“Smart people”: A good ad by Bessemer Trust

“You” is one of the most powerful words in the English language. You’re much more likely to read a sentence that addresses “you” than one that starts with “we.” But sometimes alternatives work, as in a recent ad by Bessemer Trust, which uses “smart people” instead of “you.”

Do you think of yourself as one of the “smart people”? Bessemer Trust plays on its audience’s desire to be smart in its recent ad. If you still have The Wall Street Journal from yesterday, you can see it on page A5.

The ad starts with the following text:






Bessemer’s text hooked me. I’ll bet it also snared your attention.

The text benefits from being short and plain, in addition to working the “smart people” angle. It has a nice conversational tone. It sounds more like a blog post than an ad by a firm that was founded in 1907.

If you saw this ad, I’d like to know what you thought of it.

FEB. 11 UPDATE: View the Bessemer Trust campaign online

You can view the entire Bessemer Trust ad campaign on the website of www.munnrabot.com. Go to “current work” and then Bessemer Trust. Click on the ad that appears there to see more ads. Thank you, Orson Munn, for letting me know this!

BNY Mellon: I liked your "truth ad" until you used that word

BNY Mellon Wealth Management has a catchy new print ad asking “Can you handle the truth?” 

I love the simplicity of “Can you handle the truth?”

You can view one version of the ad on BNY Mellon’s website. However, I first saw this family of ads in the print version of The Wall Street Journal. 

Print vs. online ad
The Wall Street Journal version uses the same big “truth” box, but it is mostly better than the online version.

It’s better in the sense that much of its text is simpler and more direct than in the online version. I imagine that individuals seeking financial advice would find it very appealing. Let’s compare the two versions. 

Print version

The truth is most investors’ portfolios did not handle the past years’ market volatility well. A more alarming truth is that most plans have not been changed to mitigate future risks or capture opportunities.

We have helped many investors with an honest assessment of their current portfolio and plan. May we help you?

The first sentence is disarmingly honest. At least in my eyes. 

The language charmed me until I got to “mitigate.” If you’re a regular reader of this blog, you know I don’t like “big words” and “mitigate” is one of my pet peeves. Why couldn’t the writers substitute “ease,” “cut,” “reduce,” or even “manage” for “mitigate,” depending on what they meant? I suspect that a lawyer or compliance person pushed for “mitigate.”

Online version 
The first line of the online ad’s text–which you can read in the indented section below–is much stiffer and institutional. It doesn’t sound like something a human being would say in conversation. I’ve italicized the words I don’t like in this ad’s text below.  

The rest of the text is better. I like the second sentence. However, in the fourth sentence, “complimentary analysis” suffers when compared with the “honest assessment” of the first ad. Also, “please contact us” isn’t as appealing as “May we help you?”

Fundamental changes in the financial landscape have rendered many investment plans null and void.

Your plan may be one of them.

Let us help you learn the truth about whether your portfolio is positioned for the years to come.

To get started with a complimentary analysis of your investment plan, please contact us.

Related posts
* Timely, creative financial ad from Northwestern Mutual
* No more fancy-pants prose, please
Financial writers clinic: Getting rid of “mitigate”
* Can you make a case for “mitigate”?

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Copyright 2010 by Susan B. Weiner All rights reserved

Harry Markopolos on "next Ponzi scheme"

“Where do you think the next big Ponzi scheme will occur?” That’s what I asked Harry Markopolos, author of No One Would Listen, during the Q&A following his March 30 talk to Boston Security Analysts Society (BSAS).

Markopolos isn’t too worried about seeing another big Ponzi scheme soon. He gave two reasons.

  1. Markets are down. That’s what triggered the redemptions that brought down Madoff and others.
  2. The SEC is now making Ponzi schemes a high priority.

However, most Ponzi schemers don’t register with the SEC, said Markopolos. That helps them to stay hidden from the SEC. Markopolos said the SEC typically finds out about Ponzi schemes through tips. The many poor-quality tips submitted to the SEC make it hard to sort out the good from the bad. 

