Posts

Writing for financial experts

How should you tailor your financial writing for experts like institutional investors or financial professionals? I have many gut feelings about what you should do. But this time I’m drawing on other people’s research. Nielsen Norman Group (NNG) performs great research about how people read on the web. NNG’s Hoa Loranger and Kate Meyer discuss “Writing Digital Copy for Domain Experts” in an article that may apply to financial experts. I say “may apply” because their article only mentions “medical professionals, scientists, and engineers.”

Here are the five main findings or recommendations in Loranger and Meyer’s article:

  1. Provide facts, avoid interpretation.
  2. Citations and supporting evidence are critical.
  3. Experts care about recency.
  4. Shared vocabularies change the rules for plain language.
  5. Grammar and spelling count.

1. Provide facts, avoid interpretation

Loranger and Meyer say that experts care most about the following two types of information, as they are “on a fact-finding mission”:

  1. New information that they haven’t considered or heard of
  2. Contradictory information that is contrary to their existing knowledge or beliefs

“Lead with data and facts. Researchers can see through hype,” say Loranger and Meyer. They stress presenting facts and providing “proof for your statements.” The idea of providing proof squares with what colleagues have told me about their perception of the difference between writing for institutional vs. retail investors.

Although Loranger and Meyer’s heading says to “avoid interpretation,” I think what they really mean is to make your content “free from unnecessary fluff and vague assertions,” as they say elsewhere in this piece.

2. Citations and supporting evidence are critical

Loranger and Meyer say, “Domain experts often scan bylines and citations for name recognition. If the content is written by a well-respected person or entity, readers are more likely to trust the information.”

How might this translate into the world of investment management? It might mean the difference between using asset-class performance data from Standard & Poor’s or Bloomberg Barclays vs. data from a little firm that’s not widely known or—even worse—simply saying, “in our experience, this is how this asset class behaves.”

If possible, make it easy for the experts to access your original sources of information. Of course, that’s not possible if you’re licensing proprietary information from a provider that keeps its data behind a pay wall.

3. Experts care about recency

Experts may leave sites where article dates aren’t shown or the dates are old, according to NNG’s research.

Loranger and Meyer say, “Show dates even for evergreen content that continues to be relevant long past its publication date. Domain experts can decipher between time-sensitive developments and long-lasting concepts and older dates.” (This makes me feel good about the fact that my blog posts on this website show their publication date.)

4. Shared vocabularies change the rules for plain language

It’s OK to use technical language if your audience consists solely of technical experts, according to this article. Although I often rail against technical language, as in “Words to avoid in your investment communications with regular folks,” I’m more flexible when I work on institutional communications.

Explaining concepts that experts know well may work against you, say the authors. Experts may look at your work and decide that it’s meant for the general public. Still, I suggest that you be careful not to overestimate your audience. For example, a so-called institutional investor could be a less sophisticated investment committee member or financial advisor. Read “How to make one quarterly letter fit clients at different levels of sophistication” for my take on how to keep everybody happy.

Loranger and Meyer suggest that you use extra care if your audience includes people new to the field, if you’re discussing less-common concepts or tangential fields, or if your terms have multiple meanings.

5. Grammar and spelling count

You may think that experts care more about the information than how you write about it. Think again.

“…when your target users are highly educated, they may be more likely to catch mistakes in your writing, and they may be more critical,” say Loranger and Meyer.

Useful tips for writing online for experts

This article provided some tips specific to writing online for experts.

You can’t dump too many facts on a web page. You’ll overwhelm your readers. The solution? Loranger and Hoa suggest layering your information, using two techniques:

  1. State the summary at the top. Then provide more detail information down the page progressively.
  2. Include hyperlinks that take readers to supporting details on deeper-level pages. Experts are particularly likely to click on hyperlinks to increase their understanding of a topic.

An A-to-Z index to your content may make sense for experts, while it wouldn’t work for the general public “because users don’t often know the exact name of the topic they want,” say Loranger and Meyer.

