LinkedIn’s fatal flaw for financial advisor compliance

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LinkedIn has a whopping flaw for advisors who’d like to keep their compliance officers 100% happy, and there’s no solution in sight. At least, not to my knowledge.

The problem is records retention, which is at the heart of conservative management of compliance risks from advisor communications. Much of what you post to LinkedIn can be automatically saved and archived using solutions provided by third-party vendors. But there’s no way to do this for messages sent via LinkedIn.

How to cope with LinkedIn’s weakness

If you’re a solo financial advisor who’s not subject to rigorous compliance controls, you may use one of the following approaches:

  1. Taking the risk of neither automatically nor manually archiving messages
  2. Manually copying your LinkedIn messages to your corporate email account, which I assume is automatically archived, by clicking on “Include others on this message” and then checking the “Send me a copy” box below the message.
  3. Avoiding the use of LinkedIn messages, although the LinkedIn message function cannot be disabled–at least not to my knowledge

If you work for a large, conservative organization, your compliance department may ban you from using LinkedIn. I know this happens.

What’s the problem?

The barrier to solving this LinkedIn message problem may lie with LinkedIn, according to a communication from the @Backupify Twitter account. But I’m not sure if this is a challenge specific to Backupify or to all vendors.Meanwhile, I must thank @BillWinterberg of FPPad for connecting me with Backupify.

To back up what you can on LinkedIn

In the meantime, if you’re looking for a partial solution, Arkovi backs up most of LinkedIn. I believe that some of the firms listed in my blog post on “FINRA/SEC compliance for bloggers,” such as Smarsh and Socialware, also tackle this problem.

Please tell me if I’ve overlooked a solution. I’d like to share it with my readers. Meanwhile, check with your compliance professional about how to keep them satisfied as you use LinkedIn. You CAN do it.

Lessons from “Presentation Skills for Investment Professionals”

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You can never learn too much about how to give an effective presentation, especially about weighty topics such as investment management. That’s why I logged into “Presentation Skills for Investment Professionals,” a recent presentation to the CFA Institute by Dave Underhill of Underhill Training & Development.

Some of Dave’s advice resonated with advice I give my writing students. For example, don’t get deep into details before you tell your audience the value of what you’re discussing.

Boil down the tsunami

“Take a tsunami of data and boil it down to most important point,” said Dave. It’s a mixed metaphor, but I love his point. Look at the data and pretend you’re an audience member asking “So what? Why should I care about this?”

This is a topic I’ve addressed in “Focus on benefits, not features, in your marketing.” As I say in my writing workshops, your audience is looking for the WIIFM, which is short for “What’s In It For Me.”

Leave time for questions

Don’t make your presentations too long. Allow time for questions, suggested Dave.

Figure that one PowerPoint slide will 60-90 seconds to discuss. For goodness sakes, don’t READ your slides, as I did when I first started speaking in public.

Show, don’t just tell

Among the techniques that Dave uses to improve the power of his presentations are:

  1. Telling a story
  2. Using numbers, not just words — I suggest you use a graph, rather than a simple table, if your data lends itself to a more visually appealing display
  3. Using gestures to demonstrate your ideas

Go the extra mile

I was very touched that Dave took the time to email an answer to the question I’d sent in. It was a question without broad audience appeal, but he answered anyhow. That’s a classy thing to do.

To learn more of Dave’s tips, register to watch the replay of “Presentations Skills for Investment Professionals.”

Four lessons from Wasatch Funds on reporting underperformance

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Have you ever struggled to report your investment strategy’s underperformance to your clients or customers? Let’s look at what you can learn from how one firm tackled this challenge.

Wasatch Funds’ President Jeff Cardon did such a great job in “Perspective on Performance: Energy Trends and Their Impact on Wasatch Returns” in summer 2008 that I’ve held onto his article, waiting for an opportunity to share with you.

Cardon’s commentary illustrates the approach that I recommend to portfolio managers who underperform.