If you’d like to learn more about Markopolos’ perspective, check out his book. Many BSAS members lined up after the talk to have him sign their books. He’s a hometown favorite and past president of the BSAS.

Related post
* Tweets on talk by Harry Markopolos, Madoff whistleblower

The next session of “How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors will start in April. If you can’t attend this session, sign up to receive “Information on upcoming classes, workshops, and other events” as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Tweets on talk by Harry Markopolos, Madoff whistleblower

Here are my tweets on today’s talk to the Boston Security Analysts Society by Harry Markopolos, the Madoff whistleblower and author of No One Would Listen.

  • “This case was a global tragedy” said Markopolos. “It was beyond evil.”
  • Madoff case is only in its 2nd innings, said Markopolos. There’ll be more arrests due to cooperating witnesses.
  • CFA# Code of Ethics is important to Markopolos. “It’s about investors and doing the right thing,” he said.
  • CPAs, is this true? CPA code of conduct lacks affirmative duty to report fraud.
  • Lesson #1 for Madoff victims: 0-25% is proper allocation to hedge funds, said Markopolos
  • Lesson #2 for Madoff victims: Never put all of your eggs in one basket, said Markopolos
  • Markopolos book is a good road map for conducting due diligence, said Sam Jones of the CFA Institute’s board of governors.

The next session of “How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors” will start in April. For more information, sign up to receive “Information on upcoming classes, workshops, and other events” as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

JP Morgan’s Eigen: Put your clients in non-traditional, long-short fixed income

Too many of your clients are over-invested in traditional fixed income, in the opinion of William Eigen, JPMorgan Asset Management’s director of absolute return strategies and portfolio manager of the JPM Strategic Income Opportunities Fund. He made a case for using fixed income funds that can go short and use synthetic financial instruments during his presentation to the Boston Security Analysts Society on March 15. 

Why bond funds haven’t changed
Fixed income funds really haven’t changed in 30 years, said Eigen. Their managers still basically rely on changes on interest rates to make money. In contrast, he said, managers of equities have driven the development of hedge funds.

Fixed income hasn’t evolved because interest rates have been falling for 30 years, said Eigen. In other words, with falling rates driving capital appreciation, there was no need for new techniques.

Can you imagine, Eigen asked, what would have happened to stock funds if the Standard & Poor’s 500 had gone straight up for thirty years? Clearly he believes this would have stifled innovation in the management of stocks. Instead, the stock market’s ups and downs spurred creativity. 

The need to protect your clients’ capital 
Traditional fixed income performed more or less okay for thirty years, with some rocky years here and there. But the interest-rate decline that drove bonds’ long-term positive performance will end. “I’m nervous with short rates at zero,” said Eigen, “yet investors are still piling in.”

Indeed, Eigen managed traditional bond funds during his 12-year career at Fidelity Investments. He left because he felt he couldn’t protect his investors’ capital adequately under the limitations of traditional bond investing. “I won’t be held prisoner to duration,” said Eigen. He wanted to be able to short-sell and put on relative value trades using synthetic instruments.

It’s important to earn positive returns in fixed income by taking advantages of factors other than falling interest rates. If not, asked Eigen, what happens when a long-term trend of rising interest rates takes hold? If you’re familiar with concept of duration, you know that bond prices fall when interest rates rise. Another negative: With interest rates at historic lows, there’s no “coupon cushion” of attractive interest rates to ease the pain of bond investors.

It’s easy to see the appeal of short-selling bonds in a rising interest-rate scenario. Investors would profit by essentially betting on bond prices’ decline.

Now Eigen can take advantage of short-selling as manager of the JPM Strategic Income Opportunities Fund, a long-short relative value fund that does not use leverage. The fund can use synthetic instruments. It can also hold cash because Eigen’s top priority is not to lose money. That’s a challenge for which cash is sometimes the only solution.

The fund is managed as an absolute-return fund with a target of t-bills plus 2%-8%. “You don’t need duration to generate solid fixed income returns,” Eigen said. Another potential benefit of his approach: it has “zero correlation to traditional fixed income,” Eigen said. 

