Author: David Butcher
Asset managers need to become better at communications if they want to help investors, believes David Butcher
There’s a paradox in investment communications. And solving it could unlock a huge engagement opportunity.
The investment management sector boasts some of the world’s brightest talent, with some of the biggest ideas.
But when investment businesses try and express those ideas to clients, they consistently struggle to do so with imagination, energy and purpose, particularly when it comes to their written communications. Great ideas lose their impact and meaning thanks to words and sentences that are too long for the audience to cope with. That’s the paradox, and empirical research suggests the communications challenge is significant.
As part of that research, we assembled a replica of what an investment client might read to keep up to date – 54 items of investment content, academic papers, Bank of England speeches and financial media articles – and we took readability measurements to work out what was more, and less, accessible.
We found two things
Firstly, the investment content sample isn’t very readable. It achieves a mean readability score far closer to that of the academic papers (some of which have a reading age of 20.7 years) than to articles in the financial media (14.8 years).
The research assumed that the reading audience ranges from engaged private investors to knowledgeable professional investors. But even then, the mean readability scores overshot what was assumed to be the appetite for this audience.
While our study didn’t look at the reading appetite or capabilities of the 10 UK million people who have been automatically enrolled into their company pension scheme, it is safe to assume their investment knowledge is, on balance, minimal.
But savers and investors of every hue respond to compelling stories told with conviction – and there’s no reason why investment content can’t draw meaningful links between, say, pensions and the climate crisis or inflation and a basket of groceries.
Our second finding was more of a shock: the labels attached to investment content have no bearing on their readability.
Intuitively, you might expect a paper with the warning “investment professionals only” to be more complex and challenging than one that’s “suitable for private clients”.
They’re not. At least not in our sample.
Six out of the 54 items were aimed at individuals/retail investors – and their readability scores were almost identical to those of the academic papers.
The 17 items aimed at “institutions” achieved readability scores right across the spectrum – some way above the academic scores, others comparable to UK tabloid newspapers!
This is a big opportunity for investment businesses.
First of all, anyone responsible for communicating with clients – directly or through websites, the media or other channels – could start with a realistic assessment of their readers’ capabilities, preferences, and parameters.
Second, investment managers could audit the readability of their existing materials. Such an audit, either undertaken internally or with outside support, could show managers where they meet or miss reader capabilities and appetite – allowing them to change course if need be.
Third, while it takes skill to simplify complex ideas and make them accessible, they could use shorter sentences and words, and think about more interesting turns of phrase, committing to telling clients stories they will remember and retell. Using technology to engage with clients in different, dynamic ways would certainly help.
We are privileged to work in a sector that has to make sense of the world – in all its glorious complexity, from weather patterns to coffee prices, from populism to the births, marriages and deaths of companies.
The subject matter is thrilling.
Let’s give clients more reasons to engage with it.
David Butcher is managing director of Communications and Content – a marketing consultancy specialising in public relations and thought leadership in financial services.
