How to avoid psychopaths and boost your wealth

By: Tim Bennett
Could you spot a narcissist, a Machiavellian or a sociopath? This week Tim Bennett explains why investors need to on the look-out for all three.

How to avoid psychopaths and boost your wealth

Here is a potentially expensive catch-22 when it comes to choosing an investment adviser or manager. On the one hand, we may naturally gravitate towards someone who is confident and assured. However, there is a risk that this external image conceals something more sinister.

Why we should care

According to a fairly recent study of 101 top hedge fund managers, the reason this matters is that the personality traits on the right of the previous slide have been associated with below-average performance.
The study looked at the performance of the group and compared it to the personality traits of the managers within it. What the researchers found is that managers who exhibited classic psychopathic personality traits (gleaned mostly from extensive analysis of interview footage) did worse than their peers and by some margin.

The Dark Triad

This underperforming group could be further split into three rough sub-groups.
The authors suggest that by avoiding managers who display these traits, investors may achieve a better overall result. That said, they do acknowledge the limitations of the study;

What to do?

In a nutshell, the key takeaway is that investors need to develop a way to spot someone who is only interested in themselves, rather than their clients. Here are a few guidelines;

For a copy of the underlying research, please go to;

You can find a copy of the underlying research here.