Outlook: Rising rates, risky sovereign debt, relative value
Eigen thinks interest rates could rise faster than most pundits expect. Investors might get scared once rates start rising. Then they might quickly bail out of bonds to cut their losses.

Eigen is also scared about sovereign risk. Look at what’s happened in Europe and Dubai, he said. His fund is taking advantage of that on the short side.

Synthetic instruments such as credit default swaps are a good way to take advantage of the relative value opportunities that arise in times of low volatility in bond markets. For example, investors seem to perceive a solid company such as Berkshire Hathaway as on a par with lesser insurance companies. Synthetic instruments are sometimes the only economical way to invest in this disparity.

What do you think? Is the end near for traditionally managed fixed income funds–or have they still got some life left in them?

Related posts
Fund using alternative strategies gain steam
* I LOVE this fixed income presentation
* Strong words from editor of Financial Analysts Journal

Guest post: "The Lost Art of the Thank You Card"

I’m a big fan of saying “Thank you.” So I’m delighted to feature this guest post by Suzanne Muusers of Prosperity Coaching. Suzanne is a consultant to financial advisors. I met her through Twitter.

The Lost Art of the Thank You Card
By Suzanne Muusers

What would happen to your referrals if you wrote five thank you cards per week? Would your client relationships deepen? Would you spread goodwill and kindness?

I’ve been sending out a lot of hand-written thank you cards lately. I find really nicely designed thank you cards at Trader Joe’s and AJ’s and I just get the urge to send them. You wouldn’t believe the response I get when the recipient receives the card. I usually get a phone call from them gushing about “taking the time to send a hand-written card” and “thank you so much for thinking of me.”

We have become such a digital world we forget about the impact such a simple action can have.  We now have email, ezines, newsletters, evite.com, and the like.  While it’s nice to save paper on such niceties and be “green,” getting a card in the mail is like getting a present.  When you send someone a card through the mail, I am betting that it stays on their desk for quite some time.

As I glance over my desk, I see a hand-written card I received from a financial advisor I met last month at the Financial Planning Association meeting. He asked me for advice on where he should get coach training. I gave him a few choice pointers and several days later received a beautiful zen-like card from him thanking me for the tips. You can bet that I’ll keep that card for a long time.

So how can you use thank you cards in your business? What occasions would be suitable for a thank you card?

How about:

  • Birthday cards
  • Nice to meet you cards
  • Thank you for the referral cards (as part of a written referral program)
  • Congratulations for your achievement
  • Sympathy cards
  • Wedding cards

Maybe thank you cards should be part of your Marketing Plan and part of your week!

Suzanne Muusers is a business coach, marketing expert, and a sales and marketing speaker based in Scottsdale, Arizona. Her coaching program for financial advisors, The Prosperous Advisor™ , focuses on revenue-building activities.

Susan B. Weiner, CFA
If you’re struggling to pump out a steady flow of good blog posts, check out my five-week teleclass for financial advisors, “How to Write Blog Posts People Will Read,” and sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

How to make one quarterly letter fit clients at different levels of sophistication

You have clients with different levels of financial sophistication. But you probably don’t have the time to write separate letters tailored to each client’s understanding of investment jargon. To help you manage your time–and keep your clients happy–here are my top five tips for a one-size-fits-all client letter.

I’d like to thank the Maine CFA Society for suggesting this blog post topic when I presented to them on “How to Write Investment Commentary People Will Read.”

How to make one quarterly letter fit clients at different levels of sophistication infographic

1. Keep it simple
If you use plain language, all of your readers will understand you.

Follow the example of Berkshire Hathaway’s Warren Buffett, who says, “When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters…. They will understand plain English, but jargon may puzzle them.” Despite Buffett’s easy-to-understand style, plenty of financial sophisticates read his firm’s annual report.

2. Explain briefly
The Wall Street Journal has mastered the art of explaining technical terms with phrases set off by commas. For example, a reporter might write about “the carry trade, where investors borrow in currencies with low interest rates to invest in those with high interest rates.”

