Writing sample: Three key lessons from “Schwab and TD Ameritrade Financial Stability”

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Sometimes a little tweaking can make your email message more compelling to your readers. That’s especially true when you make your message reader-centric.

Below you’ll find a “before” example of a message I received recently and the “after” version with my edits to make it more client-focused.

BEFORE:

Schwab and TD Ameritrade Financial Stability

We received a number of phone calls the past few days about the financial stability of Charles Schwab and TD Ameritrade who we use to custody client accounts.  I am pleased to report that they are both in fine shape, as they are not investment banks.   Investment banks create products and sell them to institutions such as insurance companies, pension plans and banks.  In addition, your accounts are separately held and each account has both SIPC and supplemental insurance far in excess of your accounts’ value. For more information about SIPC and supplemental insurance please click on the following link:

 

 

AFTER MY EDITING:

Schwab and TD Ameritrade are Financially Stable

Has the recent financial turmoil made you worry about the  financial stability of the firms that provide custody for your accounts with us?

Charles Schwab and TD Ameritrade are both in fine shape. They are not investment banks and they have strong balance sheets.

In addition, your accounts are separately held and each account has both Securities Investor Protection Corporation (SIPC) and supplemental insurance far in excess of the account’s value. For more information on SIPC and supplemental insurance click on the following link:

COMPARING THE BEFORE AND AFTER

What are the key lessons from the two versions?

  1. Use headings to convey your message. My heading, “Schwab and TD Ameritrade are Financially Stable” conveys a lot more information than “Schwab and TD Ameritrade Financial Stability.” It puts readers’ minds at ease quickly and may spare them having to read the entire message
  2. Talk about you, not us. The first version starts with “we received…” and talks about “we use to custody….” The second begins with a focus on you.
  3. Don’t assume that your reader understands acronyms. Spell out that SIPC is short for Securities Investor Protection Corporation.

Still, I give the authors credit for e-mailing their clients promptly. It’s not easy to craft a perfect communication when time is short.

 

Image courtesy of Rinjith Krishnan at FreeDigitalPhotos.net

New GIPS standards will change the rules for marketers of separate accounts

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Marketers of investment strategies marketed using performance composites will have to learn new recommendations and rules once GIPS 2010 goes into effect. If you’re a reader of marketing materials for separate accounts, you will find new information to digest.

GIPS is short for Global Investment Performance Standards. The next draft of GIPS standards will be issued for public comment in early 2009, with new standards to be issued in early 2010 and to become effective on January 1, 2011, according to a presentation on “GIPS Update: What to Expect in 2010” by Sunette Mulder, chair of the GIPS Executive Committee and Investment Manager Subcommittee, and Karyn Vincent, chair of the GIPS Interpretations Subcommittee. They spoke at the CFA Institute’s GIPS Standards Annual Conference on Sept. 25.

I nodded my head when Vincent said that common practice in the U.S. is to show 10 years of investment composite performance and to drop off the eleventh year once an additional year of performance is completed. I remember salespeople gleefully anticipating when a bad year would drop off the bar graph.

However, the draft of GIPS 2010 will recommend that firms show more than 10 years of history. That was just one of many points made by Vincent and Mulder. 

Another change that will impact marketers: the composite description must be expanded to include “enough information to understand all of the key characteristics, including risks, of the composite strategy.” Apparently it was felt that firms don’t adequately discuss risks.

Speaking of risk, another innovation is to require disclosure of a risk measure such as standard deviation for the composite and the benchmark for the most recent three-year period. If standard deviation isn’t the best risk statistic, you may show additional statistics.

If you don’t like what you’re hearing–or if you think some of these ideas should definitely get implemented–remember you’ll have an opportunity to give feedback on the draft of GIPS 2010. You can keep up at the GIPS Standards website.
_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Better client reporting on investments is coming, says speaker at GIPS conference

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Better client reporting on investments is on the horizon, according to “The Future of Performance Measurement,” a Sept. 25 presentation by Stefan Illmer, head of client reporting for Credit Suisse, at the CFA Institute’s GIPS Standards Annual Conference in Boston.

