Communicating with your clients is essential and, when done well, builds loyalty and resilient relationships. This is especially true during times of heightened financial market volatility.
Here’s a communications playbook to help you efficiently and effectively navigate client relationships in uncertain environments.
1. Create your communications plan
Before you reach out to clients, get your plan in order so that you are as efficient as possible. Randomly producing articles or sending emails just won’t cut it these days – communications need to be consistent and sustainable.
Some important questions to ask yourself when building your strategy:
- What are the main challenges my clients are facing?
- What key messages/proof points do I want to focus on?
- What channels are appropriate – email, website, social media, etc.?
- Who will be involved in producing this content?
As you put your strategy together and start executing on it, always keep in mind that you are trying to build trust with your clients. That means addressing the current environment honestly and with empathy.
2. Provide context for the situation
When markets decline, so does investor sentiment – your clients’ included. Investors often want to “fix” whatever it is that caused their portfolio to decline. When it comes to broad market downturns based on macroeconomic events, there’s often nothing to fix.
We recommend you reiterate that market downturns are common and temporary. They’ve happened since markets first opened, and they will continue to until markets no longer exist. Support your points with well-designed visuals, bringing data to life with elegant charts and infographics.
3. Refer clients back to their financial/wealth plan
Building on the point above, does anything really need to be fixed? Are your clients’ plans still suitable and accurate? Unless something dramatic has occurred in their life, such as a job loss, the plan is probably fine and clients are likely still on track to reach their goals.
Focusing on goals-based investing is supported by behavioral finance insights, and is an excellent way to manage your clients’ biases. Herding and loss aversion are key biases to watch out for during periods of market declines.
4. Don’t disappear when things settle down
It’s always a smart move to revisit your client communications strategy at times like these.
We recommend you create a long-term communications plan that considers both your team’s ability to communicate consistently, as well as with a cadence that keeps your firm top of mind. This is not always easy, but we know from experience that every business can find its sweet spot when it comes to communicating regularly – without burning your team out.
Short on time and resources? Contact us today at firstname.lastname@example.org or 1.844.243.1830 to upgrade, broaden and focus your marketing communications during this – and any – challenging market environment.
What’s one of the top long-term communications challenges that financial services firms face? Finding the time and talent to produce engaging and well-written investment commentaries.
Faced with the challenge of finding people with the time, ability and technical knowledge to produce accurate and engaging investment commentaries, it makes sense to work with an external partner that specializes in creating these fundamental, but highly disruptive, deliverables. Here are five reasons why:
1. Reduces your operating costs
With budgets shrinking across the financial services industry, it is more important than ever to find opportunities to manage costs. Using an external partner to deliver investment commentaries can be highly cost-effective, as this reduces the need to have expensive in-house portfolio managers, analysts, writers and project managers working on these pieces over compressed periods of time.
2. Provides access to expertise
An experienced investment commentary partner brings both high-level insights and in-depth analysis to the table. Their insights are informed by extensive exposure to multiple projects across the industry. A partner that offers best practices learned in the field can greatly improve the quality of your investment commentaries.
3. Ensures a structured process
An investment commentary partner can provide you with a structured process tailored to meet the needs of your specific deliverables. They can assume responsibility for the research, writing, editing and fact-checking of your commentaries, while ensuring these commentaries are always delivered on time and on budget.
4. Reduces turnaround time
Given their expertise and scalable resources, an investment commentary partner can get your work done faster. In this era of increased regulatory requirements, the ability to quickly produce high-quality, well-researched investment commentaries is extremely valuable.
5. Frees up your resources
Your internal teams – including your in-house portfolio managers, analysts, compliance officers and marketing professionals – can be of more value to your firm if they focus on strategic initiatives. This is made possible by having an external partner that’s well-positioned to assume responsibility for your ongoing investment commentary needs.
Investment commentaries can take a lot of time for in-house team members to produce, which can distract them from their day-to-day responsibilities. You can get much better value by outsourcing your investment commentary productions to an external team that has the specialized expertise you need and can deliver the superior results you require.
Looking for support with investment commentaries or other financial communications? Ext. Marketing has the expertise you need. Contact us at 1.844.243.1830 or email@example.com.
