Relationship managers are creative problem-solvers with knowledge of a hedge fund’s operational issues and investment strategies. They interact with hedge fund managers to help provide necessary prime brokerage or other services to help the hedge fund be successful. Typical prime broker services include:
- Brokerage and trading services: global trade execution, clearing, and settlement
- Custody services: global custody, multi-currency management, and dividend payout
- Information services: research, access to market information, and reporting
- Financing services: margin financing, securities borrowing and lending facilities, access to repo trades, loans, collateral, equity swaps, etc.
- Risk management services: real-time trade and portfolio reporting, proprietary risk control and risk management systems.
- Administrative services: office space, computer systems and technology, lawyers, tax advisory, accountants, and secretaries. (Administrative services are used primarily by hedge fund start-ups.)
Relationship managers at large investment banks typically oversee 10 to 15 hedge fund client relationships on average, ranging in size from $10 million to several billion dollars, each having their own unique strategy.
Major duties of relationship managers include:
- Overseeing the onboarding process of new hedge fund startups (including helping managers set up their business, infrastructure, and finance and operating models)
- Building relationships with key decision-makers at hedge funds
- Serving as the point of contact for all client issues (e.g., trade booking, reporting, reconciliations, accounting, auditing, information security, risk management, etc.)
- Providing advice on new investment strategies and new funds
- Introducing prime brokerage technology and other resources to clients
- Providing financial research to hedge funds as needed
- Managing, monitoring, analyzing, and communicating financial metrics for clients
- Managing all third-party relationships (e.g., auditors, fund administrators, cash managers, risk managers, etc.) with clients
- Developing and using internal monitoring and customer relationship management tools