Lawrence Evans is a performance coach focusing on Hedge Funds, Institutional Asset Managers, and High Net Worth Individuals. He started his career at Dean Witter in the 80s, worked at Salomon Brother in the 90s, was a founder/CEO of an internet start-up before working with Dr. Ari Kiev, a renowned performance coach, and launching his coaching venture.

Mia: The concept of using coaches to improve investment results has been popularized through the recent Showtime series Billions about the fictitious Hedge Fund Axe Capital. In it, the in-house psychiatrist Wendy Rhoades plays a crucial role in turning around individual traders’ performance after they hit a losing streak. Based on your experience, is this an accurate portrayal of what happens in real life?

Lawrence: Wendy seems to do much cajoling, ’mojo finding’ and even handing out instructions to traders. That’s one approach. In my view, the best coaches focus less on ’telling’ and more on asking and guiding. Humans are often their own best resource, and I find a Socratic approach to assisting people to be very effective. This method uses disciplined questioning to test the underlying investment process of the risk taker, uncover assumptions and aid clarity when communicating with asset owners and allocators.

Coaches to hedge funds can be licensed psychiatrists, psychologists, and even neuroscientists. No one method is best for the coach. The ‘psychs’ tend to use a more therapeutic approach to assisting the trader. Some coaches come from a sports background and can use motivational and mental toughness approaches. Other techniques exist (e.g. an approach I use) where coaches focus on finding the key investing rules that match the personality and style of any investor and then introduce practical tools to follow and update these rules.

In ‘Billions’ the coach deals with tough characters. This gravitas is crucial to all successful investment coaches. Being willing and able to stand one’s ground with ‘masters of the universe’ is a requirement for any high-level investment coach.

Wendy is an ‘in-house’ coach. The coaches used in the industry are either ‘in-house’ or external. Both can be very effective. The key difference tends to be how much the coach reports back to the bosses linked to their conversations with traders. Wendy Rhodes must walk a fine line between helping the trader and assisting the firm’s bosses. This can be tough to manage (especially if your husband might also be involved in a conflicted loop!) and in my experience, the bosses who pay her $5m bonus can often be very persuasive! External coaches (who have multiple different hedge fund clients) tend to be more confidential around trader discussions and if asked to give opinions on the capability of individual traders politely deflect the question or give generic feedback on a group of investors thereby protecting confidentiality.

Mia: You have worked with some of the most senior traders and portfolio managers. Why do hedge funds, PMs, and investors hire coaches and therapists?

Lawrence: There are many reasons. The most common is to enhance discipline of the process and thus aid medium to long term performance. This (in my opinion) should be done by most skill focused asset managers. It is often interesting for me to hear some asset managers talk about the fact that they don’t believe in coaching for risk takers in active markets – asking this question in any other performance industry is almost ridiculous – imagine asking Andy Murray or Novak Djokovic if either thought they could have got to world number one without a team of coaches supporting them! Some investors hire coaches for other reasons. Sometimes, just to say to their investors that they work with a well-known coach is not uncommon, to ‘fix’ an underperforming trader is another, to offer as a perk to a disgruntled employee also…. The list goes on.

Defining skill and developing skill as an investor should be at the heart of hiring coaches as more skill over time always results in better performance no matter whether the game is tennis or investing!

Mia: In the series, there is intense pressure on performance. What can traders do to cope with stress and performance anxiety?

Lawrence: Controlling emotions is impossible, but controlling emotional reactions is entirely doable. Having a process that a trader can fall back on is paramount to the investing business as behaviors under stress can be very irrational. As Mike Tyson famously said ‘Everyone has a plan until they get punched in the mouth.’ Performance anxiety is pervasive and managing this requires that the coach continually reinforces the point that skill in investing is not linked to near-term performance but only linked to the discipline of a process. While this message is accepted when all is going well for an investor it often needs a third party to help when the reverse is true.

Mia: What advice do you have for anyone who wants to be a successful portfolio manager?

Lawrence: Lots think that being a successful PM is about being smart, being right more than you are wrong on individual trades and thus getting big adrenaline kicks. My advice would be that high IQ is not a requirement to be a great investor (more like high EQ), that being right doesn’t matter as long as you make more when you win than lose. Lastly if enjoying the buzz of managing ‘x billions of dollars’ is important then I suggest they become a stuntman rather than an investor! Investing is all about the process. It is not about the adrenaline.

Mia: What do the best traders do differently?

Lawrence: Typically, they exit positions with much more discipline than their peers. Initiating a position for most professional investors tends to be the end game of much rigorous thought. Having an edge when you initiate a position is possible but increasingly difficult in a world dominated by instant information. However, exiting a position can very often rely heavily on judgment more than rigor. This judgment can be completely bereft of process and often emotional. The highest skilled managers I have coached tend to follow a rigorous process whereby emotional tendencies are minimized, and judgment is calibrated.

Mia: What is driving you to work with investors/PMs?

Lawrence: I am fascinated by risk decisions. I have a physics background and am insanely curious to understand the way investors think about trading to maximise opportunity versus trading not to lose. Happily, I have found my professional niche. My personality characteristics fit extremely well with the job of being a coach to risk takers. If any of us pursue a role that is congruent with ‘who you are’ as a personality, then success is, in my opinion, is likely.

Success in any work environment enhances one’s quality of life. Success as an investment coach is financially very rewarding but more importantly is all about helping risk takers become more disciplined and thereby making better probabilistic decisions. Only this will result in better longer term performance. What drives me is to keep learning about risk and help managers with long-term performance goals while enhancing my quality of life on the way. Thanks!

Lawrence Evans is the founder of Salomon-Partners ( Salomon Partners provides advisory, coaching and skill development services to professional investors. Helping individual and organizations to unlock their potential.