Usage tips for portfolio performance commentary writers

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It’s almost time for quarter-end investment performance reporting. I have some tips for you.

1. Use the past tense.

Why? Because portfolio performance commentary discusses historical performance.

2. Describe benchmarks’ key characteristics, when appropriate.

The general public doesn’t know the difference between the S&P 500 and the S&P 400. They may think one is a subset of the other, like the Fortune 50 and the Fortune 1000. So specify “the mid-cap S&P 400.”

3. Be consistent in how you spell and punctuate terms.

For example, choose between “indexes” and “indices.” Decide whether you’ll use “small cap” exclusively without a hyphen or hyphenate it as “small-cap” when you use it as an adjective.

4. Limit your references to the time period.

Once you establish that you’re writing about the second quarter, don’t repeat that information frequently. However, if you shift between discussing the second quarter and the month of June, name the periods often enough that your reader follows your transitions.

5. Don’t go crazy replacing “returned,” as in “the fund returned 3%.”

There are plenty of other ways to convey the information in the sentence. However, I believe too much variety is counterproductive in a paragraph that consists mainly of returns. Instead, the variety distracts from the reader’s ability to compare returns. If you’re citing many index returns, perhaps you should insert a table.

Do you have grammar, punctuation, or other usage tips for people writing about investment performance? Please leave them as comments below.

POLL: What do you say when you learn a client has lost a family member?

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You’re not alone if you feel uncomfortable responding to news of a death.

Photo: lisby1

“Ten Principles for Effective Grief Support,” an article by Amy Florian in The Journal of Financial Planning (February 2011) made me wonder what advice you have for this situation.

What do you say when you learn a client has lost a family member?

Are any of the following responses appropriate? What would YOU say?

  • At least you still…
  • Call me anytime you want to talk.
  • How do you feel?
  • How do you hope people will remember ___?
  • I can’t imagine how you feel.
  • I know how you feel.
  • I’m so sorry.
  • Is there anything I can do?
  • Life will never be the same without ____.
  • What happened?

Please answer the anonymous poll in the right-hand column of this blog. Comments are also welcome. In fact, they’re almost required because my dratted software lets you pick only one response to this complex situation.

I’ll report on the results in the next issue of my e-newsletter.

I look forward to learning from you.

Let’s get possessive: A financial writing tip

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Sometimes it pays for financial writers to get possessive.

No, I’m not suggesting that you jealously hoard your office supplies or isolate your clients from other professionals. This is a writing tip.

Instead, I’m suggesting that you use the possessive case to shorten phrases.

For example, turn “The tone of the market improved by Friday” into “The market’s tone improved by Friday.”

The next time you find a sentence including “the X of Y,” see if it sounds better rephrased as “Y’s X.”

Plain English means writing sentences that flow better. It’s not only about choosing more basic words.

Pictures can supercharge your message: A grasshopper story

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People absorb messages better when words are complemented by an image. This is a rule that any writer can exploit.

Take my dinner at Casa Oaxaca on a Mexican vacation. It was a multi-course tasting menu, so I could gloss over the chapulines in the taquitos de jicama con  chapulines, quesillo y cuitlacoche. But then the dish captured in the photo to your right arrived.

Do you see the little antennae and the translucent wings?

I could no longer ignore the inclusion of toasted grasshoppers (chapulines) in my food. Good thing they were tasty!

Properly used, photos and other images add oomph to your written communications.

Tips for finding images

1. Look for the noun.

Finding an image is easy when you write about a concrete topic like grasshoppers. Simply search your favorite photo bank for your thing–the noun you’re writing about. Check my earlier blog post for free or low-cost photo sources.

2. Illustrate the adjective, verb or emotion.

What can you do when your subject is more abstract than grasshoppers?

I follow the advice of writer Erik Sherman:

Remember that none of your stories are about abstract topics. They are always tangible to someone. It might help to stop thinking about the topic – the noun – and focus on what people are doing – the verb – or what they’re feeling – the adjective. In a given investment story, someone is either making or losing money. It often happens in some industry, like real estate, high tech, or commodities. There may be regulatory aspects, in which case think about images that could represent regulation, like police holding a hand up to tell traffic to stop, a judge, Congress. The more tangible and simple you get about the topic, the easier it will be to think of a fitting image.