Inflation is rising and the current surge may not abate anytime soon, which is something we haven’t seen much of since the 1970s. Asset managers have an opportunity to recalibrate their marketing strategies to this shifting economic landscape to help their firms not just survive, but thrive.
According to a recent Morgan Stanley survey, wealthy investors are starting to worry about their stock market holdings and finances at a level not seen since the second quarter of 2020, right after the COVID-19-related shutdown of the economy. This reduced optimism, paired with heightened price sensitivity among your clients, makes having a standout marketing strategy more important than ever. What does that look like today?
Foster trust through education
There’s a real opportunity in the asset management space to be up front about inflation in your messaging. Lead with education and put it into a context that makes sense for your clients. As you coach them on the impact of inflation, highlight the importance of putting cash to work to protect against savings erosion. Reiterate the power of diversification and the role of stocks and other asset classes as an inflation hedge. Also, educate and be transparent about the fees and costs associated with your products and services. Honesty and authenticity can go a long way in winning and retaining market share.
Amp up your brand
Periods of uncertainty are the perfect time to focus on brand building. Maintain the strength of your firm’s position by nurturing the emotional and rational story of your brand. Stay actively visible in your key markets and remember that your audience goes beyond your end clients. Consider how marketing connects with partners, suppliers, employees, colleagues and other engaged parties. Keep in mind that no previous period of prolonged inflation has had a digital ecosystem as widely accessible or advanced. You have countless opportunities to connect with your audiences and reinforce your value proposition.
Revisit your client segments
Given the psychology of inflation, your clients may feel different about their economic well-being. Even higher-income earners can be anxious that their health or employment circumstances will take a turn for the worse. Re-evaluating your existing client segments and conducting market research more regularly can help you identify new segments and their pain points. Having a keen understanding of your audiences and their motivations and preferences will help you develop products, fee structures and marketing strategies that effectively respond to their changing needs. Communicating to overcome client fears about inflation can be a way to combat their pessimism and compel them to keep investing. A/B testing (comparing two versions to determine which performs best) can be your friend in getting a closer read on what messages resonate best with them.
While containing costs is always good practice, avoid making indiscriminate cuts from your marketing budget. Fine-tune your spending, focusing on creating efficiencies and accelerating activities that can generate future sales or build your brand. Digital tools can also help you defend against inflation by helping you manage costs, logistics and other overhead expenses associated with your marketing efforts. Arming your salesforce with clear scripts that address client concerns and are consistent with your revised marketing strategy can help them feel supported and motivated.
Seizing this time as an opportunity to win your clients’ appreciation will have a positive impact that can last long after inflation has receded.
Looking to ramp up your inflation marketing strategy? Ext. has the expertise you need. Contact us today at 1.844.243.1830 or firstname.lastname@example.org.
Marketers love talking about ESG, but with regulators starting to examine investment managers’ policies, it’s more crucial than ever that claims align with reality.
ESG (an acronym for environmental, social and governance) investing is reshaping the investment industry, if not the entire world. And now, the U.S. Securities and Exchange Commission (SEC) is looking to reshape ESG.
Marketers are often called on to shape the messages that articulate ESG. What does it mean? Why does it matter? What do we do differently? Given the scope of the SEC’s approach, marketers’ work will be affected.
What’s happening – All eyes on ESG marketing messages
ESG issues such as climate change and diversity are driving everything from political agendas to corporate policies to your neighbours’ investment decisions. As such, many ESG investment products are coming to market.
Following in the footsteps of European regulators, the SEC is scrutinizing investment managers’ ESG claims. The SEC wants to know the standards that managers use to classify their ESG funds. The SEC is focused on the hype – and it wants to know if what marketers are saying is accurate.
Third parties are also reviewing managers’ claims. One recent study found that a number of climate-themed solutions are not living up to Paris Agreement goals for reducing greenhouse gas emissions. While this study was limited and may have had gaps in its analysis, for marketers the point is clear: the messages you take to market will be viewed by many different parties.
What this means for you – Accuracy and authenticity rule
Marketers should be aware of the potential perils when their messages do not align with the investment policy and process. ESG is a broad label. It’s important that regulators do not think marketers are using vagueness to mislead investors.
Disclosures: Must reflect what’s actually occurring within the strategy. If not, financial and reputational risks may develop.
