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4 tips for mutual fund fact sheet templates

“What’s your best advice for someone who’s creating mutual fund fact sheets?” A colleague’s question spurred this list of tips for mutual fund fact sheet templates that you can use repeatedly.

1. Write your fact sheets so they are compelling, clear, and concise

Focus on the information that your readers care about. Replace jargon with plain language. Trim unnecessary words.

Of course, you’ll still need the disclosures that your compliance officers demand. But even those can be clearly written. As I pointed out in “Ammo for your plain-language battle with compliance,” there’s no legal requirement to use jargon in disclosures. In fact, plain language may offer you a better defense, says lawyer Joseph Kimble in Writing for Dollars, Writing to Please: The case for plain language in business, government, and law.

2. Scavenge from your other marketing materials

Assuming that your mutual fund’s other materials are well written, you should borrow content from them for your mutual fund fact sheet templates. You’ll raise the standards for your fact sheets when you recycle compelling, clear, concise language. You’ll also benefit from consistency across your communications.

3. Hire a writer or an editor to improve the fact sheet template that you’ll use repeatedly

It’s hard for you to view your mutual fund fact sheet template through the eyes of an outsider. You’re too immersed in your product. Hire an outside writer or editor to help.

No budget for outside help? Show your draft to members of your target audience. Don’t simply ask them “Do you have any suggestions?” or “Do you understand?” Ask them, “What are the main messages of this fact sheet—and can you sum them up in your own words?”

4. Consult a designer

Effective design, with plenty of white space and a layout that makes it easy for readers to find what they seek, can make a big difference in your fact sheet’s effectiveness.

Some fact sheets present a cacophony of data. Others draw readers’ eyes to the most important information.

YOUR ideas?

If you have suggestions for how to create better mutual fund fact sheet templates, please comment. I enjoy learning from my readers.

 

Disclosure: I received a free copy of Kimble’s book after mentioning it in another blog post. If you click on the Amazon link in this post and then buy something, I will receive a small commission. I only link to books in which I find some value for my blog’s readers.

Image courtesy of ratch0013 at FreeDigitalPhotos.net.

OppenheimerFunds on the separation of mutual fund marketing and sales

Differentiation is a big challenge for mutual funds companies. Part of how OppenheimerFunds tackles this is through the separation of marketing and sales, said Marty Willis, chief marketing officer. She spoke on a mutual fund distribution panel at NICSA’s General Membership Meeting in Boston on Oct. 6.

Creativity, not just sales support

When sales and marketing were together, marketing’s focus was too short-term and reactive, said Willis. In other words, it focused on sales support.

Even when the company tackled larger goals, such as raising brand awareness, it didn’t go far enough. Many consumers didn’t know what the brand stood for.

Today Willis is focusing on getting OppenheimerFunds’ brand to “permeate all touch-points,” even including customer service and philanthropy. It all feeds from one vision, like Apple’s “Think Different.”

Globalization and “snackable content”

GlobalizeYourThinking.com is one example of Willis’ vision. This micro-site features what Willis called “snackable content.” “It’s easy to digest and good for you,” she said. In a nod to social media, can be shared by advisors with their clients. It’s also available as a mobile app.

The site has attracted over half a million viewers and has 5000 unique visitors per week, said Willis. Visitors have averaged 7 minutes on the site. That’s twice as long as advisors spend on the firm’s other website, Willis said.

Global Tracker initiative

Willis touched briefly on her firm’s Global Tracker project, which it is developing with The Economist. The project has two facets. One is to allow users to call up all sorts of country, industry, and investment product information online. The other is a kind of game in which advisors compete.

Willis experienced the power of games when she skied in Vail, Colorado, where your ski pass allows you to track your vertical feet. She found herself taking extra runs so she could earn icons or other acknowledgments of hitting milestones.

OppenheimerFunds part of marketing trend

Oppenheimer’s elevation of marketing reflects a broader trend, said Lee Kowarski of kasina, who moderated the panel on which Willis spoke.

Marketing is becoming more peer to sales, instead of focusing on sales support, he said.

Weekly Tips newsletter available

You can receive one easily digestible writing tip in your email in-box by signing up for my Weekly Tip. I launched this new publication in August.

