A recent article in CFA Institute outlines the findings of a research project by Focus Consulting Group intended to identify the common attributes of high-performing investment teams.

The study—which consisted of surveying 96 individuals from 10 top investment teams (rated based on ten-year performance records) –found the following ten common attributes:

1. Disciplined process: The top teams have buy/size/sell process disciplines as well as “clarity and acceptance of decision rights: Everyone knows who makes the final call and what the ground rules for decision making are.”
2. Continuous improvement: “Many investment firms fail to examine their filters or engage in post-mortems on a regular basis to evaluate past decisions.” The study found that only about 10% of the investment teams evaluated conducted “after-action” analysis. According to behavioral research, the article says, “our minds rewrite history, so careful records are necessary to learn from experience.”
3. Independence from outside influencers: Top-performing teams make clients the priority, are keenly focused on process and execution, and resist influence from shareholders or parent companies.
4. Diversity of thinking styles: The top teams evaluate cognitive diversity by using a personality model that tests the problem-solving approaches of their members. “Top teams have a mix of different styles,” the study found.
5. Developing team members: Recent active manager track records highlighted that the same firms that are underperforming resist developing their analysts. The best-performing teams “develop and train their smart, hardworking analysts.”
6. Committed to one another’s success: This factor, the article says, was an extremely important success factor, adding, “We all know a common problem in the investment world: big egos. The best teams operate from a true sense of team.”
7. Passion for our work: Many finance professionals place money and winning above passion for their work, which can lead to demotivation when performance or bonuses are down. “The top teams truly love the markets and the work: Their passion carries them through the inevitable down periods.”
8. We enjoy working together: “Teams that like and trust each other tend to have better debates. Debate is important, and many mediocre investment teams don’t achieve it.”
9. The members of our team debate well: “Only teams with high trust and candor can hope to achieve true debate and dialogue.”
10. Emotional intelligence: Investment professionals, the article says, are becoming increasingly aware of the importance of EQ in good decision-making.