Grab readers with an anecdotal lead

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Starting your article or blog post with with a real-life story can draw in readers who’d otherwise ignore you. 

“The anecdotal approach, by framing [your topic] in personal terms, becomes instantly accessible and—more important—readable,” as Mark Ragan says in “How to write an anecdotal lead.”

To write good anecdotal leads, Ragan suggests that you 
1. Find some good stories.
2. Write your explanation of what the story is about before you write out the story. This will help you to pick the right story and focus it.
3. Start your article with a short anecdote, followed by a colorful quote, and then your explanation of the story’s main points. After that, you can dive into the body of your story.


Have you seen any examples of financial advisors making good use of anecdotal leads? I’d like to see them.

Tune up your writing skills on Nov. 10 or Nov. 19–or hire me to help you

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Could your writing skills use a tune-up? If you work with investments, you’ll get useful tips from my November 10 lunchtime presentation to Boston Women in Finance (BWF) on “How to Write What People Will Read About Investments.” Lunch is included in the program cost.

This program sold out the first time I presented it to BWF, so register early. 

It would be great to meet you at this program. Please introduce yourself as one of my readers.

If you’re a NAPFA member who lives in the Boston area, you can see me present on “How to Write Effective Emails and Letters to Your Financial Planning Clients” at your November 19 study group. 

If you can’t attend either presentation, consider hiring me to train people at your company. I’ve presented across the U.S. and Canada on “How to Write Investment Commentary People Will Read.” I can develop presentations tailored to you. 

Note: I updated this blog post on Oct. 21 with the BWF registration link and NAPFA information.

3Q09 vs. Q3 09 –which is better?

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You probably know that Q is the abbreviation for quarter. But what’s the proper way to abbreviate “third quarter of 2009”?

I prefer 3Q09 to Q3 09. It seems cleaner to separate the 3 of third quarter from the 09 of 2009. I worry that readers will get confused if the numbers in Q3 09 run together, as in Q309.

Looking for evidence to back up my opinion, I did a Google search. I found about 121,000 instances of 3Q09 vs. 10.9 million for Q3 09.

Wow–that’s quite a disparity! Q3 09 is the format that @BillWinterberg sees in regulatory filings. Perhaps that explains it. I wonder if the SEC requires the Q3 09 format. 

Please answer the poll in the right-hand column of my blog. I’ll track your answers with interest and will report on them in my November e-newsletter. Thank you!

Advisors, now’s the time to build clients’ NON-financial emergency funds

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Financial advisors, encourage your clients to set up a non-financial emergency fund, says Kol Birke, financial behavior specialist at Commonwealth Financial Network. The fund will help them to make better financial decisions. Plus, it’ll strengthen their bond with you.

A non-financial emergency fund consists of family, friends, and activities such as volunteering and exercise. These relationships and activities are resources your clients can draw on in difficult times that will help focus their minds on positives, so they aren’t as easily rattled by market downturns or other stresses. 

In fact, psychologist Barbara Frederickson has shown that positive emotions widen individuals’ receptiveness to a broader range of options, so they can choose the best one. If you can help your clients feel more positive emotions, they’re less likely to react to a market downturn by saying “Sell, sell, sell.” That kind of single-minded “Sell” response served humans well when they were fleeing wild animal attacks. It’s less appropriate in today’s complex world.

Advisors can help clients build their funds by asking what activities are soothing, nourishing or enriching.  In other words, what they do to blow off steam, and what do they do that provides most meaning in life.

Now is a great time to raise this topic with clients. They’re past the shock of the market decline. Yet the decline is fresh enough in their minds that they’re receptive to new techniques to make them more resilient emotionally.

A nice side effect of creating positive emotions through your clients’ non-financial emergency funds is that it makes them feel more connected to you. That will serve you both well.

To learn more about this topic, contact Kol Birke at kbirke@commonwealth.com or 781.663.9663.

Estate planning for unmarried and same-sex couples

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Estate planning for unmarried and same-sex couples is mighty complicated, as I explain in “Unwed and Planning,” in the October issue of Financial Planning magazine. 

Here’s a table that got squeezed out of the story due to lack of space.

This data is frequently updated on the Human Rights Campaign’s Relationship Recognition Map.

Some resources I consulted in researching my story 

Related story in The New York Times 
A same-sex couple may spend significantly more for the same services than an opposite-sex married couple. In fact, costs could run as much $467,562 over their lifetimes for a hypothetical couple analyzed by Tara Siegel Bernard and Ron Lieber in “The Costs of Being a Gay Couple Run Higher,” in The New York Times (Oct. 3). 

