Friday Highlight  

How entrepreneurial should portfolio managers be?

How entrepreneurial should portfolio managers be?
Credit: Andrea Piacquadio via Pexels

A lot of blood, cash and ink has been spilled over the search for the prototypic rainmaker in business, be they entrepreneur or portfolio manager.

The prototypes of these two roles are very different, but there are some key questions to consider.

In what way do the two roles differ, and what do they have in common?

Additionally, should investment companies look for people with a entrepreneurial background or profile?

Portfolio managers are certainly entrepreneurial in some sense, but how are they different from the classic type of entrepreneur if he or she exists? Can you morph from one into the other?

A person’s ability and tendency to engage in entrepreneurial behaviours is what causes businesses to innovate and grow.

A crucial feature of the war for talent is to identify, engage, and retain entrepreneurial people.

If businesses fail to pay attention to these individuals, it is argued they will find it much harder to innovate; and if they fail to innovate they will find it much harder to grow. 

Entrepreneurs are people who have the ability to see and evaluate business opportunities; to gather the necessary resources to take advantage of them; and to initiate appropriate action to ensure success.

Some might say that the best portfolio managers are not that wildly different, but that they are just more analytical, less impulsive entrepreneurs.

Opportunities and gaps in the market

According to seasoned psychologists, entrepreneurs are well known for their opportunism, always on the lookout to find and exploit new openings.

They do not like missing out on opportunities when they present themselves.

These individuals are capable of seeing potential in a crisis, and see possibilities where others see problems.

At the same time, this sheer enthusiasm about potential ventures may make them overestimate the value of prospective projects.

They are eager to spot trends and new opportunities, keeping up-to-date and ahead of the game with technology, connecting seemingly unrelated events and paying close attention to other businesses, particularly competitors.  

As a down side they may over-estimate the value of new opportunities and they can be too excited by technological and other novelty. It could also lead to poor decision-making.

Their optimism means they often believe things are simpler than they really are.

But for the entrepreneur and the portfolio manager, both seek to find that which others overlook.

Drive, energy and ambition

Entrepreneurs are usually visionaries in the sense that they are always future-oriented and strategic.

Most have a restless energy and engagement with all sorts of business.

They are well known for their pro-activity, initiative, assertiveness and being results-orientated. 

They do serious business monitoring with great concern for quality and efficiency.

And they do show real commitment to those who are useful to them in the sense that they help deliver their vision; good networkers with political savvy, which is a very desirable characteristic.