How’s your day been so far?
My guess is that you have experienced disruption and disturbance, interruption and interference. Some of this may have taken the form of acute disruption, while most of it probably will have been experienced as chronic disturbance. Acute disruption and chronic disturbance are two aspects of one problem: noise.
Acute noise gets the headlines because it almost always involves a surprise or a shock. Financial journalists love to cover these stories: a sudden spike in volatility causes a star fund manager to make a series of bad investment decisions that causes severe alpha destruction and the end of a glittering career. The stories that deal with the fallout of acute noise are vivid and compelling.
But chronic noise gets way less airtime because, frankly, it’s boring. It’s the set of ongoing, low-level distractions and interferences that characterise most days for most investment professionals. One of the more insidious characteristics of chronic noise is that, for the most part, it doesn’t seem to be a problem. By definition, anything that is chronic is experienced on an ongoing basis and, precisely because of this, it will feel normal after a while. But just because it feels normal, it doesn’t mean that it’s not a problem.
The effect of chronic noise accumulates over time and it leads to a slow and inevitable deterioration in your ability to generate alpha and your ability to leverage your professional relationships, until eventually there can be a systemic cascade which leaves you barely able to function at all. Despite this, chronic noise is poorly managed across the fund management industry, perhaps because it’s not recognised as being a problem, or because it’s not considered to be manageable. Unfortunately it is a problem, but fortunately it’s manageable.
Chronic noise causes wear and tear on your mind and body, the symptoms of which include: physical exhaustion; a loss of motivation or enthusiasm; and a deterioration in cognitive performance. This is a list of the classic symptoms of burnout, where mental and physical deterioration reinforce one another in an ever-accelerating downward spiral.
Burnout is a threat to your career just as much as a series of catastrophic investment decisions; it just plays out on a longer time scale. Burnout is a syndrome that is treated by many in the investment industry, especially those who wear their stress as a badge of honour, as something that befalls lesser human beings, the 90-pound weaklings who don’t deserve to be in the game anyway. But is it only the constitutionally frail who are at risk?
People who are most likely to suffer burnout have the following characteristics:
- They have a perfectionist streak.
- They are highly competitive.
- Their identity is closely linked to their performance.
- Their jobs carry a high level of responsibility.
- They have low levels of control over the ultimate outcomes of their decisions.
Does that sound like anyone you know?
The combination of the personality profile of the typical fund manager and the noisy environment in which the fund manager typically operates makes for a particularly toxic brew. Burnout is a real and present danger. While some fund managers acknowledge that this might be true of others, very few believe that it is true of themselves.
- How close to burnout are you now? What are the signs?
- What might be the consequences for you and others if you were to burn out?
- What might you do differently to immunise yourself from the effects of chronic noise?
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