  1. Admit your underperformance. Don’t ignore it and hope no one notices.
  2. Put it in context. For example, one quarter of underperformance shouldn’t matter for a portfolio that has consistently delivered positive returns and beat its benchmark.
  3. Explain what caused the underperformance. Discuss whether it’s simply a matter of your style being out of favor or you were early into a sector or whether you’ve made some sort of error.
  4. Say what you’re going to do about your performance. When your investors believe that you’ve developed a good response, they’re more likely to stick with you.

Let’s look at how Cardon’s article illustrates these lessons.

1. Admit your underperformance

“…in recent periods, we have struggled to stay ahead of our benchmarks,” says Cardon in the second sentence of his article. He’s open about the fact that the fund complex’s products have underperformed. However, the focus of this article, which appeared in the firm’s Summer 2008 newsletter, The Wasatch Advisor,  is to explain why this happened.

2.  Put weak performance in context

Cardon does this by emphasizing his firm’s consistent investment philosophy and process. He also notes, “This strategy has produced considerable success over the years.”

“Through periods of market volatility and changing market trends, our goal at Wasatch remains steady: to deliver good long-term returns using our time-tested, fundamental approach to stock selection,” says Cardon in his first sentence. A key part of how Wasatch seeks this goal, says Cardon, is by “capturing earnings growth.”

Cardon stresses the firm’s success, even in tough times, in capturing earnings growth in its traditional areas of strength: the health care, consumer discretionary, information technology, and financials sectors. “Our thorough and collaborative investment process has continued to deliver above benchmark performance in these core sectors,” says Cardon.

Cardon reinforces this positive perspective on Wasatch’s core capabilities with graphs comparing Wasatch Small Cap Growth Fund’s performance in these sectors vs. that of their Russell 2000 counterparts. Adding a visual element is a good idea because some people absorb information better through pictures than words.

3. Explain what caused the underperformance

So, how could Wasatch underperform if it was doing such a great job in the sectors mentioned above? Because those sectors underperformed the rest of the market, which was led by the energy sector. But energy stocks didn’t meet the firm’s criteria for a good investment. “We clearly missed an opportunity in energy, but we were uncomfortable straying from our investment discipline,” says Cardon.

4. Say what you’re going to do about your underperformance

Acknowledge investor frustration. Cardon says, “If our underweight position in energy leaves you feeling uncomfortable, you may find it appropriate to supplement your Wasatch investment with a targeted investment in the energy sector.”

However, Wasatch is sticking with its investment discipline, says Cardon, because it expects “the market to return to equilibrium.” This gives readers hope for a better future.

Consistently tackling underperformance

Wasatch has another nice, although shorter, discussion of underperformance in its Summer 2010 newsletter (which isn’t online as I write this, or I’d give you a link). Again the firm’s message stresses the consistency of how the funds are managed.

Image courtesy of Goldy at FreeDigitalPhotos.net.

no, No, NO: My business card shouldn’t add me to your e-newsletter list

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“When people give you their business cards, you’re in a relationship, so you can add them to your e-newsletter list.”

Photo by Almoko


I disagree with the statement above. But I’ve heard it from many people.

Technically speaking, you may not violate the CAN-SPAM Act if you email everyone who gives you their card. But, in my opinion, you’re violating the spirit of the law. You’re also making me unhappy.

I use two techniques to keep my conscience clean.

When I meet people, I ask if I can add them to my e-newsletter distribution. I tell them they may enjoy the newsletter’s tips for client communications and articles on investment and wealth managers. For prospective clients, the newsletter is a gentle reminder of my availability, so they can find me once they need a writer.

If I obtain an email address, but forget to discuss my newsletter, I send an email asking if they’d like to subscribe. I include a link to a sample issue.

Rather than force people to sign themselves up, I offer to do it for them. “Just hit ‘reply’ to this message and send me an empty email. I’ll add you to my distribution.” This is a technique I learned from Andrea Novakowski, a coach. Interestingly, most people write a brief message in reply to my newsletter subscription offer.

