Mitch Ackles, the President of the Hedge Fund Association and the CEO of Hedge Fund PR, has been a big supporter of this transition since the day the JOBS Act was signed into law. He and others within the industry have been eagerly awaiting the rules (and their start date) from the Securities and Exchange Commission, particularly those relating to advertising.
"There's essentially going to be two hedge fund industries," Ackles told StreetID this week. "If you choose not to advertise, you don't have to change anything about the way you report, about the information and the way you interact with investors. If you choose to advertise, the SEC has provided a list of what they consider to be reasonable steps to verify the suitability of the investor -- in other words, that they have a high enough net worth and they meet the criteria."
Ackles is confident that this will lead to new jobs within the financial sector.
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"Obviously it's going to be another expense for hedge funds that want to [advertise]," said Ackles. "If they're not producing these ads in-house with existing resources and staff, they are gonna create jobs in service providers. They're gonna have to hire ad agencies or hire new talent in-house who has the experience to read a rate card and understands how to measure the performance of an ad. This isn't the day job of a portfolio manager, so they are going to need to get experts in or qualified people in to make sure that they do it in the right way."
After waiting more than 80 years to advertise, Ackles does not expect a flood of ads to immediately appear online, in print or on television. But he does think that many firms -- particularly medium-sized institutions -- will use ads to promote their brands, their successes and what they can do for the investment community.
"I also think [the addition of ads] changes something significant about the industry," Ackles added. "You're familiar with what an in-house marketer's role has been traditionally in the hedge fund world. It's essentially the person that keeps the Rolodex of current and prospective investors and makes sure that they keep them informed of the progress of the fund -- set up the meetings, get the manager in front of the right prospective investors, make sure they receive the pitch book, the performance reports, the due diligence questionnaire.
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"Now hedge funds can look at a more traditional job role—a marketing director; an internal person to deal with advertising."
Ackles anticipates job growth within financial media as well. TV networks and print/online publications have been creating rate cards specifically for hedge funds.
He also expects some firms to sponsor charity events, among other gatherings that tend to attract high-net-worth individuals who may already be accredited investors.