Seven top trends in investment management & what they mean for communicators

In New York, just now, I heard from Greenwich Associate's MD Rodger Smith at the annual PAICR conference.

While his presentation was understandably US-focused, a lot of what he had to say is relevant to the Australian and global market. 

These trends he kicked off with will sound familiar to many of us - whether we're working as an asset manager, asset consultant, or marketing or communication person in the United States, Australia, Asia or UK / Europe. Or perhaps living in time-zone hell, and working across all of those as clients and friends are.

Background to the Greenwich work is this: 

• More than 1000 funds participated
• Research was conducted in 2011 between July and September
• Participants included corporate funds, union funds, public funds, endowment/foundations
• All funds had more than US$250 million in funds under management

So what are those seven key change dynamics, or trends, that Greenwich Associates spotted in this global study of institutional (or significant family office) funds?

1. Globalisation
2. Defined benefit to defined contribution shift (accelerated by the financial crisis)
3. Channel management
4. Product demand
5. Fiduciary management - and Chief Investment Officer outsourcing
6. Convergence of institutional and intermediary markets
7. Strategic/trusted relationships

These changes in asset management or institutional investing is having it's effect on marketing and communication. And the rest of the business!

Just some of the effects for communication and marketing people are these:

1. Global communication capability is needed: learn how to do it, and well
2. Fund managers are outsourcing more communication and marketing to partners as managers are squeezed by institutional clients
3. Differentiated value propositions for asset managers are more important than ever
4. As technology enables better client segmentation, even in B2B communication, managers are using those capabilities to be much more tailored, experimental and effective in communication
5. Convergence of markets means, conversely, that messages are more likely to need to work across both institutional and intermediary channels 

I am attending the 2012 PAICR conference #paicr2012 for BlueChip Communication on the 10th & 11th of September in New York.

Managing Reputation Risk: An ounce of prevention worth a pound of cure

Managing Reputation Risk: An ounce of prevention is worth a pound of cure in many instances

This blog about reputation risk from the Reptutation Institute caught my eye because BlueChip's issues/reputation risk kit has had a serious work out since January 2008.

Of course financial services organisations, be they large, small, new or established, have found themselves needing to manage reputation risk far more closely in the the last two years than ever before.

Suddenly financial services public relations switched gear from the occaisional perceptual crisis and lots of marketing to lots of perceptual crises and the odd bit of marketing support.

Hence the many calls we've had that start "We've got a problem. It's highly sensitive, and we think we need help in case it becomes public/when it becomes public/so that it doesn't ever become public/now that's become public."

As communication or marketing professionals our key contacts inside client organisations already know that reputation risk prevention is better than cure. What they struggle with is getting the CEO and executve team to buy that, and to invest the time and money needed to really properly risk manage their their reputation with anything appoaching the care factor applied to, say, financial risk.

Dr. Majorie Dijkstra of the Reputation Institute gives a four-step process for managing reputation risk, summarised below:

1. Risk identification - assessing the gap between stakeholder’s perceptions and beliefs and the actual performance of the company.
2. Prioritisation (risks and stakeholders) - assessing the probability of risks and the impact of the risk on reputation.
3. Mitigation - assessing the best response based on controllability of risk, the impact of risk on the business across stakeholders and the cost of implementing the strategy.
4. Monitoring - closely monitoring changes in stakeholder’s beliefs and expectation that may affect reputation.

BlueChip's process is similar:

1. Identification: through scenario planning (what are all the things that could go wrong here and where might that leave us??) risk logs and context analysis (e.g. media commentary or sentiment around a particular issue)
2. Prioritisation: through risk logs/workshops and stakeholder analysis
3. Response: through management action and communication strategy & action plans/actions/running orders across stakeholders. We include monitoring in this part and step 1!
4. Embedding: as often as not, whatever led to the issue has it's roots in longer term organisational issues. The only way to prevent similar issues in the future is to look back at those root causes and address them going forward through conscious management and communication behaviour.

When capable in house communicators or trusted consultants are allowed to complete step 4 we're able to help prevent a whole truckload of potential trouble.

Of course not everyone on the senior team necessarily takes that at face value.

I've always found that having that risk log or scenario planning from step 1 to hand, fleshed out with some of the more scary potential outcomes, tends to help colleagues focus on the potential downside of not managing reputation risk!