Another online writing tip: sign up for the Nielsen Norman Group weekly newsletter. It’s one of the few newsletters I read regularly.

Ideal quarterly investment letters: Meaningful, specific, and short

Investment managers’ quarterly investment letters should be meaningful to clients, specific to the manager, and short. These are the key conclusions I drew from my quarterly investment letter survey.

Meaningful content

“Clarity,” “insight,” and “candor” were the most popular answers to the question, “What’s the ONE WORD that best describes what investment managers should strive for in their quarterly letters to clients?” I think these popular answers can be summed up by the term “meaningful content.”

The image below gives a visual overview of the responses. Type size is proportional to the number of respondents choosing a word as their answer.

 

Here are examples of how respondents explained their word choices.

  • “Clarity” suggests that you have done the reading, research, analysis and due diligence on what you’ve taken in. You have synthesized it. Rather than repeating a litany of what you’ve read, you provide a simple summary of what key points you commend to their attention and why.
  • Clarity. Clients appreciate honesty, and the best way to demonstrate honesty is to be clear in what you are saying. Always consider the client’s perspective. Put yourself in their shoes and ask yourself what is important / relevant, and how you would want it shown. And be honest with your answers.
  • Candid. Warren Buffet discusses both types of investment – the ones that made money and ones where he lost – candidly.
  • Clarity – The world and financial markets are very dynamic, intertwined, and complex. The ability of an investment manager to take seemingly disparate and complex topics and distill them down to an explainable relationship, etc is rare but very value-added.
  • Needs to reflect the voice of the investment team not marketing fluff.
  • Relevance – As a customer, it’s about my money, my future, my family, it’s not about your strategy, your brilliance, your research department. I need to know: Can I count on you?

Content specific to the manager

The survey asked respondents to specify whether various letter components were very important, important, somewhat important, unimportant, or not applicable. Respondents placed the highest importance on the manager’s investment strategy and review of the past quarter’s portfolio performance. Here’s the rank order:

  1. Manager’s investment strategy
  2. Review of the past quarter’s portfolio performance
  3. Manager’s market outlook
  4. Graphs, tables, or other illustrations
  5. Client-specific portfolio returns
  6. Stock-specific or security-specific comments
  7. Sector-level strategy
  8. Review of the past quarter’s market and economy
  9. Something not listed above

These results say to me that readers want content they couldn’t read elsewhere.

Here are some relevant responses:

  • The investments are a commodity…the client bought the firm and that brand should be consistently presented in all interactions.
  • What is missing in the vast majority of reports from managers is any genuine clue as to how and why they made/lost money. Market or asset class reviews or forecasts and returns summaries are ultimately meaningless if the manager doesn’t understand the drivers of his return. I like to see a thorough and genuinely insightful “attributions analysis” that makes it plain to the reader that the manager knows precisely why/how/where the money was made.
  • Needs to be something more than what I get from Bloomberg or WSJ commentary. I want to understand their outlook, and how that shapes their strategy.
  • Manager should include “what went right, what went wrong” during the quarter relative to investment performance. In other words, performance attribution at a high level.

Keep it short

More than 40% of respondents thought a quarterly investment letter should run two pages or less. A length of five pages or more was the least popular response, as you can see in the graph below.

Respondents favor shorter letters that are reader-friendly, as the comments below show.

  • Investors want you to tell them what THEY need to know, not everything YOU know!
  • I read a lot of quarterly letters, and I selfishly would like to be able to pull out the important nugget(s) quickly. More importantly, as an investment advisor I know that my clients will not put a lot of time into reading these letters. If they look long and boring, they simply won’t bother.
  • As an investment manager researcher, I read numerous quarterly commentaries from our sub advisors. The managers that are able to deliver the highlights clearly and in a concise manner stand out because they are better able to communicate their message to me and our clients.
  • In my experience in investment communications, I’ve learned that less can be more. Get to the point quickly! Most financial advisors (and investors) don’t have much time to read and are in a state of information overload. Many receiving a 3-page commentary will put it in their “read later” pile (meaning it may never be read). However, if they received a shorter commentary (1-page would be ideal), they might read it upon receipt, getting information in a much more timely manner.
  • People are busy and finance isn’t always the easiest or most scintillating topic; keep it short and sweet so you can keep your clients engaged and informed, Value their time.
  • After three pages, most people get bored 🙂

