We recently released our Asset Management Report for 2020. The report showed that most firms have made little progress over time. They remain obtuse and don’t communicate clearly with investors. And, they have not prioritized building trust with customers. Throughout the COVID-19 crisis, few organizations seized the opportunity to communicate clearly.
So how can Asset Management firms improve their scores for 2021?
Improve in 2021 – Focus on Customer Experience
Our latest report explores how closely clarity, trust and customer experience are linked. And not only that – we know that bad customer experience is also bad for your bottom line. For example, Adobe partnered with Econsultancy on a Digital Trends Report for 2020. The results showed that companies that prioritized customer experience were three times more likely to have significantly exceeded their top business goals in 2019. Good experiences lead to loyal customers. And the reverse is also true. Data shows that, in the U.S., 17% of consumers will switch brands after just one bad experience. And 59% after several negative interactions.
This confirms that Asset Management firms can also create or lose trust with every experience. Whether that’s firms’ websites, industry updates, or during in-person consultations. Whatever the channel, we know that complex language leads to confusion and poor customer experiences. To build trust and loyalty, firms must look at the ways in which they communicate. And our research over the last three years shows that there are many improvements to be made.
Improve in 2021 – Focus on communications
Financial Services remains the least trusted industry year on year, according to the Edelman Trust Barometer (pre-COVID-19). There is a lot of work to be done to expect an improvement in next year’s results. And there are two key areas of concern.
1. Keeping investors updated
Our 2020 Report showed that there was no mention of COVID-19 on 30% of the websites we reviewed. From an external perspective, this appears to be a major oversight. The pandemic caused major disruption to lives, economies, and financial markets. Investors will have looked for reassurance from their Asset Management firm. Most customers would have expected to find this clearly presented on the company’s site. There may well have been emails or letters sent out. And naturally, these were difficult times for everyone, including employees working within such firms. But initial investigations do not suggest a picture of firms communicating proactively. Similar findings were presented in an FT Ignites article in June 2020. It also points out that many firms make little to no reference to the pandemic on their homepages. Leaving clients searching for content or going elsewhere for advice.
There is a huge opportunity to create human-to-human connections over the coming year. The next 12 months are likely to be worrying times for investors. It’s important to keep your customers updated. And if you can show empathy and build trust, then you’re also nurturing their loyalty. The Asset Management firms that do this well will gain a strong advantage in the long-term.
2. Embracing plain language
Communicate clearly with your investors, and pay attention to plain language. Question whether the general public can consume your content. We know that the average American reads at 8th-grade level. Keep your written texts at, or lower than, this level.
Whenever we discuss plain language, especially within financial services and similar industries, we tend to hear the same argument. “My customers are smart – we don’t need to simplify our language for them.” We’ve blogged before about why this is a myth. Research shows that the more educated people are, the more they prefer plain language. People are busy, they want to hear from you in a straightforward way. Don’t make them waste time deciphering your content.
And there are several pieces to the plain language puzzle. Here’s where to start.
Remove complex words
When you use unnecessarily long words or jargon, it takes time for investors to process the information. This adds to their cognitive load. Which, in turn, breeds confusion and mistrust. It leads to a bad customer experience .
Take this complex content example from the report:
“ABC Corp* offers a range of EM debt strategies that capitalize on the team’s breadth of investment universe and depth of country-level research. These strategies have historically generated excess return in a risk-aware fashion, leading to high information ratios relative to peers.”
NOTE: we have replaced the actual firm name with ABC Corp
One paragraph and three pieces of jargon for the reader to comprehend:
- “high information ratios relative to peers”,
- “breadth of investment universe and depth of country-level research”, and
- “excess return in a risk-aware fashion”.
This type of insider-speak does not promote trust, or a good customer experience. This year, only 4 out of 60 firms achieved the recommended complex word density level. This is a minor improvement compared to 2019, where only 1 company had the recommended level. Over the next 12 months, you should work on rephrasing your internal or technical language. Opt for more everyday words.
Keep sentences as short as possible
This year, we saw 25.66% long sentence use, which is over 20% more than the recommended level. And over the past few years, we’ve seen minimal improvement in terms of sentence length. In fact, 2020 saw a slightly increased rate compared with 2019 (last year it was 25.01%).
Luckily, long sentences are an easy thing to fix. You just need to split them up. Work on the premise of one thought, one sentence. That makes it much easier for investors to absorb what you’re saying. Especially when you’re communicating a complex subject, such as changes to investments post-COVID. We’ve pulled together some tips for avoiding long sentences here.
Avoid passive voice
Passive voice levels have also remained static year on year. Once again, the average is 12%. We recommend keeping passive voice levels at 4% or lower. Because using passive voice hides who is taking the action. Take the example of
“I made a mistake” (Active) vs. “Mistakes were made” (Passive). You nurture trust by using the active voice and showing investors that you are accountable.
This year, only 3 Asset Management firms managed to keep passive voice under 4%.
Our 2020 Asset Management Report includes rankings for all 60 firms over a variety of metrics including passive voice, long sentences and complex word usage. You can also review 2018 and 2019 ranks to spot notable improvers and get more tips on how to communicate clearly.
This is no ordinary year
Of course, 2020 is an unusual year. There has been extra strain on teams to produce crisis communications, on top of the usual workload. And they needed to create content about the impact of COVID-19 from scratch, with no experience of the topic whatsoever. We send high praise to any firms who managed to communicate effectively throughout this time.
And there were challenges for content writers, even before the pandemic. Just think about the range of people creating customer communications within your own firm. There’s Legal, Financial Advisors, Marketing, Investor Services. They produce investment statements, terms & conditions, service descriptions, compliance documentation. Not to mention Subject Matter Experts (SMEs) who are well-versed in their subject, but not necessarily in professional writing. This high volume from different sources tends to lead to the loss of a company’s single tone of voice across the customer journey.
On top of all this, staff have been furloughed, or laid off. The pressure has been amplified. And the reality is, this situation is likely to continue. Firms will struggle to manually review the sheer volume of content they produce.
It’s time to turn to technology
The good news is, you can support your teams by allowing them to score their own content at source. Without the need to further invest in staff. Language Analysis Platforms like VisibleThread automatically calculate important indicators of readability, such as grade level, complex word density and passive voice. You simply upload documents or enter text, and the solution scans and scores your content. It helps all business writers to see how they can improve, and enables management to benchmark team performance. It’s time to embrace technology. Build customer confidence, and move up the rankings for 2021.