There is “increasing pressure to provide analytics…from the client’s point of view” in addition to providing them for the portfolio manager. That translates into:

  • Providing the money-weighted rate of return, which is the client return, rather than simply the time-weighted rate of return
  • Using analytics to address where absolute profits are coming from in addition to analyzing returns vs. the benchmark; this is especially true for private clients

Illmer also foresees more reporting for clients’ total portfolios, incorporating clients’ externally held assets such as real estate, private equity, assets held with other custodians, and advisory accounts.

An audience member asked how firms can aggregate client portfolios for look-through given the 90-day delay in mutual funds reporting their holdings. Illmer replied that the data exists because it is used for daily net asset value calculations. He believes that pressure from clients may eventually win the release of this data.


For a related post, see “Financial crisis will change client reporting, according to Credit Suisse executive.”

_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Financial crisis will change client reporting, according to Credit Suisse executive

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In response to my question about how the current financial crisis will impact performance measurement and reporting, Stefan Illmer, head of client reporting for Credit Suisse, said that the investment industry needs standards for client reporting. 

He said he wasn’t referring to performance reporting to clients, but to a broader array of topics such as valuation, pricing, transparency, and disclosures. 

For example, if a firm regularly runs return attribution software, it will immediately notice when a bond defaults because there will be no price for the bond. Of course, that assumes that the firm doesn’t let the portfolio manager define the price for the bond.

Illmer answered my question during the Q&A section of his Sept. 25 presentation on “The Future of Performance Measurement” at the CFA Institute’s GIPS Standards Annual Conference in Boston.
_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Who’s hiring CFA charterholders…and other job search tips

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Who’s hiring?

Evergreen Investments and Leerink Swann are among those hiring, according to their representatives on a panel called “Talent Search Professionals Uncensored” at “Investing in Your Career,” a CFA Institute program held in Boston on September 23.

Some firms will always hire in down- as well as up-markets, said Bob Gorog, a partner with CT Partners, an executive search firm. Certain areas are stronger than others, in his experience, including:

  • Senior risk professionals and international (especially frontier markets) portfolio management professionals
  • Client-facing professionals, especially those who can make clients feel better
  • Alternative investments professionals

Sascha Bernitsky, a senior recruiting consultant with Evergreen Investments, echoed Gorog’s comment about interest in international and alternative investments. Evergreen is also interested in fixed income professionals who have managed through market turmoil, he said.

Investment banking firm Leerink Swann especially likes job candidates who combine health care and financial expertise, said Alice Avanian, associate director of equity research. 

More job hunting tips for investment professionals

These three panelists offered additional job hunting tips. Here’s what I took away.

  • Make it easy for recruiters and hiring managers to see how you fit their opening. In addition to your resume, craft a cover letter that highlights how your expertise makes you the best candidate for the specific opening for which you’re applying
  • Prepare for your interview because your oral communication skills are more important than ever as investment professionals spend more time in front of clients.
  • You can turn your failures to your advantage. Bernitsky looks for candidates who can talk about how they learned from a failure.
  • Have plenty of references. Gorog said some of his clients are asking for seven to 10 references, although they may only call three to four of them.
  • Social networking can help–or hurt. Bernitsky has used LinkedIn to search for hard-to-fill positions. On the other hand, be cautious about posting personal information on sites like Facebook because your name will be Googled, said Gorog.

As for your written communications, consider the following.

  • Proofread and critique your letters and emails. Automated spell-check is not enough. Bad grammar can automatically disqualify you, said Avanian and Bernitsky. Also, a friend who reads your cover letter can objectively assess how well the letter makes your case.
  • Write a strong email subject line. For example: “small cap equity analyst–resume of Bob Johnson.” It’s important to include the title of the position you’re applying for.
  • Don’t bury the name of the person who referred you. Bernitsky said he’ll be sure to read your resume, if you mention the person who referred you at the top of your email. Presumably the referrer should be an employee of his company or someone he knows.
  • Resumes should run two pages or less, and be laid out in a reader-friendly style.
  • Send a thank you note within 24 hours. Either email or snail mail is fine, said Avanian.

Good luck with your job hunt!

_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Is a global infrastructure fund right for your clients’ portfolios?