Make it personal

It’s not easy to make quarterly letters feel personal and customized without spending lots of time on them. Some of the techniques that respondents suggested for achieving this included:

  • Using “you”
  • Integrating data from portfolio accounting
  • Know the type of client that is attracted to your investment strategy and speak to that client’s biases and need for information.
  • Answer the question, what is in it for them? Comfort them? Encourage them?
  • Add a personal note within the body of the letter. “I took my son shopping for school supplies and Walmart…” and if there is an investment tie-in, so much the better.
  • Include  a personal touch regardless of how long it takes. These clients give us their hard earned money to manage and we should take time to report to them.

Well-written

A number of comments supported my belief that letters should be well written.

  • I’m busy and I read a lot of investment letters, I don’t have time to reread investment letters in an effort to understand what the manager is really trying to tell me. I want a straightforward letter that I only have to read once to understand.
  • You must write to the level of the average individual, not at a level that will impress your peers. Your clients would not be working with you if they did not believe you are intelligent…you don’t have to show them how intelligent you are by spewing out words that fly over their heads. If you want personalized and relevant letters, you must bring yourself to their level.
  • I try to speak in my natural voice, rather than a “writing” voice. I also find that humor and self-deprecation (on non-professional issues) resonate with clients.

Thank you, CFA Institute LinkedIn Group members and other respondents!

I am very grateful to all of the people who responded. Your comments made this topic come alive. I wish I could have included more of them.

I believe most of the survey respondents are financial or marketing professionals, but I didn’t collect their demographics. However, I suspect that members of two of my LinkedIn Groups–CFA Institute Members and Financial Writing/Marketing Communications–were particularly generous with their contributions.

Note: I edited some of the language for clarity on June 1, 2014.

Tweets from Jack Malvey’s Boston Security Analysts Society talk

BNY Mellon’s Jack Malvey spoke about the Search for Global Relative Value During the Great Transition Age, 2009-2025, to the Boston Security Analysts Society yesterday.

I tweeted some of the bits that interested me the most. I was especially interested to learn that he holds no bonds in his personal portfolio.


If YOU attended the session, I’m interested to learn your thoughts about it.

Guest post: “Creating Pitch Books Without Losing Your Mind: Design & Content Management Tips”

Margaret Patterson, the co-host on my recent webinar, is a financial pitch book expert. She has created sales support tools and provided production management expertise to numerous institutional asset managers and consultants, mutual fund companies,  and wealth management advisors for 25 years. She shares her expertise in the guest post below, which originally appeared on one of my earlier blogs.

Margaret is great about answering questions, so I hope you’ll pose some.

Creating Pitch Books Without Losing Your Mind:

Design & Content Management Tips

by Margaret Patterson

Typically many employees provide input for a firm’s pitch book. To pull all that information together you need a good plan.

1. Delegate pitch book content management to one employee. That person will be the key contact for every employee and consultant who influences the pitch book.

2. A small approval committee, 3 to 5 people, should determine what content works best.

3. Give considerable attention to investment process but whittle it down to no more than five steps. Don’t over-explain. Let your graphics be a starting point for conversation.

4. Emphasizing investment professionals’ expertise gets new business. Don’t leave out the support they get from marketing, client service, operations and reporting. Finding inefficiencies in markets, sticking to disciplined investment processes and impressive client service are the marks of well-structured firms regardless of their size. An impressive organization chart carries a lot of weight with prospects.

5. Request senior management approval only after you have a complete draft that can be defended with valor. You need a concise mission statement supported by brief, punchy text and elegant graphics. 20 to 25 pages are enough. After all, people are pitching to people. Be a good listener and let your spoken story address a prospect’s unique concerns.

6. It’s a good idea to customize books if you clearly understand your prospect’s investment objectives. Customized pages can be inserted into your standard book.