Maybe I’m too conservative. I don’t automatically add my clients to my newsletter distribution. I treat them as I’d like to be treated.

Guide to e-newsletters

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If you have questions about e-newsletters, mosey on over to “The freelancer’s guide to e-newsletters” on Michelle Rafter’s WordCount blog. I’m quoted extensively in answers to questions including

  • What’s so great about e-newsletters?
  • How long should it be?
  • What kind of software can I use?
  • How can I get subscribers?

If you’re a financial blogger, you can recycle your blog posts in your newsletter, perhaps adding one unique bit of content for your subscribers.

It takes time to build an e-newsletter email list. Even if you don’t think you need one yet, start building your newsletter now.

Great blog posts don’t matter…

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…if people don’t read them. As the saying goes, “If a tree falls in a forest and no one is around to hear it, does it make a sound?”

Don’t count on readers for your financial advice or investment services blog posts to come to your blog. Grow your audience by making your content available the way your readers prefer.

A client recently reinforced this lesson for me. She said, “Susan, I love those links you post on LinkedIn!” I was surprised. This client had declined my offer to send her my e-newsletter, which is the main way my clients read my blog posts. However, my content developed greater appeal when delivered via LinkedIn, a way that suits her style. Linking to my blog posts in my LinkedIn status updates is a bigger success than I’d realized.

Here are some ways you can make your blog posts available to satisfy your readers’ preferences.

1. LinkedIn status updates. I explain how to post links in “Reader question: How can I share my investment commentary on LinkedIn?”

2. LinkedIn groups. If you’ve found a LinkedIn group that gets good traffic, then share your post there.

3. E-newsletter. An e-newsletter is a great way to package your blog posts for readers who’ll never visit a blog or use an RSS feed.

4. Other social media: Twitter, Facebook, and more. You can post links to your blog posts on Twitter, Facebook, and other social media sites much as you would on LinkedIn. Of course, link-posting will reach a point of diminishing returns. Figure out which sites yield your best results, and then focus on them.

You may find that more of your prospects are on Facebook than Twitter or other social media sites.

5. Guest posts. Appearing as a guest on someone else’s blog is another way to get your content seen. While many blogs want original content for their guest spots, some don’t. You can learn more in “How to guest-blog on personal finance or investments, Part I: Your approach” and “Part II Blogs that accept posts from financial advisors.”

If you’re not using any of these methods, it’s time to re-think your approach to blogging.

E-newsletters: Great marketing tool for financial advisors and writers

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E-newsletters are a great way to market yourself, as I’ll discuss on the WordCount Last Wednesday (#wclw) Twitter live chat on August 25 from 11:30 a.m.-12:30 p.m. Eastern. You can get details on how to tune into my #wclw chat at http://bit.ly/92SQdH

Learning from personal experience

My Investment Writing e-newsletter has brought me many new clients. Sometimes I get calls or emails within 24 hours of sending out a newsletter. Other times, it’s the steady drip of emails that brings my name to mind when a prospective client has a need I can meet.

The funny thing is that I didn’t set out to write a newsletter. I simply started writing a mass email to stay in touch with the great people I’d met at my last corporate job. I wanted to give them some useful content in addition to my rhapsodies about gardening and bicycling, so I started reporting on Boston Security Analysts Society events. To my surprise, my former colleagues told me they looked forward to my emails. A newsletter was born.

Services that help you format and manage your e-newsletter

If you create an e-newsletter, don’t try to distribute it using your regular e-mail or you might get tagged as a spammer. Now that my subscription base has grown, I pay $30 a month (fees start at $15/month) to ConstantContact.com for access to their website to manage the email lists, format my monthly newsletter and help me avoid the spam filter.  It’s easy to learn and the customer service is great.

If I were starting a newsletter today, I might start with MailChimp. It’s free for up to 500 subscribers. My financial advisor friends tell me it’s also social media-friendly.