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With their high returns and low correlations to other major indices over the past five years, investments in global infrastructure-toll roads, airports, utilities and the like-are attracting attention from financial advisors and new products from fund providers. But will such impressive performance continue? And, if you buy the case for this kind of investing, how should you evaluate the funds vying for your attention?

Continue reading my article on infrastructure investing in Advisor Perspectives for insights from Jay Rosenberg, lead manager of First American’s Global Infrastructure Fund, and from Harold Evensky, president of wealth management firm Evensky & Katz.
_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Avoid these mistakes when you evaluate single-manager hedge funds

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If you focus only on investment essentials such as philosophy, process, performance, and people when evaluating single-manager hedge funds, you could miss out on some key information.

Some of the other questions you should consider, according to “Selecting Single-Manager Hedge Funds for Private Client Advisers” by Richard Boutland, include:

  • For a non-U.S. fund, who is the fund administrator and how extensive is their role? Boutland prefers strong, involved administrators.
  •  Is the fund managed in a country with a strong regulator?
  • Does the fund manager have adequate operations expertise and adequate capital? Boutland notes that “on many occasions ‘star traders’ have set up their own firms only to fail through lack of adequate information technology, compliance, trade support, personnel, investor relations, and all of the other operational support.”
  • Are there special terms for other investors that discriminate against redemptions by new investors? 

Boutland’s article appeared in the CFA Institute’s Private Wealth Management e-newsletter.

_________________
Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

Make your clients smile, while you stay safe from lawyers

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Making a client smile can bring your meeting one step closer to a successful result. 

So, consider licensing a cartoon about the economy or stock market. It’s easy to find them by searching CartoonBank.com, a collection from the New Yorker. 

Could you use the cartoon described by the following caption?

“I got out of tulips after the market collapsed, but I’m slowly getting back in. Especially pink ones.” 

Or, how about this one?

“Actually, ‘Monkey see, monkey do’ has served me quite well in this market.”

When you license cartoons for use in presentations, you keep yourself safe from charges of copyright infringement. Lawyers can’t come after you. That’s an added benefit. 

Have you used cartoons successfully in your presentations?

Do financial blogs make a difference?

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Financial blogs have multiplied like crazy. But are they worth reading?

When I researched “Investment Strategy Blogs Slow to Influence Advisors,” I found that financial advisors aren’t paying much attention to blogs. However, in some cases, investment strategy blogs affect advisors’ buy and sell decisions or help them refine their thinking or their client communications.

You’ll find a list of financial and economic blogs visited by my interviewees in the box on page two of my article.

Meanwhile, an upcoming BlogWorld panel will tackle “How Financial Blogs Influence the Markets,” according to a post on Content Matters. Panelists include Paul Kedrosky, whose Infectious Greed blog appeared in my article’s blog list.

As Content Matters blogger Barry Graubart sees it, “Financial blogging is one of the more interesting segments of the blogging space. Despite the huge financial news presence of companies like Bloomberg, Dow Jones, Reuters and various newspapers, blogs frequently are ahead of the mainstream media in grasping the significance of key trends.”

Thanks to Bob Leonard of Bolen Communications for pointing me to Graubart’s post. 

Vary your paragraph length like NYT columnist Floyd Norris

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It can be painful to read a page full of long sentences and longer paragraphs. That’s why, when I teach “How to Write Investment Commentary that People Will Read,” I suggest that people vary the length of their sentences and paragraphs.

New York Times columnist Floyd Norris illustrates this nicely in the print version of his article“No Profit Without Risk.”

In the print version, a two-line paragraph follows an eight-line paragraph and a 10-line paragraph. The contrast between two vs. eight and ten in the print version is starker than what you’ll see in the online article. By the way, the online article goes by a different title than the print version, so please don’t tell me I got his title wrong.

The short third paragraph comes as a relief. It gives the reader a chance to breathe. Plus, its shortness emphasizes the contrast between the content of the first two paragraphs and third.

In fact, Norris’ opening three paragraphs illustrate a classic article approach that goes like this:

People thought blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah

They were wrong.

So, think about mixing up your sentence and paragraph lengths the next time you write. Your readers will reward you by paying attention longer.