Monday, November 05, 2007

Know your audience before you write investment commentary

Think about your audience before you begin writing your investment commentary.

Identifying your audience will help you choose the topics, tone, and language that will glue readers to your commentary.

It's all about your reader

What's the typical reader's favorite word?

Some portfolio managers suggest "outperformed" or "beat the benchmark" when I ask this question in my investment commentary writing programs. These terms probably run a close second behind the winner.

The winner is "you." Using the word "you" will help to attract readers' attention. They also like content that is tailored to their needs and style of communication.

Think about your clients, prospects, and referral sources.

Are they:
  • Emerging affluent, high net worth, institutions or consultants?

  • Sophisticated investors, newbies or somewhere in between?

  • New college grads, young families, entrepreneurs or creators of wealth, planning for (or living in) retirement?
When you meet in person with your clients, you quickly discover their different interests and levels of understanding. You should reflect these characteristics in your writing as well as in your face-to-face meetings.

Emphasize impact on client portfolios

Your clients will zoom in on "What does this mean to me?" Especially, "How does it affect my portfolio?"

If you manage all client accounts identically, you can easily discuss the impact of market trends--and even specific stocks--on their portfolios. Be sure to make that connection explicit in your commentary.

It's not so easy to tie your commentary to client portfolios when accounts vary due to differing investment styles, managing for tax efficiency, timing of cash inflows, and other factors. But you can still do it.

When you've got account dispersion, you can still personalize your commentary by talking about:

  1. Asset classes (and maybe even sectors) instead of specific securities

  2. Where you're looking for new opportunities or where you foresee weakness

  3. Address questions your clients ask

  4. How account performance may vary because you customize your portfolio management to client needs

Choose topics that interest your readers

When I first wrote investment commentary at Fleet Investment Advisors (now Columbia Management Group), I focused on recapping the past quarter's events, just as my predecessors had. Nobody complained. At least, not in the beginning.

However, as I got to know the portfolio managers in the field, they warmed up enough to tell me the truth. "We can read this in The Wall Street Journal," they said. "What can else can you say?"

I discussed one response earlier: Talk about what you see coming in the future. Be sure to relate it to how you'll adjust your client portfolios.

Another route is to answer a popular question, such as "How can I generate more income in this low-return environment?"

Or, you can take a stance on a controversial topic. Some good sources for topics:

  • The Wall Street Journal and other publications read by your clients
  • CFA Magazine, Financial Analysts Journal, and other specialist publications
  • Brokerage research

One benefit of using the abovementioned sources is that they'll provide documentation that you can use to satisfy the compliance professional who reviews your commentary.

Write for your clients' level of understanding

You may be able to toss around terms like duration, contango, and reversion to the mean without confusing your investment colleagues. That's not true for the typical individual investor. So, simplify your vocabulary for them.

I like Warren Buffett's advice. He suggests, "Write with a specific person in mind. 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." Buffett made this comment in A Plain English Handbook: How to create clear SEC disclosure documents, an excellent resource for investment commentary writers.

Follow these tips and your investment commentary will keep your readers' attention.

Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

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

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