Other options, which I’ve only heard of from friends and colleagues, include:

Most of the pay services will let you experiment with a free account before you commit. By the way, if you want to use Constant Contact, you can give my name as a referral sources, so you get a $30 credit once you become a paid subscriber. I’ll also get a $30 credit. However, I think you’ll probably want to start with MailChimp.

My top three posts if you’re new to newsletters

Poll: Should you make investment predictions that can backfire?

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The investment strategies of Bill Gross, founder and co-chief investment officer of PIMCO, influence the asset allocations of investment professionals around the world.  Should he also influence your approach to your market commentary?

“Vigilante on the move,” a profile of PIMCO that appeared in The Economist, got me thinking with the following paragraph.

“Some colleagues might welcome a lower profile for Mr Gross, whose utterances occasionally backfire. In a typically punchy commentary in January he recommended avoiding British government debt, which was ‘resting on a bed of nitroglycerine’. But gilts failed to explode, and PIMCO was forced to reverse course.”

When you make investment predictions, you’re bound to be wrong some of the time.

Is this embarrassment something that you should avoid at all costs by shunning predictions and strong opinions? Some managers hedge their bets with wording such as “a continued recovery is more likely than a double-dip recession, however….” Or, should you embrace controversy?

What strategy will help you most with clients, prospects, and referral sources?

Please answer the poll that will appear in the right-hand column of this blog until I take it down next month. I’ll comment on the results in my September e-newsletter. Or you can leave comments below.

Poll question

Clients and prospects will respond best when asset managers’ market commentary…

  • Never makes predictions
  • Makes qualified predictions that give them an “out”
  • Sometimes makes predictions
  • Always expresses at least one strong opinion
  • None of the above (Please leave a comment)

Financial ad in plain English: Another one from BNY Mellon

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Financial ads that speak plain English are unusual, so I was delighted to find another example from BNY Mellon in the July/August issue of the CFA Institute’s magazine. This ad does an even better job than the ad I discussed in “BNY Mellon: I liked your ‘truth ad’ until you used that word.”

Here’s the text that opens the ad for BNY Mellon Asset Servicing.

“Our tools measure performance, monitor exposure, and analyze risk. You get all the glory.”

The text is jargon-free. Plus it appeals to readers’ interest in promoting their careers. It’s a nice combination. The rest of the text is also free of jargon.

How do YOUR written materials measure up?

Three writing lessons from “One Trader’s Binge on Cocoa Wraps Up Chocolate Market”

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Some of us will read about hedge fund managers even if they’re written about in prose as dry as the Sahara. But many people won’t. This is why I’m discussing “One Trader’s Binge on Cocoa Wraps Up Chocolate Market” by Julia Werdigier and Julie Creswell in today’s New York Times (free registration may be required for access to the article). As I type this blog post, this article on the front page of The New York Times is its “most emailed.”

Photo by Profound Whatever

Here are three writing lessons from the article.

Lesson 1: Use colorful images. “To some, he is a real-life Willy Wonka. To others, he is a Bond-style villain bent on taking over the world’s supply of chocolate,” write the authors in the opening paragraph. This immediately draws in readers who may not care about hedge funds. Of course, the fact that hedge fund manager Anthony Ward is buying cocoa, an essential ingredient in chocolate, lends itself to tasty images.

Lesson 2: Explain numbers in everyday terms. “”By one estimate, he has bought enough to make more than five billion chocolate bars,” says the article. That’s a much more colorful image than “7 percent of annual cocoa production worldwide.”

Lesson 3: Get your main point across quickly. By the end of the first column, I learned that “.. hedge fund manager …named Anthony Ward has all but cornered the market in cocoa….and rival traders are crying foul, saying Mr. Ward is stockpiling cocoa in a bid to drive up already high prices so he can sell later at a big profit. His activities have helped drive cocoa prices on the London market to a 30-year high.”

Bonus suggestion: If you’re looking for writing tips, especially for short articles such as blog posts, analyze newspaper articles. The best newspaper articles offer great role models.