To give you a sense of what you’ll get, here are links to my September tips:

You can add the weekly tips to your subscriptions. Assuming you already subscribe to this newsletter, after you input your email address you’ll receive a link that will allow you to update your email preferences.

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.

Advertising makes you stupid–even if you’re smart or rich

Highly educated and wealthy investors make dumb mistakes.

This is my oversimplified take on one section of “Mutual Funds: Advertising, Behavioral Models, and Investor Choice,” an article by John Haslem, which appeared in the Spring 2011 issue of The Journal of Index Investing.

“There is a strong positive relation between advertising and investor dollar allocations,” says Haslem’s article, which appears to be a review of other authors’ literature on his topic.

Smart and rich, yet dumb

Advertising emphasizes past performance and rarely discusses fees outside the fine print, so this provides a backdrop to Haslem’s assertion that

  • Highly educated and wealthy investors underweight fund fees and give more attention to past performance.
  • Financially savvy investors underweight fund fees
    and give more attention to short-term performance.

Surprising, isn’t it? You’d think that wealthy investors would take the time to educate themselves and that highly educated investors would understand the importance of expenses to fund returns.

To dig below the surface of this finding, read the source cited by Haslem: Ronald T. Wilcox’s “Bargain Hunting or Star Gazing? Investors’ Preferences for Stock Mutual Funds,” The Journal of Business (October 2003).

Financial writer’s tips

  1. If you’re a financial blogger or newsletter writer, the provocative assertions in Haslem’s article would make a great takeoff point for an article.  For example, you could share how your experience compares.
  2. The Finance Professionals’ Post, published by New York Society of Security Analysts (NYSSA), is a good place to find tidbits to inspire your writing. I found Haslem’s article in the blog’s “Recent Research: Highlights from March 2011.”
  3. If you’re an NYSSA member, you can pick up more writing tips when I speak on “How to Write Investment Commentary People Will Read” on April 28. It’s FREE for NYSSA members.

Defining investment outperformance: You’ve got strong opinions

You don’t agree on how to define outperformance by stock funds, the focus of my latest poll. You expressed your disagreement in votes as well as in your comments on my blog post, some of which I’ve quoted verbatim below.

Outperformance poll results

Almost 30% of you said that an advantage of even one basis point (0.01%) was enough for an investment to claim outperformance. Close to 20% put the break point at 10 basis points (bps). Overall, more than two-thirds of you said there was an absolute level at which asset managers could claim outperformance.

For the rest of you, it seemed that outperformance was relative. Twelve percent defined an investment’s outperformance in terms of “a certain percentage of its benchmark.” The rest of you–21%–said outperformance was defined by “None of the above.”

Here are the poll answers and the percentage replies:

* 1 basis point (0.01%): 29% of all votes
* 10 bps: 18%
* 25 bps: 0%
* 50 bps: 6%
* 100 bps: 15%
* A certain percentage of its benchmark’s return: 12%
* None of the above: 21% (Percentages may not total 100 because of rounding)

The minimalists’ approach

“Technically, a mere 1 bp excess return should arguably count for ‘outperformance,'”wrote David Spaulding of the Spaulding Group in his comment on my blog. His comment was echoed by Jeff McLean, Ph.D., who said, “I believe that a stock, fund, or variable annuity that outperforms a benchmark by any margin, no matter how small, can claim outperformance.”

Consider the benchmark

John Lowell said he’d like a manager’s performance to exceed the benchmark by at least one standard deviation, but preferably 1.5 standard deviations, before he applied the term outperformance. “To really be outperforming, I’d like to see them outperform by at least 1 standard deviation 3 years out of 5 and cumulatively over the 5-year period.”

Some of you who commented on my blog took issue with the idea of comparing performance net of fees with the performance of a benchmark that’s not reduced by fees. Here’s what Frazer said:

For example, if you have a fund with a 50BPs expense ratio being compared with the SP500 (which investors can access via ETF with an 8BPS expense ratio), you should subtract the fees from both numbers to get an accurate view of relative performance by the manager.

In this case, the fund would need to outperform the SP500 by 42BPS to claim “outperformance” over the benchmark.