Financial blogger Chuck Rylant cracked this problem in his “Controversy Over Disappearing CalPERS Police Officer Retirement Benefits” blog post, which is no longer live. He illustrated the adjective “disappearing” instead of the difficult-to-depict noun, “retirement benefits.” Plus, the sinking ship in his illustration reinforced the message that the benefits are disappearing.

Can you add any tips for illustrating blog posts and other written communications?

Nov. 20, 2013 UPDATE: If you prefer original photos, read about the strategy used by advisor Sheri Iannetta Cupo. Aug. 15, 2016: I deleted some broken links.

WSJ video highlights plain English for financial advisors

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The Wall Street Journal continues to highlight the case for plain English. An article, “A Tip for Financial Advisers: When Possible, Use English,” expands on the ideas introduced in the video.

If you like this article-video combo, you may also enjoy former SEC Chairman Arthur Levitt’s opinion essay, which I discussed in “The Levitt test for financial risk disclosures.”

Projected: A word geek’s nitpick

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Sloppy or mistaken word usage pops out at me. For example, “A projected 5,000 people hold shares in this mutual fund.”

The sentence misuses “projected.” Projected refers to an estimate for the future.

Here’s a correct use of the word. “A projected 5,000 people will hold shares in this mutual fund one year from now.”

To speak about current shareholders, you could say, “An estimated 5,000 people hold shares in this mutual fund.”

Are you using “projected” and “estimated” correctly?

The Levitt test for financial risk disclosures

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Do your risk disclosures pass the Levitt test?

In “A Word to Wall Street: ‘Plain English,’ Please,” former SEC chairman Arthur Levitt sets a high standard for your communications about risk.

Levitt says, “For the language of financial disclosure, we need to raise the standard from ‘potentially understandable’ to ‘impossible to be misunderstood.’ ” His article appeared in The Wall Street Journal.

Levitt speaks harshly about the quality of financial communications. “It’s not just that much of this stuff is difficult to understand; it is written not to be understood.”

If you’re used to producing what Levitt calls “an avalanche of impenetrable verbiage,” it will take time for you to learn how to write using plain English.

Improve your disclosures

Step 1. Assess the quality of your communications. Ask if you can realistically expect a non-specialist to understand what you’ve written. Next, test your assumption by asking a representative member of your audience to read and then explain your text in their own words.

Step 2. Download A Plain English Handbook: How to create clear SEC disclosure documents, published by the SEC. It’s one of the best publications for financial writers and it’s FREE.

Step 3. Write, rewrite, and rewrite again. Start your long journey toward improving your financial disclosures. For me, it’s an ongoing challenge. There’s always room for improvement.


Quick check for writers, with an economic commentary example

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You CAN edit your own writing.

First-sentence check

Here’s a tip that will help you check how well your piece is structured. Read the first sentence of every paragraph. In combination, do they give the reader a good idea of your main points? If so, you’ve written something that’s likely to survive a busy reader’s scrutiny.

This first-sentence check works because strong business writing typically starts each paragraph with a topic sentence that summarizes the paragraph’s main point or topic.

You can also incorporate the first paragraph into your quick check of your writing. When I write something longer than a blog post, I like to set up my main points in the first paragraph.  This lets me convey my argument to readers who don’t have the patience to read any more.

Example: “Today’s employment report” by Cumberland Advisors

Let’s use “Today’s employment report,” a piece of economic commentary by Cumberland Advisors in Sarasota, Florida, to test the first-sentence approach to checking your writing.

Below you’ll see the first sentences of the first six paragraphs of the commentary. By the way, I’m not copying all of the first sentences because I don’t want to infringe on the firm’s copyright.

  1. Today’s employment report is a disappointment.
  2. Markets got ahead of reality; this is weak economic recovery.
  3. The United States faces the worst employment conditions seen during the entire Post World War II period.
  4. The human tragedy is large.
  5. If you look at the U-6 unemployment rate, you realize that 1 out of 6 in the labor force has either no income or pay that is less than it was three years ago.
  6. To understand the dynamic at work in the US one has to drill into the headline number.