7. Handouts are also valuable tools in a high courtship pitching process. Use fact sheets, company profile handouts and composite performance PDFs to provide more detailed information. Handouts also help you control who gets the information and when. Conversely, prospects will resort to taking phone calls and planning golf games if your pitch book is too long and intense.

I create a PowerPoint design system guide for each client to help them maintain consistent, effective messaging.

Input and questions are welcome. Your thoughts may show up in future articles, so let me know if I can quote you.

NICSA General Membership Meeting in tweets and posts–#NICSAGMM

The NICSA General Membership Meeting on October 6 addressed challenges facing investment managers and their service providers. Compared to other industry conferences, it emphasizes the “back office” functions that support investment professionals. In this post I present some of what caught my attention at the conference–mostly information about regulation and marketing.

The short statements are tweets, grouped by speaker. I also link to my blog posts on the meeting. In case you’re wondering, #NICSAGMM is the hashtag used on Twitter to help people find tweets related to the conference.

My blog posts about #NICSAGMM

OppenheimerFunds on the separation of marketing and sales

Citi on financial services’ biggest potential social media mistake

Opposing financial services’ social media paralysis at #NICSAGMM

Robert Pozen, MFS Investment Management, on financial reform

The back office makes mutual industry go, says Bob Pozen, MFS #NICSAGMM

Bob Pozen: SRI = systematically risky institutions. Means lots of extra regs #NICSAGMM

Pozen: Cost of SRI bailouts borne by other SRIs, NOT taxpayers #NICSAGMM

Pozen: Proprietary trading will shift from US banks to least regulated countries and companies with Volcker Rule #NICSAGMM

Pozen: Good change with Dodd-Frank: clearing for derivatives #NICSAGMM

Pozen suggests investment advisors form their own SRO #NICSAGMM

Pozen: C shares will be required to convert to A shares eventually #NICSAGMM

Pozen: Fluctuating NAV for money market funds would be end of MMFs for retail investors #NICSAGMM

Pozen: Hope we don’t over-regulate MMFs. Only 2 broke the buck #NICSAGMM

Pozen: Public-private firms like T Rowe, Franklin, Legg Mason, Black Rock will be winners in asset mgt #NICSAGMM

Pozen: Public-private means some public stock, but strong internal mgt control #NICSAGMM

Pozen: Restricted shares shouldn’t vest just because you’re still alive. Tie to performance. #NICSAGMM

Pozen: “Mortgages are the big banana that has never been touched.” Barely touched by Dodd-Frank #NICSAGMM

Pozen: Qualified residential mortgages (QRMs) will be important. Downpayment requirement will be key. #NICSAGMM

Bob Pozen: Europe has solvency crisis, US doesn’t have one…yet #NICSAGMM

Pozen: Repeated budget crises -> instability. Need to bring back compromise. #NICSAGMM

Pozen: Another crisis is inevitable at end of 2012 when Bush tax cuts expire & budget is issue #NICSAGMM

Pozen: Customers want best products at best price. #NICSAGMM

Pozen: People don’t understand inverse relationship between interest rates and bond prices #NICSAGMM

Marty Willis, OppenheimerFunds

Marty Willis, Oppenheimer Funds: Mutual funds’ biggest challenge = lack of differentiation. #NICSAGMM

Willis: New tech will allow wholesalers to improve the value they offer. Like pharmaceutical reps. #NICSAGMM

M. Willis, Oppenheimer Funds: Marketers’ toolkit now more complete. #NICSAGMM

M. Willis: Fund marketing has become editor of content across web, print, social media. #NICSAGMM

OppenheimerFunds is using predictive modeling to help wholesalers decide who to call on. #NICSAGMM

Peter Thatch, Merrill Lynch Global Wealth Management

Peter Thatch, Merrill Lynch Global Wealth Management: “Clients’ risk appetite has fallen off the cliff.” #NICSAGMM