I imagine that the SEC doesn’t like this approach. What marketer wouldn’t do this if it were legal?

Then, there’s the issue of what benchmark to use. Steve Smith said, “Leaving aside the degree of outperformance, two baseline criteria are also required: 1) choosing the proper benchmark (i.e. “best fit” index) and 2) having a very high (mid-90%) R squared.”

Remember the client

The financial advisors who responded to my poll said that “outperformance” is meaningless if client goals aren’t considered.

David B. Armstrong, CFA, said

I define outperformance as this – when an investor’s portfolio does better then the return required by the financial plan to meet the investors goals – that’s outperformance.

Moderately outperforming the return required in a financial plan is probably ok – most investors can get away with that safely from time to time. It’s when your outperformance is like going 95 mph in a 65 mph zone that investors have a problem. How many investors experienced a ticket or a wreck in their portfolios in late 2008? Or better yet – how many advisors sat in the back seat of the car and let their clients drive 95 mph…drunk!

Stephen Campisi, CFA, agreed, saying “…outperformance is really not about return; it’s about having more money than you need to meet your tangible financial goals.”

Campisi also suggested that fiduciary responsibility comes into play. “As fiduciaries, we need to start thinking in terms of our loyalty standard, and start thinking about meeting the client’s financial goals – and these are money goals. So, we need to “show them the money” and when we talk about return we need to show them an internal rate of return over a long period. We need to show them the return that incorporates their beginning wealth, the money they were able to pull out of the portfolio for their goals, and their ending wealth. Then (and only then) will we be acting in the best interests of the client.”

My take on this issue

I like the idea of defining outperformance relative to client goals. This is an area where financial advisors and asset management firms focused on separate accounts can improve. However, if you’re a fund company producing investment performance reports for a diverse group of investors, you lack information about client goals. So you’ve got to define outperformance relative to a benchmark.

Thank you, commenters!

I’m grateful to everyone who commented–both on my blog and in a lively discussion on the members-only Financial Writing/Marketing Communications LinkedIn Group. You made me see new dimensions to this issue. I love learning from you.

Thank you–and please continue the conversation!

How do you spell it? “Out-performance” vs. “outperformance”

The Firefox browser’s spellchecker keeps tagging “outperformance” as a typo. I feel very annoyed when this happens because I believe it’s wrong.

The case for “outperformance”

Here’s the evidence in favor of marrying “out” and “performance” so they’re one word:

  1. “Generally do not hyphenate when using a prefix with a word that starts with a consonant,” says The Associated Press Stylebook. Note: I’m using the 2007 version of the AP Stylebook.
  2. Words into Type agrees, saying “The modern tendency is to eliminate the hyphen between a prefix and a root unless the root is a proper noun or adjective, such as un-American.”
  3. Google brings up about 1.2 million examples for “+fund +outperformance” vs.fewer than 700,000 for “+fund +out-performance.”

The case for “out-performance” with a hyphen

I mustered one piece of  evidence in favor of hyphenating “out-performance.” Google yields more than 931 million search results for “out-performance” vs. only 1.01 million for “outperformance.” It’s strange that the first four results use the spelling “outperformance,”as you see in the screen shot on the left.

Results of my spelling poll

When I polled my newsletter and blog readers about the proper spelling, “outperformance” won in a landslide, with 92% of the vote. Here are the results:

  • Outperformance: 92%
  • Out-performance: 0
  • Out performance: 8%
Note: I updated this piece on December 1, 2013, to share the results of my poll, instead of directing readers to a poll that’s no longer active. This post originated as a request for readers to respond to a poll.

Guest bloggers: 2010 in review

I’m thankful for the knowledgeable and talented professionals who have contributed guest posts to my blog this year.

Here’s a list of guest posts sorted by topic, including client communications, marketing, social media, and writing.

