More than one week on, and the news headlines are still dominated by the fallout from Britain’s vote to leave the European Union (EU). Are you Brexhausted already? Well, brace yourselves, as this process is just getting started. We won’t truly understand the political, economic and financial impacts of the vote until the terms of the exit are agreed, which could take several years. So there are still millions of column inches to be published on this subject.
For our asset management clients, this is going to be a critical period. Your investors are nervous about what lies ahead and are highly sensitised. They still carry the baggage of previous financial crises. And they know that there are years of uncertainty ahead, which could weigh upon their investments for a long time.
At a time like this, your choice of language and tone of voice are critical. Communications can move markets and could directly affect investment flows in and out of your funds.
Consider these two contrasting reactions to the Brexit vote:
Isn’t it funny? When I came here 17 years ago and I said that I wanted to lead a campaign to get Britain to leave the European Union, you all laughed at me – well I have to say, you’re not laughing now, are you?
In my view, and I am not prejudging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.
The first comment, of course, is courtesy of UKIP leader Nigel Farage, who campaigned to leave the EU. The second is from Mark Carney, governor of the Bank of England. Both are influential people with the ability to move markets and affect investor confidence. Yet they have radically different presentation styles.
Whose approach do you prefer? Which is best suited to your client base of institutional pension funds, investment consultants, wealth managers, financial advisers and consumers?
Get your tone of voice right
Brexit is going to remain in the investment writer’s lexicon for years to come. The skills of financial communications experts are going to be put to the test. So we need to be prepared. Here are five tips to help investment writers survive Brexit:
- Maintain some sense of longer-term perspective. In the words of Kipling, “If you can meet with Triumph and Disaster/ And treat those two impostors just the same”. Investors are going to be twitchy in the short term, and the UK’s exit negotiations are going to yield some good days and bad days. Fund managers will be positioning their portfolios for the years ahead, not the days ahead. So it will pay for your communications not to cheer (or sob) too loudly when individual political developments are announced.
- Deliver a clear and honest message. If you have an opinion to give, give it. If you have facts to share, share them. If you have a decision to communicate, communicate it clearly. Here’s Columbia Threadneedle’s simple response: We have begun the process of applying to expand the scope of our Luxembourg-based management company to enable us to establish an asset management presence in the EU.
- Adopt a calm and neutral tone to reassure investors. Here, we don’t intend neutral to mean vague. Don’t hide behind words like ‘if’ and ‘could’ too much. Your readers come to you for your view, so give it concisely and calmly. If you obfuscate, they’ll go somewhere else. A good example of a clear message with a neutral tone is that of Mark Carney above.
- Don’t be too combative. The tone used by Mr Farage is rare in the investment community, but not completely absent. The linked article is an excellent and vivid piece, but it may well unsettle investors who read it in light of the result. At a time when passions are running high, I think the temptation to let rip in such a way should be resisted. I (perhaps naively) believe that investors select an asset manager to look after their hard-earned savings in a sober and level-headed manner. This is particularly true at a time of heightened volatility.
- Have some empathy. There’s likely to be some bad news to be delivered in the coming years. Remember that your investors are human. Perhaps you are, too. So think about how you’d like to be told what each event means for their portfolio.
Let’s not forget that our ultimate objective as investment communicators is to make sure our readers understand what their fund managers are thinking (about the world around us) and doing (with their money). For the next few years, many active UK investors will likely be holding their itchy trigger fingers over the ‘sell’ button. Our job will be to give them the clear messages and calm tone that helps them trust their fund managers’ judgement – and remain invested.
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