6 Rules for the Road in Providing Clarity in Investment Marketing

Updated: Jul 13, 2020

Managers and marketers alike are eager to tell their story. They want to explain how their product is differentiated and should matter RIGHT NOW to the audience. Their end goal is adoption; having the product accepted and invested in by investors. Accomplishing this monumental task requires all the firm’s ducks to be lined up in a row, marching in order, telling the same story and moving along in lock step. These ducks take many forms, from collateral to people, from philosophy through process, and ultimately incorporating product terms, performance and price. In the push for adoption, often the focus becomes about one key element, or one main idea that the manager and/or marketing professionals are most passionate about.

This one element is so powerful, they surmise, that if they can just help investors ‘get it’ they will have a steady stream of asset flows regardless of terms, pesky performance, fees and the like. This focus can create a challenge; the ‘seller’ is presenting their offering in the way they feel it is best sold, while the ‘buyer’ is thinking about a whole different set of criteria. The old adage ‘start where the client is’ is meaningful here, but only as a construct to keep in mind that the client is unlikely laser focused on that one key element or main idea–they are scattered far and wide, watching trends, dealing with competitive threats, searching for answers and strategies well beyond any one good idea. How can ‘sellers’ stand out in the crowd with clarity so that their key value add is embraced and the noise drifts away sufficiently to permit adoption? Here are 6 rules for the road in accomplishing clarity–and ideally thus success–in marketing communications:

Avoid the desire to conceal problematic elements of the offering through window dressing; sales is sales but an astute research professional (as many are) will be 10x more aggravated when they weed through the offering and find elements that are non starters; they’ve now wasted time reviewing something that they can’t possibly due to structure, fees that are too high, a track record that is too short, volatile performance, etc.

Skip the urge to make an investment seem ‘generic’ in terms of its product structure. For example, creating an acronym out of an extended ‘fund’ name that makes it ‘appear’ like a mutual fund ticker symbol, even when it's a limited partnership, is a bad idea–tell the recipient what structure the offering is in out of the gate.

Don’t be a fair-weather friend to benchmarks; utilizing a benchmark against which the strategy looks more compelling, but is not the most representative of the strategy and/or peer group is problematic as it may lead the recipient to believe the strategy is offering something different than it is.

Don’t cherry pick performance periods. Defining time periods that are not the norm, or that are not as robust as possible given the track record of the strategy (i.e. leaving off YTD or a 3 or 7 year number in a 10 year track record) is an obvious red flag to astute recipients–provide the whole story.Avoid fee miscommunications. Establishing a significantly higher fee but with a notable ‘cap’ that is buried in the fine print, or listing a ‘management fee’ that doesn’t include numerous transaction fees that are additive to the gross fee paid by the investor is problematic not only for regulatory reasons, but as a sign of integrity and transparency.

Don’t throw tons of crap at the wall and hope something sticks. Content is everywhere. What is really, truly good? A good story is clean, clear, concise, consistent and focused. Reduce the noise, throw out the superfluous language and heavy use of overused jargon. Explain what the strategy is and how it fits in a diversified portfolio, then provide examples of that fit overtime.