Thatch: Products that meet clients’ current needs are more complicated #NICSAGMM

P Thatch: You’ll see more global TAA with risk parameters. #NICSAGMM

Joseph D. Kringdon, Pioneer Funds Distributors/Pioneer Investments

J. Kringdon, Pioneer Funds Distributors: If you died tomorrow, what would your clients miss about you? That’s your value. #NICSAGMM

J. Kringdon, Pioneer Funds Distributors: Clients don’t care about benchmarks #NICSAGMM

Kringdon: Pioneer Investments tries to build its intellectual capital & deliver in multiple media #NICSAGMM

Visit multisectorbond.com to see creative site for advisors to back-test fund #NICSAGMM

Lee Kowarski, kasina

L Kowarski of @kasinaUS: Compensation is broken, but no one wants to lose wholesalers. #NICSAGMM

Penny Alexander, Franklin Templeton Investments

Penny Alexander, Franklin Templeton: Best biz growth opportunities for fund cos = non-US #NICSAGMM

P Alexander: Most developed countries aren’t breeding any more. #NICSAGMM

P Alexander: $10/month invested by world’s middle income earners−>$391 billion in annual gross sales. #NICSAGMM

P Alexander: Need scale to manage lots of small accounts #NICSAGMM

Cartoon: “If we take a late retirement and an early death, we’ll just squeak by.” #NICSAGMM

P Alexander: 3-legged stool for retirement isn’t enough #NICSAGMM

P Alexander: Retirement now needs a kaleidoscope with lots of little pieces. #NICSAGMM

P Alexander: Fund industry can affect mindset & behavior to meet retirement challenge. #NICSAGMM

Penny Alexander: Technology is key to reaching next generation of investors. #NICSAGMM

P Alexander: Muslim investors don’t get as much attention as they should. #NICSAGMM

Pat Allen, a great resource for tracking asset managers’ social media

Pat Allen of Rock the Boat Marketing works for me. Well, not literally. No money changes hands. But Pat’s tracking and analysis of investment management companies spares me from the need to perform these tasks myself.

Three things stand out for me about Pat’s online presence:

  1. News coverage
  2. Analysis
  3. Twitter lists

1. News coverage

As @RocktheBoatMKTG on Twitter, Pat tweets and retweets news, blog posts, and other information relevant to investment management marketers. Here’s an example.

As @AdvisorTweets, Pat highlights the social media activity of registered investment advisors, brokers, financial planners, and other financial professionals. Asset managers need to track these financial intermediaries who are an important source of financial product sales. NOTE: Pat has put AdvisorTweets up for sale.

2. Analysis

There’s a 140-character limit to how much analysis pat can squeeze into her tweets. So, for analysis I turn to her Rock the Boat Marketing and Advisor Tweets blogs.

3. Twitter lists

To figure out which investment managers have a Twitter presence, simply mosey over to Pat’s investmentmanagers list, which she updates frequently.

Check out these highlights of Pat’s online presence. You’ll probably find more that you enjoy.

Disclosure: Pat wrote a lovely testimonial for my latest e-book. However, this blog post was brewing long before that.

Women in investments: Career advice from seasoned pros

Making a career in investment management can challenge both women and men.

Photo by whiskymac

Here are some tips I’ve heard recently.

On bosses, mentors, and sponsors

  • “Having a boss who throws you into the deep end of the pool is a good thing.”
  • Look for sponsors who’ll throw their weight behind you. They’re different from mentors who only give you advice.

Work–life balance

  • Outsource everything.
  • “I don’t cook. I don’t clean. I don’t iron.”
  • Find a good nanny. Don’t be upset if your children love them. Pay them well.
  • Give up stuff. You may need to narrow your life to only work and time with your family.
  • “Don’t be a guilty mom.” Guilty moms overindulge their kids.
  • Take a child – just one, if you have more than one – on a business trip. You’ll create a wonderful memory that’ll last for years.

Do you have career advice or an interesting story to share?

Diversification: Andre Perold’s take on its value

“Diversification shouldn’t be viewed as protecting you from losses in wealth but rather from being concentrated in the worst-performing asset classes.”

