Hedge managers may need Spidey’s powers

With great salaries come great adverse possibilities. The Federal Reserve Bank of New York issued a statement…

With great salaries come great adverse possibilities.
The Federal Reserve Bank of New York issued a statement last week warning that the $1.4 trillion hedge fund industry could be caught in a web of “crisis.”
The funds’ trading strategies may concentrate way too much risk in too few markets, according to a paper by Tobias Adrian, a capital markets economist at the bank. The situation bears a disturbing resemblance to what happened in 1998, when the bank helped Wall Street bail out the funds.
Yet whatever the risk to others, the risk creators themselves appear safe. The average hedge fund manager made $570 million in 2006 and three topped $1 billion, according to an April survey by Alpha magazine.
Few investors are complaining — at least for now — as hedge fund assets grew 26% in 2006, according to a study released last week by Hennessee Group LLC in New York.

MBAs are no fools
Irreverent Google Inc. in Mountain View, Calif., is the dream employer of 20% of recipients of freshly minted Master of Business Administration degrees, noted a survey last week by Fortune.com.
But several reverent financial firms made excellent showings. The Goldman Sachs Group Inc. was a solid third, with 14% of new MBAs salivating for a career with the industry’s most-famous investment banking firm, as well as a shot at its even-more-famous bonus pool.
Morgan Stanley (7%), Lehman Brothers Holdings Inc. (6%), and JPMorgan Investment Bank (5%) — all based in New York and no bonus slouches among them — also made the top 25.

Adviser mom
Mothers perform services worth $138,000 a year, concluded a study last week by Salary.com Inc. in Waltham, Mass. Financial advisers average $65,000, the company said.
It’s not the housekeeping, cooking and child rearing that jack up mom’s pay — it’s her services as “psychologist” to her spouse and offspring, the study noted.
Advisers may argue there also is plenty of psychology involved in convincing baby boomer clients there is no way their nest eggs will last until they reach 95.

Filthy rich
Los Angeles took top honors in two polls last week: worst air pollution and most millionaire households.
L.A. had the worst short-term and year-round particulate pollution, worst damage to the ozone layer and worst smog of any U.S. city, according to the American Lung Association in New York.
For the wealthy, though, the allure of living in the world’s entertainment epicenter is well worth a few hacks and wheezes.The city and its environs have 268,138 millionaire households — accounting for 23% of the state’s millionaire households and 3% of the national total, noted a study by TNS Financial Services in London.

Stag meets sushi
The Hartford (Conn.) Financial Services Group Inc. announced last week that it has become a sponsor of the Chiba Lotte Marines, a Japanese baseball team.
About three-fifths of the people who watch the Marines on television are more than 50 years old — “that matches The Hartford’s target market for variable annuities,” the company said in a statement.
As part of the sponsorship agreement, the Marines will wear the insurer’s stag logo on the front of their uniforms.
Also part of the agreement: Loquacious Marines manager Bobby Valentine — formerly skipper of the Texas Rangers and New York Mets — will make speeches to distributors of Hartford products.

Compliance matters
The road to an adviser’s heart is through his (or her) compliance burden.
Broker-dealers that keep compliance activities of their advisers to fewer than five hours per week receive high satisfaction scores, according to the 2007 Financial Advisor Satisfaction Study by J.D. Power & Associates in Westlake Village, Calif. Unfortunately, advisers spend nine hours a week on compliance, the study found.