ESG issues: Make them crystal clear. If your fund is aligned with the Paris Agreement, explain how. If it focuses on governance issues such as diversity on boards, provide details.
The good news is that marketers, and the firms they work for, are staying ahead of change. In fact, they are taking leadership roles. In Canada, a recent Canadian Securities Administrators (CSA) ESG-related roundtable discussed emerging issues in the ESG space. Enhancing ESG-related disclosure was at the top of the panel’s priorities.
In Europe, the Sustainable Finance Disclosure Regulation requires ESG funds to classify themselves according to a specific framework. While this type of requirement may be further down the road for North American funds, it’s time for marketers here to prepare for the future.
Marketers need to work closely with product specialists to build a deep familiarity with ESG investment processes. This collaboration will help identify the data needed to back up their marketing messages.
With those relationships in place and the data in hand, marketers can ensure their messages are accurate and authentic, which will further help their messages resonate in the market.
- SEC Response to Climate and ESG Risks and Opportunities (U.S. SEC)
- Intro to Responsible Investing (RIA Canada)
- New ESG Regulation Out of Europe Redefines Investment Risk (TriplePundit)
Looking for support in refining your ESG messaging? Ext. has the expertise you need. Contact us today at 1.844.243.1830 or email@example.com.
It’s as inevitable as the changing of the seasons: the return of commentaries for most investment managers. Commentaries tend to result from sales and/or regulatory obligations, and are often viewed as a bit of a distraction when compared to an investment manager’s other core responsibilities.
Just a few small changes, however, can increase the value of the commentaries you produce for your audience, regardless of whether that audience is individual investors, institutional investors or other stakeholders.
Remember your audience
While you may be writing for an investor audience, a significant portion of your readership will likely be made up of industry insiders, including other investment managers, institutional gatekeepers, financial journalists and regulators. While keeping the language plain and straightforward, ensure the commentary is high quality and sufficiently detailed.
Identify and avoid obscurity
Whether you’re writing for an investor-level audience, a professional investor audience, or both, clarity of argument is important. Avoid confusing words and phrases (e.g., “contributed negatively to performance”) and avoid sentences that are longer than 50 words.
Avoid information overdose
Investment communications should be about clarity and relaying important information.
There are very few good reasons for an investment commentary to be more than 2,000 words, even for multi-asset or multi-strategy portfolios. Past macroeconomic and market discussion is essential to laying the groundwork, attribution and trading activity is important to explain what happened over the period and why, and an outlook helps investors focus on the future. Just make sure you are being concise.
Look for teachable moments
In today’s increasingly complex investment world, insider jargon is sometimes unavoidable, even for investor-facing commentaries.
Discussing portfolio alpha and beta, for example, may be essential for certain investment strategies. Mentioning yield curves, duration and spreads is often unavoidable in fixed income commentaries. Instead of either avoiding those terms or using them without context, have a short, standard definition ready for widely used terms, to insert into commentaries (even in parentheses).
It’s one thing for your investors to be informed, it’s another for them to walk away from your commentaries having learned something. Done correctly, this is where your commentaries can rise above others and become a hub for valued information.
Looking to offload more of your investment commentary tasks to an industry leader in the field? Contact us today to learn more at 1.844.243.1830 or firstname.lastname@example.org.
Investment commentary production can be a chore.
But there’s one great thing about this business function: it usually follows a fairly predictable pattern. Meaning, it can be made easier if you build some additional preparation into your project plan before it kicks into high gear.
Here are some key tasks and milestones to make your commentary production process a smoother ride:
Does your organization have a preferred style guide (i.e., a reference document that tells you, for example, whether you write “U.S. dollar” or “US dollar”)? Or does your existing style guide need to be updated to reflect new and/or newly accepted financial terminology?
Ensure that style guides are approved before period end to reduce uncertainty during your commentary cycle.
Macro and micro planning
It’s great to track the statuses and due dates of each individual deliverable but don’t forget to create a master schedule, even something as broad as a traditional monthly calendar view.
This can be especially helpful when dealing with unexpected mid-cycle events, like any new requirements that pop up in the middle of your production cycle. The trick is to be nimble day to day, while not losing sight of longer-term deadlines.
It’s not uncommon for a single investment mandate to have multiple investment commentary requirements for delivery at the same time because of multiple reporting time periods (e.g., a monthly, quarterly and/or rolling annual commentary for one mutual fund).
