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Aron Miodownik (aron@cambrian-associates.com) from consultancy firm Cambrian Associates gives an interesting perspective in FSO magazine:

It’s a typical story trotted out every week in the financial press — another couple of “Top Gun” traders, tired of Wall Street bureaucracy, resign to set up their new billion-dollar hedge fund. While these star traders hit the sidewalk to convince investors that they can thrive outside the protective wombs of their previous employers, some of the smart money is being invested in service companies to support the wave of cash that has been flooding into alternative assets.

Just like Maverick and Goose from the movie “Top Gun,” there is a healthy level of disrespect for their old superiors and colleagues. Risk is in their blood, and they have “the need ... the need for speed” as the oft-quoted line from the movie goes. The big question is: Can they operate effectively outside the structure of an integrated investment house?

What many of these dynamic duos often overlook is the scale of the trading support infrastructure they were effectively freeloading from their old employers. A fact also overlooked by the Hollywood hit of 20 years ago — it actually takes 34 experienced mechanics and support staff to keep an F14 fighter operational and combat ready.

On the average Wall Street trading floor, the ratio of support staff to traders is much lower, but the total cost of resources require......................

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