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Is Gen Y Ready To Work At Your Hedge Fund?

They grew up with the Internet and handheld devices but does Generation Y have the right skills to work at your hedge fund or prop shop?

Today's college graduates have never known a world where the Internet didn't exist. They grew up with Smartphones, IM and 300 television channels compared to your measly five. They don't get your 8-track tape jokes and Star Wars starts with Anakin Skywalker and JarJar Binks and not Luke, Leia and Han Solo.

Feeling old yet? Think about this, Gramps: This year, the United States will unleash 1,781,000 college graduates with a four-year degree according to National Center for Education Statistics (NCES) and the majority of them were born in 1990. (That's about two years before Microsoft unveiled Windows 3.1, an operating system that crashed only three times a day.)

These bright-eyed and eager grads are smart, tech savvy and can multitask with flair. They are also entering one of the tightest and most competitive job markets in ages. Do they have the skills to work in your hedge fund or prop shop?

Where are the hottest schools for quant degrees? Check out The Top Quant Schools, According to the Street.

According to Lou Ricci, partner and co-founder of quant trading headhunting firm The Hagan Ricci Group, Gen Y has the talent, but are sadly lacking in on-the-job experience.

"They definitely do have the skills but the challenge is to find that have some experience," says the 25-year headhunting veteran. "Internships are very important. Having job experience is better than just having an academic background."

Ricci continues: "Everybody wants the formal degree and someone with skills and practical experience as well. So someone with one to two years experience is the best candidate right now."

For more of Ricci's thoughts, read our full Q&A Ask a Quant Headhunter.

Even with the social media and multi-tasking wizardry that seems like second nature, some worry about Gen Y's ability to focus and drill down into data and solve problems.

According to Vidis Vaiciunas, a former head of trading at a subsidiary of AGF Investments and now an independent consultant: "In the old days you had to really pay attention and spend a lot more time on a particular trade or task because you didn't have the tools to work with them," he says.

"Now, they have grown with these tools, the video games and all of these things, they are very comfortable with them but their attention span... They might say, 'This is not working for me now, so I'll go over here" without necessarily properly analyzing this trade," says Vaicaiunas. "Some don't say, "perhaps I should look at this a little more.""

At the recent Trade Tech event in New York, Advanced Trading asked Michael Lindh, vice president, head of options trading for Nuveen Asset Management, if Gen Y has a good sense of attention to detail. He laughed and said, "On the record, I don't think you can generalize."

Why Wall Street?

If the capital markets are having trouble hiring university graduates with top-notch skills it might be that they have bypassed Wall Street for Web 2.0 jobs. Even the most pro-capitalism booster must admit that Wall Street has lost some luster in the past four years: The credit and mortgage crisis on 2008, the subsequent bailouts, and the wildly popular Occupy Wall Street movements in large cities has tarnished the reputation of today's capital markets.

How challenging is it on today's trading desk? Check out The New Trader: Adapt or Die.

If that weren't enough bad news, the news reports of smaller bonuses for traders at major firms haven't helped. If young desk traders are lucky to get a bonus this year, it might be capped at a paltry $125,000. It's hard to put a down payment on a Soho loft or pay off those student loans from Princeton or UPenn when Google or Apple might be offering discounts on stock shares.

"There's a lot going on outside of financial services and Wall Street might not be as sexy as it once was. Very interesting things like Google and related initiatives have presented themselves," says Matt Samulsen, principal for market research firm Woodbine Associates. "It does have an appeal to the graduate."

Despite some doubts, Wall Street will still manage to attract top young talent. According to Megan Costello, director of North America Client Services of Fidessa, the capital markets will eventually win out even if prospects might seem dim at the moment.

"In the long term, a career on Wall Street will not lose its appeal," she says, "but for now, other industries might grow while the capital markets continue to find their footing."

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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