Thursday, 3 April 2008

A fund manager's existential angst

This is excellent, everything about it. It tells you so much about financial services, especially the self-reinforcing guff! Not only the fact that a person making a decent living out of active fund management thinks it's built on a lie (that you can consistently out-perform), but the comments too. Another (older) fund manager says he agrees, but that he's been at the job for over twenty years. Then you get the arrogant young fund manager who says he KNOWS that you can out-perform because he has done it, and that if you don't agree you must be a failure. Or what about the guy saying have kids because then you won't think about it.

Genius all round!

Anywhere here it is:

Should I quit just because my work lacks purpose?
By Lucy Kellaway

Published: April 3 2008 03:00 | Last updated: April 3 2008 03:00

I am a fund manager in the UK. My job is great: flexible and well-paid. My problem is that I don't believe it is possible to outperform other fund managers with any consistency. I believe the industry is based on the lie that fund managers add value through skill, rather than luck - which makes it hard to keep motivated. Should I move - even though I can't think of anything else I want to do - or should I accept the idea that work is not meant to be meaningful?

Fund manager, male, 34


Looking for meaning in work is like looking for happiness. The more you look, the less you find.

You have been searching so hard that not only have you failed to find meaning, but you've found something more unsettling - a lie.

In some ways you are right: fund managers generally don't outperform consistently and luck often plays as much of a part as skill. On average they perform only averagely, and - once you subtract the huge fees - they perform sub-averagely.

If I were picking you as a friend, I'd like your honesty. It is particularly nice set against the brash, self-promoting comments that your peers have posted on the FT website. Yet you aren't applying to be my friend; you are asking for advice on your working life. In which case I advise you to drop this line of thought, as working at something that you believe to be a lie is too corroding.

The good news is that there is another, better, way of looking at your job. As my colleague Martin Wolf (journalist, male, 61) explains below, fund managers collectively contribute a good deal to the economy by making markets work more efficiently. I suggest you recite his comments to yourself 20 times a day until the message sticks.

At the same time, do some gentle spadework on other occupations. Talk to people you know who do other things and then compare their jobs with yours. You say your job is "great" - I bet most of them would not say the same.

The other thing that might help you now is fear. If the markets go on being quite so unrewarding you may soon find that your "great" job is not so safe as you think. The prospect of losing it may make you drop your existential doubts quite smartly.



The reason it is difficult to outperform markets consistently is that so many clever people are trying to do so. The result of these efforts is already in the prices at which you buy and sell. Since you can outperform the others only by exploiting opportunities they have failed to identify, the scale of the collective effort ensures you are likely to fail. But you are being rewarded handsomely for contributing to a socially useful result: a moderately efficient capital market.

Journalist, male, 61

Too right

I have been a fund manager for 27 years and I agree with you completely.

Fund manager, male, 50s

Honest John

If only the rest of the industry was as honest as you. Most active fund management is a swizz: a great big pile of marketing hype. Now that you have seen the light you should stay, enjoy the salary and write a blog about it. The world would be richer and you wouldn't be any the poorer.

Investor, male, 36

Quit now

Your question suggests you are a failure as a fund manager. As someone who has outperformed every year for 14 years I know your statement is false. If you can't find a way of changing your investment approach - this challenge should be motivation enough - you should get out.

Fund manager, male, 39


I suggest you breed immediately. The increased financial pressure and the shortage of sleep will quickly assuage any regrets you have about lack of skill in your job. You can agonise over your life path when you become an empty nester.

Financier, male, 31

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