What do you say to investors when their money has gone?

What on earth do you say to investors who are near retirement and find themselves with half their capital gone thanks to global market volatility? Or worse, poor investment choices?

Fund managers, financial planners and superannuation providers are answering these questions now, and will have to keep answering them in the future.

There's no easy answer. There's no doubling the lost dollars to magically take investors back to where they were.

So how about a simple but challenging answer?

Markets go up and down. When and how they will do that is something you, I, and most professional investors, cannot pick. So invest now for the long term with full knowledge of the short term risk you run. Think very carefully about what you are prepared to lose, or what you can do without for a very long time - perhaps ten years.

And understand a little about investor behaviour - how you might react when it gets scary. We typically buy and sell at the 'wrong' times because we panic - even though we know this basic info about markets.

Forewarned is surely better prepared...although it might be a while before some of us get to use that knowledge.

It's what those with a long term focus have been saying for as long as I can remember funds management marketing...which is since the early 90s.

It's not new. It's not sexy. It's not different to your competitors. But it appears to have been proven right - again.

What can be new, different and if not sexy at least real, is HOW you say that now.

The "how now" is all about humility, understanding and realism. Doing that well takes a good understanding of your audience - the real people you are talking to.

Communicating well now also takes a long term commitment - which comes from deep inside your organisation - because as a company you believe an informed investor is better off as well as being a better client.

GFC + social media = new religion

How financial services players are turning to social media

With all the hubbub about twitter in conventional media, financial services execs seem suddenly to have found religion. Or at least, the curiosity to search for their social media spirituality.

Shrinking budgets and greater public scrutiny - thanks to the global financial crisis (GFC) - have helped send many of our financial services clients, and their audiences, online.

As investors open superannuation emails or statements, many feel cold hard fear. The fear is that they’ve lost a large amount of their life’s savings with anxiety over whether their super will recover. In such a time, some institutions stand out as using social media well - to contact, educate, reassure or interact with nervous clients and customers. Success of these efforts will partly be judged in the long-term by how many investors stick with their investment strategy, riding out the cycle.

Within the finance sector, Australian banks, perhaps, have least to lose by taking their PR and marketing online. This could be why they’ve made significant steps to do so, fast followed by others such as fund managers and financial planning firms.

So what’s new in financial services online communication since the GFC hit home?
Interactive newsletters and investor reports, weekly email investment updates, bank blogs, regular fund manager video updates or podcasts, ever-better online media centres and far, far better content. There’s a growing realisation that home-grown content must be as good, or better, than what mass media produce. This is particularly important as online communication deals direct with a real, live and sometimes vocal public.

Beyond monitoring social media, the financial services industry is more active in protecting and managing their reputations online. The GFC has been responsible, in some part, for a more sudden shift online.

Annual Reports & Shareholder Reviews - avoiding the 'house of pain'

Here are some practical tips for those involved in the annual report & shareholder review process, written by one with some scar tissue on the subject. While some aspects of the reporting process are outside corporate affairs or investor relations control, many things can be done to make the process more efficient and produce a higher quality product.

Want the 30 second version? This week I'll also post Top 5 things in best annual reports and Top 5 annual report shortcuts.

The annual report house of pain
This is when:
- a process starts without clear criteria
- everyone is an expert on language, images, design and content
- hence no-one agrees
- deadlines are missed
- things are done at the last minute and of course...
- quality suffers.

Throw in a 4am finish and you have a living hell.

Typically at some point in this nightmare (usually too late) the CEO will decide that they really doesn’t like a particular image and they want it changed. Or the General Counsel will suggest the language and punctuation needs their personal stamp on it. And who can blame them? There were probably no clear criteria set out for the visual identify or language style guide of the document to start with.

Criteria
It sounds simple, but some clear objectives and criteria for the annual document suite can make judging success far easier. How to decide what success looks like for this year’s report?

Simply look around at your peers, previous experience, and best practice sources then take the draft objectives for the document and criteria (for messages, images and overall meaning) to your CEO and then Chairman. This needs to happen BEFORE anything else. How do we brief designers, writers or contributors if we don’t know what our criteria are for a successful report in the first place? How can the effectiveness of the reports be judged if no one set out objectives? The answer “poorly” and “I don’t know”.