Always check and re-check the time period requirements of the commentaries you’re working on. This may seem like common sense, but it is often overlooked.
Know your roles
A single investment commentary often requires inputs from multiple sources. Benchmark data may come from your analytics group, performance information may come from a data provider, investment outlook may come from the portfolio manager, and so forth.
A cross-functional meeting of stakeholders before the live cycle reminds the team that commentary season is coming up, and ensure everyone is aware of responsibilities and deadlines.
If you utilize a broad range of communications resources (e.g., writers, editors, typesetters and designers), make sure those individual resources are captured in either your master calendar or a separate one. This makes resource allocation easier, both before and during your live cycle, and help you re-allocate resources to deal with unexpected events.
Make your investment commentary process easier. Contact us at 416.925.1700, 1.844.243.1830 or email@example.com.
Just in case you didn’t already know the investment industry is managing never-before-seen levels of regulations, we wanted to provide you with a list of the regulations affecting investment managers in the hedge fund, private equity and alternative management spaces.
You need to be aware of these regulations, as they will directly impact your chances of attracting capital from institutional investors.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Another law that was passed in light of the financial crisis, this Act’s objective is to protect consumers from potentially harmful financial products, regulate financial markets and limit the likelihood of another financial meltdown. Please note: the Senate recently passed legislation that could eliminate some aspects of Dodd-Frank.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act (“FATCA”) is looking to eliminate tax evasion by requiring U.S. taxpayers to report financial assets held outside of the U.S.
Alternative Investment Fund Managers Directive (“AIFMD”)
A European Union law enacted following the financial crisis that regulates alternative investment managers, including private equity and hedge funds, and mandating they be authorized with regulators and provide various disclosures to remain in business.
Basel III Proposal (banks)
Formed by the Basel Committee on Banking Supervision, this framework was developed to strengthen the global banking industry by requiring banks to maintain adequate capital levels, liquidity and risk management systems to decrease systemic risk.
Financial Transaction Tax
The Financial Transaction Tax (“FTT”) would seek to tax EU financial transactions, including the sales of stocks, bonds and derivatives, to recoup taxpayer dollars used to support banks during the financial crisis and eliminate speculative transactions that do not support a positive economic well-being.
Institutions for Occupational Retirement Provision II (pension funds)
The Institutions for Occupational Retirement Provision (“IORP”) seeks to protect pension members and establish rules to maintain the quality and sustainability of workplace pensions through disclosure requirements, governance, cross border transfers, etc.
Markets in Financial Instruments Directive II
The Markets in Financial Instruments Directive’s (“MiFID”) objective is to offer investor protection and further the transparency of all EU financial markets by making them more structured as well as mandating easier to observe trading costs, access lower cost data and improved transaction execution.
Find out more about MiFID here: Are you MiFID by regulatory changes?
Undertakings for Collective Investment in Transferable Securities V and VI
Undertakings for Collective Investment in Transferable Securities (“UCITS”) V looks to improve investor protection by enhancing depository duties, fund manager remuneration rules and sanctions for breaches, while giving regulators an adequate level of power to impose those rules. UCITS VI will tackle the use of derivatives, portfolio management techniques, long-term investments and money market funds.
Solvency II (insurance companies)
Solvency II was designed to protect insurance customers throughout the EU by instituting a regulatory framework around financial requirements, reporting and disclosure, as well as governance and supervision for the insurance industry.
To learn more about how we can help you successfully launch and manage your fund in this complex regulatory environment, contact us at 1.844.243.1830 or firstname.lastname@example.org.
Are you involved in the portfolio manager/regulatory commentary process? By that we mean MRFPs, financial statements, monthly, quarterly and semi-annual commentaries, and annual reports. If so, you know that timelines are tight and extra rounds of review can derail the project.
To help you make the process as efficient as possible, we’ve put together a list of seven tips that could save you hours. They’re easy to implement and you’ll see results immediately.
1. Know your benchmarks
A fund’s official benchmark may not be the one that your portfolio manager used during the period, especially if it is sub-advised. Getting that right before reviews is an easy win. If you’re wondering what else you may need to document before the process starts, here are some other facts to get in order.