After reading these sentences, do you have a sense of the author’s opinion on the employment report? I think so. To check the relationship between this six-sentence summary and the original commentary, go to “Today’s employment report.”

I like the commentary on the Cumberland Advisors website. It states opinions in an appealing style. I almost feel as if I’m in a conversation with the firm’s investment professionals. You can read more by visiting Cumberland’s commentary archive.

What if your writing flunks?

If your writing flunks the first-sentence test, you may simply need to tweak your content.

For example, if all but one of your first sentences work, you can zero in on the problem sentence’s paragraph of origin. Your problem may be that the topic sentence doesn’t sum up or introduce the paragraph’s main point. You can fix this by rewriting the first sentence.

Alternatively, the offending first sentence may be a sign that the entire paragraph doesn’t belong. Perhaps you’ve gone off on an unnecessary tangent. If so, you can axe the entire paragraph.

Another possibility: Your sentence and paragraph are fine, but belong higher or lower in the commentary. Move the paragraph and you may be set to go.

 

Image courtesy of Jonathan Baker Photography via flickr licensed under CC BY 2.0

Why financial bloggers should care about William and Kate

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Prince William and his bride-to-be are hot topics. Financial bloggers and other writers can use that to their advantage. Simply follow the example of LawyerMira‘s tweet, “Why William and Kate Should Sign a Prenup,” by inserting William and Kate into a tweet or blog post about your area of expertise.

When you put trendy topics in your headlines, you’ll attract more readers. Even better, otherwise indifferent readers may plow through your entire article or tweet.

For example, an article about “Why William and Kate Need a Financial Planner” may retain the interest of readers who otherwise would never read about financial planning. You could perform a public service by using William and Kate as an example.

However, as I mentioned in “SEO: What’s right for your financial blog” and “Two views: ‘Why Wasatch Writes White Papers,” you should deliver on the promise of your title. Don’t simply seek eyeballs at any cost.

Have you seen any good “William and Kate” titles related to investments, wealth management, or financial planning?

Please note the titles in the comments. Also, feel free to suggest a “William and Kate” title you’d like to read. I can imagine all sorts of riffs on “Why William and Kate…”

Two views: “Why Wasatch Writes White Papers”

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I dreamed of peeking into an asset management company’s marketing strategy when I saw the title “Why Wasatch Writes White Papers” in the latest issue of The Wasatch Advisor. Although the article disappointed, it suggested Wasatch’s real motive: Making the case for the asset classes in which they invest. Plus, it reminded me of two important rules for writers.

Wasatch: Little-known topics

Here’s the only paragraph that comes close to addressing the question raised by the article title:

Over the last couple of years Wasatch has developed five white papers on a variety of topics, including the most recent white paper “Think International, Think Small” which was just released this month. Each white paper focuses on an important topic that we believe is not well covered in general investor education.

So, the stated motivation boils down to Wasatch’s desire to cover important investment topics that don’t receive much popular media attention.

My take: The case for investing in Wasatch’s asset classes

If you look at the five Wasatch white papers, you’ll see that each addresses an asset class included in one or more Wasatch funds. Indeed, the first four white papers mention four to five Wasatch funds, according to the “White Papers” page in their online “Literature and Forms” section. I haven’t actually read the white papers.

White papers are a great way to market funds. However, I believe fund companies shouldn’t act as if it’s an accident that their white paper topics and their investing styles overlap.

I imagine that “Why Wasatch Writes White Papers” didn’t receive the editorial scrutiny it deserved. After all, in “Four lessons  from the Wasatch Funds on reporting underperformance,” I admired the quality of the firm’s communications. I’ve also benefited from the quality of the firm’s white papers. One of their white papers gave me the hook I needed to sell the editor of Financial Planning magazine on an article about mid-cap investing.

Writing lessons from this article

If you’re a writer, editor, or reviewer of your firm’s publications, you can learn some things from this article.

  1. Make sure that your articles deliver on what their titles promise. If the author called this article “Five White Papers to Help You Make Better Investment Decisions,” it would have set my expectations more accurately. Plus, it would never have inspired this blog post.
  2. Remember the WIIFM. Stress “What’s In It For Me” from your reader’s perspective when you write. The current title and introduction don’t do this.

If you remember #2, you’ll pull way ahead of many other financial communicators.