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The evolution of hedge fund management

By Andrea Murad

Robert McEwan CA, Managing Director at The Blackstone Group, discusses the hedge fund landscape, his role at one of the largest hedge funds in the world and challenges in the industry.

Why did you decide to work in the hedge fund industry?

I became intrigued by the financial services industry when I was doing my Masters in Finance at Strathclyde University in Glasgow. I was not exactly sure at that stage what a hedge fund was but knew that I would have to move to either London or New York to pursue such a career.

I always wanted to become a Chartered Accountant, which I completed in Scotland after receiving my Masters, and then took my first step into the financial services industry.

I moved to Luxembourg where I worked at Ernst & Young in their asset management audit practice. This gave me my first taste of an ‘investment fund’ and I started to better understand the landscape of the industry.

During my time in Luxembourg, a few partners from the Ernst & Young New York office gave training on hedge funds, which taught me what a hedge fund is and how it operates.

After hearing and understanding this, I knew I wanted to work in the industry and the best way to do this would be to move to New York, which for me would be a huge step in my career.

I moved to Ernst & Young New York after three years in Luxembourg, and I worked in their hedge fund practice on two very large hedge funds and one of the largest hedge fund administrators. After six years at Ernst & Young in New York, I decided that I wanted to challenge myself further.

Coincidentally, around this time I received an email out of the blue from the Blackstone Alternative Asset Management (BAAM) Chief Operating Officer asking if I could meet him. Shortly thereafter I was hired by BAAM and I am still working on one of the largest hedge fund allocators in the world.

Can you describe what your role entails?

I am a Managing Director at BAAM in the Finance and Operations Group. My role is to lead Finance and Operations Team’s efforts in supporting our direct trading platform. This entails fund accounting, valuation, financial reporting, and trading operations. Our direct trading business is where we have our own hedge funds versus the traditional BAAM fund of funds business.

I was hired in 2014 on the accounting side to build out our operational infrastructure for our direct trading business, which was starting to grow at this time and has grown significantly since then.

My role has changed significantly over the years and has evolved into more than just accounting. I oversee the day-to-day accounting and operations, which includes being heavily involved in identifying areas to improve operational efficiency and become more scalable as a business.

I also focus on business development from an operational perspective which includes the launch of new funds and products.

What are the challenges of your role?

There are a number of challenges. There is the continual pace of growth and evolution of the business. BAAM is always looking to innovate and grow, which makes the job exceptionally interesting but can also make it challenging.

These challenges, however, drive you to think and innovate which ultimately lead to a better business and skills experience from a personal perspective.

Another big challenge is the need to build a scalable business. This involves continually thinking about how to do things more efficiently and timely, and where data can be analysed to make more informed decisions. To achieve this, you need technology, which is now venturing into artificial intelligence (AI) and robotic process automation (RPA).

What advice do you have for anyone looking to make a career change into hedge funds? How should they prepare?

Working at a large hedge fund is very demanding and challenging. There is a lot at stake each day given the real-time nature of the investment activities and investor demands.

On top of this, the hedge fund industry in general is going through an evolution that brings about many challenges and opportunities.

At a hedge fund, investment personnel – the ‘front office’ – drive the business from an investment and revenue perspective. The ‘back office’ manages the day-to-day operations of the business and works closely with the front office. I work in the back office so can only speak from this perspective.

I think to be successful in any job you need to understand what is going on and as a consequence need to “get into the weeds”. I think this is also very positive for your new team as it shows you are willing to roll up your sleeves and get things done. This is the initial phase which can soon transition into a more strategic role once you figure out what is going on and what improvements are required.

I believe success is all about how much you care about doing things right and how much effort you are prepared to put in to get it right. This is driven by your attitude, desire and determination to do well.

Success is also predicated on how you develop and make others successful. It is not only about yourself, it is about the team and creating opportunities for everyone and empowering everyone in order to get the best out of your people.

Whether changing careers to work at a hedge fund or trying to be successful at an existing role at a hedge fund, it is critical to be flexible and open-minded when assessing your new role and dealing with new people; dig into the details, listen to others’ opinions, show you are prepared to get into the weeds and add value.

My objective is always to make things better by challenging how existing processes work and developing my team. I am not content to progress along the same path and do the same thing day in and day out. Complacency breeds mediocrity.

How do you think technology will change the role of the accountant?

Technology, including AI and RPA, will change accounting and operational roles significantly over the next few years. There’s a lot of pressure in businesses to reduce costs and redundancies, which can be solved by investing in technology.

These changes should ultimately lead to better data and reporting which should result in better decision making and value add activities to the business. People will need to evolve in their roles and think of how to use the output from the technology to enhance their businesses.

ICAS has recently signed an agreement with US accountancy bodies to provide a simplified route for CAs to achieve the US CPA and licensure, will this create opportunities for you in your role?

The agreement is a move in the right direction. When I moved to the US, I had to study for the CPA, which made my first two years difficult between work and study. I think this time could have been used more wisely to either work more or study something else as there was a lot of overlap between what I studied for my CA and then the CPA. This agreement may give individuals better opportunities to transition to the US.

This article was originally published in the October 2018 issue of CA North America.