Client communications

Five Tips for Delivering Bad News to Clients by Kathleen Burns Kingsbury
Talking to clients about social investing by Annie Logue

Marketing

Adding Video into the Communications Mix by Samantha Allen
The Lost Art of the Thank You Card by Suzanne Muusers
My Six Best Marketing Tips for Independent Advisors by Steve Lyons
What’s a tomato got to do with getting your fund discovered? by Dan Sondhelm
Would you like to know how financial advisors are choosing products and making investment decisions in this market? by Lisa Cohen

Social media

Be Compliant When Using LinkedIn Messages by Bill Winterberg
Financial Advisors and Twitter by Roger Wohlner
Generate Quality, Low Cost Leads with Facebook Ads by Kristin Harad
How Seeking Alpha Can Build Your Professional Reputation by Geoff Considine
Investment analysts and social media by Pat Allen

Writing

Correct Grammar Errors in Your Writing Quickly and Easily by Linda Aragoni
Making Research Readable by Joe Polidoro

Guest post: “What’s a tomato got to do with getting your fund discovered?”

Mutual fund marketing is the focus of this week’s guest post by Dan Sondhelm. His post originally appeared on SunStar Strategic’s FundFactor blog.

What’s a tomato got to do with getting your fund discovered?

by Dan Sondhelm

Have you ever grown a tomato? If so, you know it’s not as simple as just putting a seed in the ground. In fact, passionate tomato farmers often start their seedlings indoors several weeks before planting season. Once outside, they need a good dose of sunshine and the right amount of water, not to mention great soil, shelter from chill winds and a strong trellis. You get the idea.
Growing a fund requires similar specialized knowledge and attention. According to Morningstar, in the open-end mutual fund industry of over $7 trillion assets, the top 10 fund firms hold 58%. That’s one big tomato! The next 40 hold 28%, while you and the remaining 600 plus firms compete for the remaining 14%. And, fund flows follow a similar pattern.
In the past few weeks, I’ve been privileged to speak on panels addressing distribution for smaller funds. I’ve met dozens of smaller fund managers there. Some are managers with unique investment processes. Others are experts in their asset classes, still others have amazing performance. Yet, they’re frustrated by lack of fund flows, anxious about mounting expenses and hungry for ideas about how to get the recognition they deserve in this crowded market place. So, how do you differentiate your fund from the others and get discovered?

Like growing tomatoes, gaining visibility – and resultant sales – requires commitment. As a small firm, you’re competing for attention with firms who spend significant dollars on their marketing activities, both in the advisor market and at the retail level. They spend hundreds of thousands of dollars for TV commercials, glossy magazine style annual reports and sponsorships with major distribution platforms and public venues.

Making the Commitment to Grow.
Distribution is at the heart of the potential for success. But just getting on platforms is the equivalent of tossing your tomato seed in the dirt and hoping for the best. Successful distribution lies in nurturing the effort. Like adding water and light, protecting from the frost and spraying for bugs, growing your fund requires consistent attention. You have to ensure you’re in the right channels, and that advisors and investors know you, know your people and know your products.

We understand smaller firms are often made up of a handful of people. Not all firms can afford a wholesaling staff or have resources to sustain a significant marketing presence. So, how do you make it work?

Design a Distribution Strategy.
Write it down. Make someone accountable for each step. We all know that what gets measured gets done. Traditional marketing wisdom says you must address the four P’s: Product, Price, Place (Platforms), Promotion. This applies to fund distribution, too. But what about a fifth P, Performance? It’s true, not many investors will flock to a poor performing fund, but relying solely on performance is risky business. While performance may get you your 15 minutes of fame, performance chasers will drop your fund for the next hot item if they don’t really understand your investment philosophy and process or know the fund manager well.