In other words, diversification puts a floor under how badly you can do when all asset classes fall.

This struck me as a valuable insight from “Harvard Business School Professor Andre Perold Looks At The Forces Reshaping the Business of Asset Management,” on the blog for the CFA Institute’s Second Annual Middle East Investment Conference.

Other points I took from the CFa Institute’s summary of Perold’s talk include the following:

  • The value of classic endowment-style management has run its course because “the low-hanging fruit has been picked.”
  • New instruments that separate alpha and beta are useful; Now asset managers don’t have to “leave significant money on the table.”
  • Stable-weight portfolios should be replaced by portfolios with stable risk budgets. (I’ve written about Perold’s views in “Stable Risk Portfolios: A Timely Alternative to Static Asset Allocations?“)

Best European investment opportunities are cyclical, say strategists

European cyclical stocks and banks in the continent’s peripheral countries offer the best investment opportunities, according to Ian Harnett, managing director for European strategy at Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He made his comments during “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

Reasons to favor cyclical stocks from Europe’s core countries

Why cyclicals?

“Globally, excess liquidity will continue to make ‘risk assets’ more attractive,” said Harnett. Cyclical stocks in core Europe will benefit most from loose monetary policy and weak exchange rates.

More reasons to favor cyclicals include the following:

  • The VIX measure of volatility will fall closer to 10 by year-end 2011, in Harnett’s opinion
  • European Union stocks remain cheap, using 10-year trailing earnings per share–They are still below lows hit in 2003 and earlier
  • European cyclicals tend to do better when the yield curve flattens
  • Dynamic earnings growth will support these stocks

ASR’s perspective on Europe’s crisis

The main points I took from ASR’s description of Europe’s situation were

  1. The important of cyclicality
  2. A shift in relative cost of capital between core and peripheral Europe
  3. The survival of the euro

Europe’s woes have both structural and cyclical elements, said Harnett. However, he said, fiscal deficits such as we’ve seen recently are nearly always cyclical rather than structural. Harnett made his point with a graph showing the correlation between “Budget Balance as a % of GDP” and “Industrials Hiring Intentions.” “This has been a jolly good indication of deficits until now,” he added. “Europe’s woes are more ‘cyclical’ than ‘structural,’ ” he concluded.

Investors are moving into “safe havens,” such as Germany, at the expense of Europe’s peripheral countries, Harnett said. As a result, the core countries of Europe are paying an inappropriately low cost of capital. German consumer confidence is at record highs, so they are spending.

“The German locomotive can carry a very heavy load,” said Harnett. German excess demand is being funneled to Europe’s peripheral countries. Germans are vacationing abroad and buying peripheral countries’ exports. Trade imbalances within the euro zone are shrinking. Eventually, banks will benefit, especially in the peripheral countries, assuming they survive the current turmoil. ASR is currently very long on European peripheral banks and neutral on the banks of core Europe. Harnett added that he expects ASR’s next move will be to overweight core banks.

The euro is a political creation, so politicians will ensure its survival, according to Harnett. So your investment strategy shouldn’t bet against the euro, if you agree with ASR’s opinions.

For more on ASR’s views, go to “Japanese crisis good for European economies” and “U.S. companies may move supply chain home.”

U.S. companies may move supply chain home, says Absolute Strategy Research

U.S. companies may move more of their production back home, said David Bowers, managing director of global strategy for Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He spoke during the Q&A session following “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

The lessons of the past few years suggest that companies should bring their supply chain home to avoid “the risks of exchange rates or tectonic plates,” suggested Bowers. The disruptions caused by the Japanese tsunami have been in the news.

Ian Harnett, ASR’s managing director for European strategy, agreed, elaborating on Bowers’ exchange rate comment. Offshoring is based on low foreign exchange volatility, he said. But foreign exchange volatility is rising. Food price inflation will encourage foreign countries to allow their currencies appreciate. As a result,  labor costs could rise by as much as 10 times, depressing the wage advantage overseas. This argues for in-sourcing, Harnett concluded.