Bostonians can learn more on October 22
“Estate Planning & Family Litigation Avoidance Strategies for Gay & Lesbian Individuals and Couples” is the topic of a breakfast meeting to be held by the Boston Estate Planning Council on October 22.

Guest post: "Can I replace my paper newsletter with an e-newsletter instead?"

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Are you considering scrapping the newsletter you send via U.S. mail in favor of a newsletter delivered via email? If so, please read the guest post below by Tom Ahern of Ahern Communications, a specialist in fundraising, advocacy, and “persuasion” communications. It is excerpted with permission from his Love Thy Reader newsletter.

Ahern writes from the perspective of non-profit organizations seeking donations. But most of what he says applies equally well to investment and wealth managers seeking to retain existing clients and attract new ones through communications with clients, prospects, and referral sources.



Can I replace my paper newsletter with an e-newsletter instead?

This is the most commonly asked question at my workshops. My considered answer has stayed the same for the last five years: “Ummm…no. You really want both.”

A well-done paper newsletter can produce significant revenue. Witness the Gillette Children’s Foundation in Minnesota, which went from generating $5,000 per issue to $50,000 per issue just by changing a few things.

Understand, too, that paper and electrons are two very different media.

Paper is slow — the good kind of slow, the kind that’s made the “slow food” movement so popular among the health-conscious. Paper is a reader’s medium, a relaxing place where you, as the writer, have the elbowroom to tell stories, show terrific pictures and report results.

An emailed newsletter, on the other hand, is fast. It’s an ACT NOW! medium. Words are kept to a minimum.

In December 2008, Jeff Brooks shared with me some conclusions from his company’s ongoing research into e-newsletters.

“I had a hypothesis,” he wrote, “that e-newsletters were radically different from print newsletters. Not about story-telling,” Jeff clarified, “but about the actions you can take. We’ve tested that notion a couple of times, and so far, that’s proving to be true. It seems what works is to have one topic with 3 to 5 actions a reader can take, at least one of which is to give a gift, but the others aren’t.”

A fully firing communications schedule stays in touch with the donor base at a minimum once a month. Electronic newsletters help you satisfy that torrid pace. But if you pull the plug on paper and switch to utterly electronic, your donor income will almost certainly fall.

Here’s a tantalizing bit of confirming data from Convio, via Ted Hart: Donors you contact with BOTH email and conventional mail give $62 on average annually versus a $32 average gift for those donors whom you contact ONLY through postal mail.

In other words, it’s NOT an either/or situation, paper or electronic. It’s a BOTH situation: paper AND electronic, if you want to maximize results.

Of course, that assumes you are actually getting results.

If you aren’t currently making money with your paper newsletter, don’t expect to do any better with an e-newsletter. Really good donor newsletters are few and far between, in my experience. Most nonprofit newsletters sent to me for audits are unwittingly built to fail, due to a variety of unguessed fatal flaws.

Related posts:
* Should you drop subscribers who don’t open your e-newsletter?
* Boost readership of your e-newsletter with powerful subject lines
* Three tips for how often to publish your newsletter 

A quant’s guide to detecting a future "Madoff"

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Worried about getting taken in by an investment management Ponzi scheme?

With the SEC ratcheting up its fraud detection efforts, it’s less likely that you’ll get scammed, based on what I heard at the CFA Institute’s GIPS conference last week. But the conference also introduced me to a quantitative method for detecting fraud in “The Importance of Risk and Attribution in the Post-Madoff Era” by Dan diBartolomeo, president and founder of Northfield Information Services.

The solution boils down to identifying investment returns that aren’t economically feasible. The effective information coefficient is an important tool for that, said diBartolomeo. 

A personal commitment to preventing future Madoff-style fraud 
DiBartolomeo wants to make people more aware of–and attentive to–risk.  He’s so committed that every year he hires a pickpocket to attend his annual client conference and warns his clients that “Keith the thief” will be targeting their wallets, watches, and other possessions. Despite the warning, each year, diBartolomeo has to return a pile of stolen goods. Keith succeeds because he’s good at distracting people–and Bernie Madoff was good at this, too, said diBartolomeo.

Speaking of Madoff, diBartolomeo’s firm was involved in the efforts of Harry Markopolos to uncover the secret to Madoff’s steady investment returns. At the time, diBartolomeo only knew that he was analyzing the returns of Manager B. But within a few hours, analysis revealed that Manager B’s returns “were either fictitious or had arisen from a strategy other than what was being represented to investors, wherein returns were probably being enhanced by illegal means.” You can read more of the details of this analysis in a March 2009 FactSet podcast with diBartolomeo. 