Similarly, if you don’t have a style guide, you better get one fast before the documents are written. If you don’t have a style guide everything is up for debate - which word to use, how abbreviations are referenced, and where the comma goes, and on...and on...and on.

Audience analysis
Annual reports and shareholder reviews are for shareholders... but are read and interpreted by everyone from analysts to customers, employees, suppliers and high school economics students. We may care more, or less, about some of these audiences but we do need to know who matters most. We also, I argue, need data about what the most critical audience or two currently thinks about the company.

Typically at least one part of an annual report or review is a message driven document. Companies invested significant sums in creating and delivering messages to audiences. This is almost pointless if you don’t have facts (not your ‘gut feel’) about what those critical audiences think, THEN create messages and deliver them in a way that works for, or influences, the current mindset of the most important audiences.

Right now, whether talking to retail or institutional investors, humility goes a long way. How do we know? Because it makes sense but it’s also backed up by data from investor research telling us just how annoyed some shareholders and investors are.

Structure
Ultimately I have no doubt most annual reports have great ‘bones’. However some are limp, lifeless things with no clear logic in the presentation of information.

Starting with good structure, before anyone begins to draft and two things happen. First the document writes itself. Phew. Second, no one can find a word out of place because the logic and simplicity of a good structure is that every word fits in the right spot with crossword-like precision.

Overall document structure
This you can glean from convention - competitor reports, your own previous years’ reports, best practice guides such as the AICD or Australasian Reporting Awards and of course any major focus for the year. This document structure is increasingly a content hierarchy rather than a typical fishbone ‘table of contents’.

And please, if you are doing an online version, do not create an ‘online table of contents’ that mimics the printed document. It’s not good use of readers’ time and it wastes a perfect opportunity to actually communicate a message. BHP Billiton [URL] is a great example of how to use this space for messages rather than a bland listing of contents that sit behind the first report or review landing page.

Formula for each section
The format for each report section can also be gleaned from convention. The Chairman’s letter, video or transcript may differ in structure to a divisional report but there is a basic common format.

It’s this:
1. The result, compared to the previous corresponding period.
2. The things that led to that result – company driven or from the external environment
3. How it compares to a relevant reference - others in the market, the overall market or more on previous years’.
4. How this result will be repeated, improved on, or avoided in the year to come.

Tip – the best reports talk to streakers, strollers and scholars - see here for more: http://financialservicesmarketingpr.blogspot.com/2009/04/streakers-strollers-scholarsyes-they.html.

Financial services heed swine online

A global health crisis trumps a global financial crisis anyday.

Rightly so. Lives matter far more than money.

So then, it's right that swine flu has galvanised the online community.

The single source of all about swine flu? http://mashable.com/2009/04/25/track-swine-flu/
And for analysis of how swine online in unfolding, read the professional communicator's view at
http://reputationaldemocracy.wordpress.com/2009/04/26/communicating-health-risks-swine-online/

It's not directly relevant to financial services, but what we learn here about online public health communication is applicable to our own crisis communication.

Streakers, strollers & scholars...yes they all read

Writing for three audiences in every document

EVERY document (well nearly) should cater for three levels of readers. Some will glance, some will skim read and some will study every word.

Also known colloquially as streakers, strollers and scholars.

So how to talk to them?

Headlines and big pictures for the streakers.

Sub-headings and pullout text for skim readers - our strollers.

And the full treatment for scholars - every word carefully placed and thought through in a logical order, supported by images and headlines that make sense.

Why? Because we're going online, getting news in ever shorter, shaper blocks of copy & becoming overwhelmed by GFC markets info overload.

Simple, clear, compelling communication matters more than ever.

Welcome....what do you want?

Welcome! This blog is about financial services communication and PR - more specifically, the industry's reputation.

If you're in asset or wealth management, banking or similar, this is for you.

It's about ideas as well as proven approaches that drive reputations in financial services pr. The content is based on the successes I and my colleagues have had, but also the mistakes - what we've learned in our decades as financial services PR practitioners or journalists.

I'll also share the best ideas about how apply social media & online PR to the finance industry.

Future topics will include:
- Leadership post-GFC
- Communicating in difficult times - how PR needs to change
- Effective wealth management CEO communication
- How to use online PR to get real results - fund inflows & retention.

Carden