2. Heads up!
Let everyone – portfolio managers, analysts, project managers and your compliance team – know their timelines well in advance, and then remind them again a few days before the process gets underway.
3. Use the right language
Don’t send copy to compliance that won’t be accepted. That means removing investing jargon and overly technical terms like “risk on/risk off,” “headwind/tailwind,” “hawkish/dovish” and “when rates backed up.” We can help you find suitable alternatives that an average investor would understand, check this post out for more jargon to avoid.
4. Think about repetition
Does every single fund need a different outlook? It’s important to spend some time on that question because if you choose “No” you could cut down on a significant amount of work by repurposing copy.
5. Shorter is better
Tight copy that gets to the point will always win. Your readers will appreciate your brevity if it helps them get a better picture of what happened over the period. Here are some more tips on simplifying your commentary writing.
6. Know your reporting period
Six-month marketing commentaries and MRFPs can be a problem because investment teams are more familiar with quarterly and annual reviews. In your communications leading up to the project, explain the time period in bold typeface.
7. Create a style guide
Does your firm write sector names with an uppercase or lowercase letter (e.g., the Energy sector or the energy sector)? Does your firm use a serial comma or not? If everyone is on the same page, reviewing will take less time. Here’s how to strengthen your brand with a style guide.
There you have it: seven simple ideas that can save you hours. We’ll return to this topic from time to time throughout the year, so keep checking our blog and social media for more insights.
If you want to improve your commentary process, contact us today at 416.925.1700, 1.844.243.1830 or email@example.com.
The Management Report of Fund Performance (“MRFP”). It’s a report that’s often, and quite appropriately, viewed as a regulatory document. But it can be so much more.
MRFP commentaries can also be a story from the fund’s past to help explain its future.
You know the format: the macroeconomic environment, performance versus the benchmark (including contributors and detractors), trading activity and current positioning. All of these are vital components from a regulatory standpoint.
Share vital information
But maybe more importantly, they are also vital pieces of information for advisors and investors. Advisors want to ensure that portfolio manager objectives and strategies are aligned with their own and those of their investors. Certainly not an unreasonable ask.
Advisors want to ensure that portfolio manager objectives and strategies are aligned with their own and those of their investors.
With so much choice in the industry these days, advisors are tuning into the objectives, strategies and processes of portfolio managers to ensure their recommendations are the right match for their clients.
Speak directly to investors
How can you help inform advisors and investors? By looking at MRFPs not only as regulatory documents but also as a chance to speak directly to investors.
Whether your fund outperformed or underperformed, if you give investors a well-integrated story about why the fund performed as it did, you can build a strong and long-lasting relationship with the investor.
You can build a strong and long-lasting relationship with the investor.
So put additional effort into it and explain what sectors, geographic regions and individual holdings contributed to and/or detracted from performance.
More importantly, explain why these sectors, regions and holdings performed the way they did. Those are the insights investors can’t get elsewhere but should always have available in their funds’ MRFPs. Including this information shows investors that you are working towards your objectives, following your strategy and executing on your process.
At their most basic level, MRFPs are regulatory documents. But they are also an opportunity to speak directly to investors. Don’t pass on the opportunity to tell these investors why your fund is the right option for them.
For investment commentary support (including monthly and quarterly commentaries, as well as MRFPs), contact us today at 416.925.1700, 844.243.1830 or firstname.lastname@example.org.
Sometimes jargon is useful, and can be used as an efficient way for investment professionals to discuss obscure and complex topics with precision.
More often though, jargon is used as a mental and verbal shortcut. Instead of thinking about what we really mean and using clear and unambiguous language to say it, we use jargon, even when talking to non-specialists – in this case, an average investor.
Instead of thinking about what we really mean and using clear and unambiguous language to say it, we use jargon. It’s a verbal shortcut.
At its worst, the result can be incomprehensible writing.
For example, here are a few jargon terms that often pop up in investment commentaries, along with some ways to avoid using them:
Instead of “negative alpha,” it’s easier for the average reader to understand that “the fund underperformed relative to the benchmark.”
When describing this kind of investment style, try “focusing on a specific company, rather than an industry or economy.” Likewise, don’t assume that your reader will understand “momentum” without explanation.
Instead of discussing “the company’s strong fundamentals,” try “the strength of the company’s financial statements and management team.”