Cover all the bases
Product

• Build a story around your investment process that highlights the opportunities of your asset class and process and differentiates you from your competition.
• Add personality by discussing your current sector strategy and top investment selections. Let investors know about the good decisions you’ve made in the past and the fund’s current positioning.
• And of course, commit to excellent performance.
Price
• Set competitive pricing – You’ll notice I didn’t say lower than average. Many managers think this is important, but many funds with lower-than-average expenses don’t sell. What does matter is how your fund compares overall to other funds that are selling.
• Set your share classes so that you are priced appropriately for the advisor types you are targeting. The preponderance of flows are going to no-load and load-waived shares. For smaller firms without existing relationships or sales teams, no load may be the way to go.
Place (Platforms)
• Select the distribution channels and share classes that make sense for your fund.
• Get on Schwab, TD Ameritrade, Fidelity, and Pershing – these are the most appropriate for smaller firms with limited distribution. Then, establish a relationship with your account manager, who can guide you through the maze of opportunities available to reach platform advisors.
• Be realistic in your expectations. If you have no prior relationships with wirehouse firms, you are too small to meet their criteria and/or there is no demand from their representatives, it’s unlikely they will add you to their platform in the short term.
Promotion
• Establish relationships with advisor firm research teams to get and stay on their radar. Where applicable, find out and work toward meeting criteria to be placed on preferred/recommended lists.
• Take advantage of marketing opportunities offered by some platforms. Develop a strong relationship with your account manager so you are alerted to and aware of opportunities for proprietary mailings or sponsorship opportunities at local and national events.
• Consider Virtual Wholesaling – use third party endorsements and technology to communicate with advisors in a structured and timely way to attract and retain investors, while building your brand.
o Proactively engage the media. Let the financial press sell you; third-party endorsed news coverage in national and local business publications adds credibility.
o Leverage third-party endorsed reprints in your other sales and marketing efforts, in print, through social networks and on your website.
o Keep your website up to date with timely commentary and news coverage. Regularly post themes about your fund and the good decisions you made. If your site doesn’t allow you to add timely information, upgrade it. Advisors won’t come back if there is nothing new.
o Communicate. Regular communication with advisors is critical in order to keep your story top of mind. Consistently offering useful, meaningful information will position you in their minds as the expert on certain topics.
o Use monthly email newsletters to drive advisors to new content and fresh ideas on your website such as recent commentaries, Webinar promotions and media coverage.
o Host Webinars or conference calls for advisors on a quarterly basis.
o Take advantage of platform outreach programs to stay in front of their advisors; many of these are free.
o Develop a social media strategy to distribute timely information in the networks investors frequent. Social media allows you to listen to shareholder concerns and become part of the conversation.
Growth will happen if you take the right steps. Like a tomato, the more care and attention you provide, the greater the likelihood for success. Healthy growth depends a great deal on creating relationships. With today’s email, internet and social media opportunities, expanding your reach is easier than ever before. Make a commitment to building strong relationships where advisors and investors can learn to trust and respect your firm and its expertise.
Dan Sondhelm provides personalized services to money management firms and service providers, REITs, public companies and pre-IPO companies seeking to attract and retain investors. Dan is also the executive editor of the company’s online blog, Fund Factor.

Guest post: “Would you like to know how financial advisors are choosing products?”

Investment marketers want to know what’s driving financial advisor behavior, so I asked  Lisa Cohen, CEO of Momentum Partners, for a guest post.

Financial advisors, what do you think of the RepThinkTank findings that Lisa discusses? Are you–like the advisors whom she mentions–planning to increase allocations to emerging markets and international stocks?


Would you like to know how financial advisors are choosing

products and making investment decisions in this market?

By Lisa Cohen

We thought you might. We did too. The recently-released first report in the RepThinkTank Distribution Dynamics series provides comprehensive information on investment selection and asset allocation trends. The study includes data from more than 1,000 financial advisors across all channels.

Key findings include:

  • Continued commitment to a short list of top managers and families (American Funds, Franklin Templeton, PIMCO), and
  • High regard for growing managers including Davis Investment Advisors, Ivy Investment Management, First Eagle Investment Management, and Thornburg Investment Management
  • Plans to increase allocations to Emerging Market Equities and International Core, among other asset classes, and to slightly decrease exposure to fixed income
  • Changing risk/return expectations and the financial crisis are a top driver of recent changes in the asset allocation of client portfolios
  • Advisors’ median allocation across all channels to passive investments is 20%. Data suggests a growing appreciation for using passive investing as both a core allocation and as a way to adjust investor exposure to specific asset classes.
  • Use of third party portfolio construction tools by nearly a third of advisors in all channels. In light of advisors’ anticipated increase in use of mutual fund wraps, this data suggests the continued outsourcing of asset allocation.

The complete report is available from any of the RepThinkTank partners and is priced at $7,500. RepThinkTank is an experienced, integrated team of leading financial services research, advisor practice management, and advisory firms. Learn more at www.repthinktank.com. You can contact Lisa at 866-995-7555.