How to uncover a fraud 
“Do these returns make sense?” That’s an essential question for those who perform due diligence on potential investments, according to diBartolomeo. Returns-based methods aren’t adequate for analyzing this question, he said. Instead, one needs “a risk-based measure of investment performance that can detect manager skill(or lack thereof) quickly.”

The information ratio is one place to start, but it has flaws. The information ratio has nothing to do with making money for investors,” said diBartolomeo. For example, the information ratio would look great for a manager with alpha of 1 basis point and a tracking error of zero, but the manager’s clients wouldn’t benefit much. He also pointed out that “the statistical significance of a ratio is hard to calculate.”

The effective information coefficient (EIC) could be the answer to this problem. For more details on the EIC, read “Measuring Investment Skill Using the Effective Information Coefficient,” which appeared in The Journal of Performance Measurement (Fall 2008). 

I wonder what Madoff’s EIC was. I don’t know if diBartolomeo got an opportunity to calculate it.

Oct. 31 update: diBartolomeo’s talk is now available as a podcast from the CFA Institute.

Do you use “pride capitals”?

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If you’re in business, you probably use capital letters more than grammar geeks recommend.

I confess. I was guilty of overcapitalizing titles until Prof. Albert Craig, my Ph.D. thesis advisor, drummed the rules into me. I learned to write “Goto Fumio, home minister” instead of “Goto Fumio, Home Minister.” Titles should be capitalized only when they directly precede the titleholder’s name, as in “Home Minister Goto Fumio.” Goto Fumio, by the way, was the focus of my Ph.D. dissertation.

For a quick overview of the rules, see the Grammar Girl blog’s “When Should You Capitalize Words?” (Sorry, this post is no longer available.) The blog post, written by Rob Reinalda, who goes by word_czar on Twitter, discusses “pride capitals” to explain why “One mistake business writers often make is capitalizing words simply for emphasis or to augment their importance.”

You’re using pride capitals if your firm’s biographies refer to “Jane Smith, President and Chief Investment Officer” instead of “Jane Smith, president and chief investment officer.”

 

Note: edited on Feb. 11, 2016 to delete an outdated reference and again on Dec. 12, 2016.

Image courtesy of FrameAngel at FreeDigitalPhotos.net.

Top 5 tips for investment performance advertising

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Knowing the rules for advertising your investment performance is your key to staying out of trouble with the regulators.

Here are some of the tips I gathered from “Performance Advertising 101: Regulatory Do’s and Don’ts” presented on Sept. 23 at the CFA Institute’s GIPS conference by Rajan Chari of Deloitte & Touche, who focused on GIPS issues, and Steven W. Stone of Morgan, Lewis Bockius, who focused on SEC issues. 

1. Don’t think that you’re not subject to advertising rules because you’re not buying a newspaper or magazine ad. Advertising is broadly defined. It’s “basically, any written communication addressed to more than one person (or used more than once) that offers investment advisory services with regard to securities,” according to the speakers’ slides. Advertising includes client materials. It may also refer to anything that you distribute in unchanged form to 10 or more people. 

2. Make the necessary disclosures about performance. Consult with experts who are knowledgeable about your disclosure requirements. 

3. Tread carefully in performance advertising areas of particular concern to the SEC. For example, projecting returns may be viewed as promissory. Back testing is easily manipulated. To avoid the appearance of cherry picking, top stock picks must be balanced with worst stock picks. 

4. Keep a log of the people to whom you send advertising materials. I’ll bet that many people aren’t doing this. But it’s essential for making things right if you discover that inappropriate materials have been distributed. 

5. Take your audience’s sophistication into account when you choose the materials you send them. The regulators give you more leeway in materials aimed at sophisticated investors.

Despite the fact that “Performance Advertising 101: Regulatory Do’s and Don’ts” was presented at the CFA Institute’s GIPS conference, GIPS didn’t get much attention compared to the SEC.  That’s because investment managers always have to pay attention to SEC rules, whereas “GIPS advertising rules are only applicable if you choose to claim [GIPS] compliance in an advertisement.” You can read the GIPS Advertising Guidelines, on pages 33-37 of the Global Investment Performance Standards.

Happy advertising!

Sept. 27 addition from Rajan Chari
Thanks to the generosity of Rajan Chari, here are two links to give you more information on advertising standards.


RFP dilemma: What should my colleague do?

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You may have the answer to my colleague’s investment management RFP dilemma.

Here’s his question: “When preparing an RFP response (one in which you repeat the question, then provide the answer) should you correct the original author’s spelling or grammatical error?” 

Also, should you worry about offending the client if you correct an error?



What do YOU think? I’ll give my opinion after I hear from some of you.