Savvy investors skim over the explanations, while the less knowledgeable gain a quick understanding.

3. Use a sidebar
A sidebar, which is a text box that’s set off from the main body of your article, can help you to accommodate different levels of knowledge among your readers.

Let’s consider my example in Tip #2. You could use a sidebar to explain the carry trade in more depth. Your goal could be to educate less sophisticated investors. Or, you may convey details to more educated investors that wouldn’t interest the rest of your readers.

4. Provide a glossary
A glossary at the end of your printed communication can help when you can’t squeeze all of the necessary explanations into the body of your text.

If you send electronic communications, you can provide click-through links to definitions on your website or elsewhere.

If you’re willing to link to third-party glossaries, you’ve got a variety of choices. I’ve found some good definitions on the following sites:

5. Provide a newsletter with articles for different audiences
If you have the luxury of writing a multi-article newsletter for your clients, consider including articles aimed at different levels of sophistication.

However, don’t vary your level willy-nilly. I’d suggest aiming your newsletter at a general audience and then consistently including one article targeting better educated readers.

How do YOU handle this challenge?
I’m interested in hearing from you. Please leave comments below.


Image courtesy of stupakidmod at FreeDigitalPhotos.net.

Statistics to calm nervous investors: Research on dollar cost averaging

Are you–or your clients–nervous about buying stocks? You may find comfort in statistics from “(Re)Entering the Market: The Costs and Benefits of Dollar Cost Averaging” by Gregory D. Singer, director of research, and Ted Mann, analyst in Bernstein Global Wealth Management’s New York office. Their article appeared in the CFA Institute’s Private Wealth Management e-newsletter (August 2009).

The bottom line, according to the authors’ research

…if you have a sum of money to invest for the long term, entering the market all at once will usually prove to be a better strategy than dollar cost averaging. The odds that you will reap greater wealth in the end are in your favor. But dollar cost averaging is reasonable insurance against the risk of investing in a falling market.

The authors highlight the downside of dollar cost averaging. “If the market rises while we are ‘averaging in,’ we miss out on potential gains. And those forgone gains could be substantial.”

As evidence, they present average 12-month rolling returns for the U.S. stock market from 1926 to November 2008 for three strategies of investing a lump sum.

  • Invest All at Once: 12%
  • Dollar Cost Averaging: 8%
  • Hold Cash: 4%

I find these numbers tremendously reassuring, even though past performance is no guarantee of future results. The case for investing all at once is even stronger following 12 months of a down market, with returns of 15%, 10%, and 3% respectively.

However, dollar cost averaging does preserve wealth during the bottom 20% of markets. In this bottom quintile, it “resulted in an average of 11.6 percent more wealth than investing all at once.”  So it sounds like a great strategy for declining markets. The hitch? No one can reliably predict when those markets will occur.

Over the long run, investing all at once should outperform dollar cost averaging and holding cash.

The authors concede that investing entire lump sums immediately isn’t for everyone. Their research suggests that the potential benefits from dollar cost averaging fall after the first six months. Moreover, “Beyond 18 months, averaging in doesn’t make financial sense (unless it’s part of a program like payroll deduction, where the money becomes available only over time).”

What do YOU think? When would you recommend investing lump sums all at once vs. dollar cost averaging?

What financial advisors can learn from the "60-Minute Naked Truth Salesletter Formula"

Having a hard time writing your first sales letter? The “60-Minute Naked Truth Salesletter Formula” can get you started. But you should tweak his formula to reach your audience and to keep your compliance officer happy.

The formula 
Here’s my interpretation of the formula. You can read more details in Michel Fortin’s explanation of Dean Jackson’s formula in “60-Minute Naked Truth Salesletter Formula.”
1. Start by completing the following sentence: “I’m writing to you because I want you to…”
2. Complete the following sentence with a bulleted list: “The reason I’m writing to you specifically is because I think you want…”
3. List your services’ features and benefits.
4. List your prospects’ top 10 questions or objections–and your answers to them
5. Explain how you guarantee results or remove risks. Obviously this step poses challenges for financial advisors.
6. Write a “call to action,” giving steps the reader can take to connect with you or your company and describing exactly what the reader will get.
7. Give your reader a sense of urgency, so they’ll act soon.
8. Supply testimonials. This is another step that financial advisors–especially investment managers–should skip because of the SEC prohibition against testimonials. 

