest a certain prime broker (or mini prime broker) who has the specific
In addition to helping managers with these items, a hedge fund consultant can also help in the following ways:
Business plan development – many hedge fund managers do not draft any sort of business plan for their hedge fund. We believe that a well-drafted business plan for a hedge fund manager is essential. There are many issues on the operational side which a manager will need to deal with and plan for. Hedge fund consultants can help managers to draft and revise business plans, as well as to identify potential issues within the plan.
Fine-tuning the hedge fund marketing campaign – hedge fund managers typically will use a variety of mediums (including hedge fund pitchbooks, hedge fund tearsheets, and hedge fund websites) as part of an overall hedge fund marketing strategy. Hedge fund consultants can help a manager to draft marketing materials and/or fine-tune these marketing campaigns.
Drafting an investment program/ strategy description – some hedge fund managers have a hard time drafting an investment program description. These fund managers typically have an understanding of their program but are not sure how to put the program into words. Hedge fund consultants can help the manager to draft the investment program description based on conversations with the manager.
Hedge fund database selection – managers may want to consider submitting their performance results to hedge fund databases as part of their capital raising campaign. Hedge fund consultants can help managers to decide to which databases they should submit their performance information. Additionally, some fund-of-fund managers will actively use databases to scout new and emerging hedge fund talent. A hedge fund consultant can help these fund-of-fund managers to select the most appropriate databases for their needs.
Introduction to other service providers – because of their long list of contacts within the hedge fund industry, hedge fund consultants can provide managers with introductions to other service providers such as hedge fund administrators, hedge fund auditors and prime brokers. The consultant will also be able to provide recommendations for third party marketing firms and/ or specific capital introduction services.
Please contact us if you would like more information on hedge fund consultants and other hedge fund service providers.
*** UPDATE ***
The services which each consultant offers are different. For example, one hedge fund consultant, Richard Wilson (who runs the Hedge Fund Consulting Group and HedgeFundBlogger.com) provided us with the following case study of one hedge fund consulting experience:
6 months ago I had a hedge fund startup come to me which had been building a track record for around 14 months. They approached me while looking for recommendations for service providers, as they needed to identify an auditing firm with hedge fund experience yet reasonable fees. I helped them connect with one and then discussed their business strategy with them. During this conversation it became apparent that this firm needed help marketing, their sole piece of marketing material was a 2 page word document their lawyer had helped them create. I worked with them to develop an original PowerPoint marketing piece, simple website and one pager for their new hedge fund. They have outsourced this marketing material work to my firm and see my counsel when marketing or sales opportunities arise.
While much of the work I do is simply helping hedge fund managers connect with appropriate prime brokerage firms, auditors and consultants, the above example shows how an outside consultant with expertise within a niche area may help hedge funds improve their business prospects.
We remind all hedge fund managers that all hedge fund marketing materials should be reviewed by the hedge fund attorney prior to distribution. Managers should also make sure that the attorney reviews the hedge fund website for compliance with all applicable laws and regulations.