This term is popular in the investment industry, but try “challenges” instead – or better yet, name the particular challenges you mean. Similarly, instead of “tailwinds,” try a term such as “favourable conditions.”
So are we saying you should never use technical terms in your writing? No, of course not. But think hard about what you’re trying to say and the best way to say it.
Think hard about what you’re trying to say and the best way to say it.
Sometimes only a technical term will do. If that’s the case, define it clearly up front. For example, you will probably have to discuss duration when writing about fixed income funds, so explain that it is a measure of the interest-rate sensitivity of a bond.
Your investment commentaries will be livelier and more readable if you use technical terms sparingly.
Sometimes it takes a few more words to say what you really mean, but getting the point across clearly is worth it.
If you want support for your investment commentaries, contact us at 416.925.1700, 844.243.1830 or email@example.com.
Financial services marketers face challenges every day, from writing investor education articles to managing complex rebranding initiatives. There’s one marketing challenge that we all wish would never happen, even though it’s inevitable: communicating with investors about an underperforming investment solution.
So, tip #1: don’t hide from underperformance. Quite the opposite. Get in front of it, be transparent and talk about what matters most to investors. Trust and understanding will go a long way to building a strong, enduring relationship.
Identify investor concerns
Any project that tackles underperformance must start by identifying investor concerns. And when it comes to performance, investors typically have two highly important concerns:
- Am I overpaying for my investments?
- Will I achieve my financial goals?
Once you know investor concerns, use them to identify your key messages. Fees and the value of advice are hot-button topics in the financial services industry but for the purposes of this article, let’s move forward with the idea of reassuring your investors that they will meet their goals.
A note on the causes of underperformance
The reasons why a fixed income solution may underperform are different from those for an equity solution, and within equities, a Canadian solution may underperform for different reasons than a global solution. For example:
- A bond fund could underperform because of unexpected interest rate moves
- A Canadian fund may underperform because of its weighting to energy companies
- A global fund could underperform as a result of its geographic allocation
The point here is that no one-size-fits-all strategy exists for communicating about short-term underperformance. To do it right, you need robust product and industry knowledge, and the ability to make complex issues investor friendly.
You’ve identified the primary investor concern: they’re uncertain whether they will achieve their financial goals. Could there be a more valid concern? We don’t think so. So, now it’s time to execute.
1. Create a special brochure
By crafting a special print- and web-friendly brochure, you create an opportunity to talk about the benefits of the underperforming solution. For example, you can highlight:
- The manager’s philosophy and process – this is especially important if your firm has a strong history or if the manager has a truly unique approach
- The solution’s role in a diversified portfolio – investors may question why a certain solution made it into their portfolio, offering you the opportunity to talk about asset allocation
- The importance of focusing on long-term goals rather than short-term volatility – remind investors that they are on the right path
2. Build a microsite
If you want to reinforce the importance of diversification and asset allocation, you can create an interactive microsite that uses the underperforming solution to diversify investor portfolios. Microsites are a great choice since they can have a long life. Why? Because, in this example, the asset allocation story is important at all times.
For microsite tips, read Why microsites are a big deal.
3. Produce a whitepaper
We think that an investor-friendly whitepaper is equally valuable as a brochure in this situation because they naturally have a more sophisticated feel that relies on data. Talking about underperforming investment solutions isn’t about whitewashing poor returns, it’s about explaining the situation effectively and data can help you do this with clear examples.
For more on whitepapers, read Whitepaper tactics that work and Five best practices for creating better whitepapers.
4. Write an advertorial
Support your investors by supporting advisors. We recommend writing a piece specifically for a trade publication that not only references, but also builds, on the whitepaper mentioned above. Advertorials are a great way to reach a broad audience, and you can tie them into other marketing and ad campaigns.
5. Host a PM roadshow
Although portfolio manager roadshows might be falling out of favour as a result of their high costs, and while they aren’t our first recommendation, they’re still effective and beneficial if the portfolio manager believes a roadshow could help with retention efforts.
Since mutual fund underperformance is unavoidable, we think you should turn the challenge into an opportunity for you and your firm. Your honesty and transparency will help you build stronger relationships with investors. And don’t forget to equip advisors with relevant materials first, since they are the ones who communicate directly with clients and field many of the performance questions from them.