Feb 16th 2017 - by Patrick Adrian, CFA
Technology can do a lot within and around the research process, but at the end of the day the foundation of successful organizations are the people and the teams doing the work. As we moved from practitioners to vendors in our own careers, we’ve had the opportunity to interact with and observe many different teams and analysts. With this perspective commonalities arise across the most successful of the bunch and should serve as the areas to focus on to improve any professional investment analyst.
Here’s four characteristics of a research analyst that we’ve seen produces the best results on a team:
This is likely obvious, but you would be surprised how many professionals lack the prerequisite knowledge to do investment research! Natural aptitude certainly varies, but no one is born with the wide swath of interdisciplinary knowledge required to create a cogent investment thesis, make sense of global macroeconomic forces, or identify an investment organization likely to produce outsized returns. We have found that a strong formal educational backing in college along with the CFA curriculum has become the minimum starting point. Continuous learning and voracious reading also seem to fit into this category as the research analyst’s job of understanding something as nebulous as capital markets never really ends.
In contrast to acquiring knowledge or the CFA program, I’ve read that curiosity is something people are born with and/or is nurtured in early childhood. You can have all of the acronyms you want after your name, but without a propensity to ask and seek answers to difficult questions, all of the formal education in the world won’t help you. Firm culture can play heavily into how curiosity is viewed. If questioning analysts are labeled as ‘troublemakers’ or ‘non-conformists’ by firm leaders it can have an untold negative effect on morale and likely lead to staff turnover, which can have implications for client retention and ultimately impact investment performance. The bottom line is hire curious people and encourage free and open thought.
I very specifically chose to highlight listening and not questioning, because the latter is far less important. The most successful analysts that I’ve worked with or observed are superb active listeners. If they are in a meeting with Money Manager and they ask a question, they will process vast amounts of information and probe until they achieve a clear understanding. Often I’ve seen them ask the same question twice in succession. They aren’t necessarily quick, but they are thorough. One trick I picked up from a mentor of mine is to program your brain to inject “so what?” into your brain’s talk track as your actively listen to an answer.
The dread of taking notes! I used to absolutely hate documenting meetings. Eventually I realized my extremely poor typing skills were partly to blame. Once rectified, I probably erred on the verbose side of things. The important thing to realize is that documentation is essential to the individual, team, and firm. For the individual who wants to improve their skills there are few better activities than documentation. It’s a way of cooking down the knowledge we’ve received into just the essential information which will later be used to form opinions or areas of further inquiry.
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