Pros and cons of applying this formula 
The pluses of this formula include
* Making it easy for your readers to understand what you want and how it’ll benefit them–Too many financial advisors get hung up on features instead of benefits. Or they fail to anticipate objections.
* Organizing your information logically  
* Developing a good understanding of topics that you need to discuss with prospects
* Ensuring that you include an action step, the “call to action,” in your letter 

The drawbacks of this formula include
* Landing you in trouble with your compliance officer through discussion of guarantees or testimonials (although it’s easy enough to skip Steps 5 and 8)
* Sounding too formulaic and too much like a late night TV ad for something that grinds, chops, and does everything else
* Creating a letter that’s so long no one will read it

I learned about Michel Fortin’s blog post in an email from marketer Sonia Simone of Remarkable Communication. Thanks, Sonia!

Related posts:
Focus on benefits, not features, in your marketing
Your mail has three seconds to grab your reader’s attention
“Institutional investing” isn’t as great as you think

Behavioral finance can deepen your client relationships

Understanding behavioral finance can improve your client relationships. That’s the lesson I took away from “Behavioral Finance: So What?”, a June 15 presentation by Gayle H. Buff, president of Buff Capital Management, to the Boston Security Analysts Society (BSAS). Buff has 20 years of experience working with  individual investors and is a past president of the BSAS.

Like financial advisors, clients of investment and wealth managers don’t act with complete rationality. They react with their emotional right brain in addition to their rational, reflective left brain. However, Buff said, to optimize our ability to make informed decisions, we need to use both sides of our brains. Advisors who understand this, can tailor their interactions with clients to take advantage of this. 

Behavioral finance experts have identified loss aversion, uncertainty aversion, and overconfidence as a few of the key investor tendencies that reflect the influence of the right brain. During the past year’s financial crisis, Buff observed many instances where fear of uncertainty trumped fear of loss. Some of her clients wanted to sell their investments, even if that potentially meant locking in losses.

Behavioral finance helped Buff respond effectively to her clients who wanted to sell. Understanding that clients’ “sell” requests were intensely emotional, “I don’t take it personally or as them telling me I’ve done something bad,” she said. Instead of arguing with them, Buff listened to her clients’ fears. “Talking about what makes us afraid makes us less fearful,” she said.

It isn’t easy for most advisors to follow Buff’s strategy. “We often want to rush in with facts,” she said. However, advisors need first to acknowledge their clients’ feelings. Only after doing that does it make sense to give clients an alternative perspective on the issues. The advisor who takes this two-step approach will find their clients more receptive.

In fact, if advisors and clients can work through a financial crisis, they may end up with a much deeper relationship. One of the big advantages may be enhancing clients’ understanding of risk. Prior to the past year’s financial crisis, most clients overestimated their risk tolerance said Buff.

Buff listed five areas that advisors should explore with their clients, including clients’
1. Capacity to tolerate market volatility and economic risk
2. Characteristic defensive posture in the face of anxiety and uncertainty;
3. Vulnerabilities, passions, strengths, weaknesses, and dreams
4. Ability to process, integrate, and adapt to new information a new experience
5. Commitment to working collaboratively and synergistically as one-half of the advisor–client relationship

This blog post only touches on a tiny portion of Buff’s material, which included a bibliography on complexity theory and adaptive systems, behavioral finance and investor psychology, and the intersection of theory and practice. However, she speaks on behavioral finance to CFA societies around the world, so she may come to your area.

By the way, it has been my pleasure to get to know Gayle through volunteering with her on the BSAS’ Private Wealth Management committee. I’ve seen her dedication to financial education.