Looking back at 2016, Mark Polson, of the lang cat, reflects that, in so many ways, it has been a legendary shocker of a year. But, he asks, what can we learn about the reaction of the mass media to such events, and why doesn’t it sit comfortably with sensible, long term investment portfolio management?
Sadly, as I write this, the most recent addition to the death rollcall has been Leonard Cohen, who followed Bowie’s lead by dropping a fantastic album just before turning up his toes. And away from popular culture – although not really – the Year of Reactionary Self-Harm transferred its attention to America and we are now staring up the luxuriously groomed nostrils of a Trump presidency.
Those of us who – and I am looking for sympathy here – keep an eye on product provider communications to advisers, winced doubly that morning when we found out that it was The Donald. Once for, y’know, world peace and all that, and once because we knew it was only a matter of time before mountains of cant was unleashed in the name of timely communications from various investment marketing departments.
Such headlines as ‘What stocks to pick in a post-Trump world!’, ’10 ways in which a Trump presidency could be good for your clients!’ and ‘Please, please buy my multi-asset fund!’ did indeed come flying out into adviser inboxes. (I may have made the last one up). Any client unfortunate enough to have accounts with certain direct investment platforms got much more than that.
Crisis? What crisis?
But here’s the thing. I was hosting a sort of investment conference event the day after the election. I polled the 150 or so advisers who were there, to see how many of their clients had actually got in touch with them following the result, to voice concerns about their portfolios. The answer was…two. All the advisers had their devices with them, and I’m assuming clients generally have their adviser’s email address so they will have been aware if there had been a mass panic going on.
There was none of it. This lack of panic was borne out when I phoned a few direct platforms to see if their share-trading arms were getting pounded as they did post-Brexit. None were. One was running at about five times its normal trade volumes but it was well within expectations and there were no problems filling orders. Markets failed to plunge, much to the annoyance of headline writers, and in general everything seems to have ticked along not too bad, considering.
The reason I bring this up is that the way the industry communicates with clients – and by that I mean both directly and also through advisers – is once again under scrutiny. Some of this is about boring stuff like contractual documentation, but there’s much more going on.
As part of its recent “Our Future Mission” paper the FCA stated that “It is now clear that, in real life, consumers “focus on the here and now”, “use more personal decision making”, “based on a narrative of what they want and believe they deserve, rather than logically balancing opportunity against risk”.
A couple of observations – first of all, cracking job, industry, on all the communication about investment risk. Take the rest of the day off. No, actually do.
Second of all, we can’t be surprised. There is a massive disconnect between the messages which the industry pumps out and the messages that you, as advisers, give your clients. And there’s no better example of this than the Trump result. You will tell your clients – rightly – not to do anything daft; that investment allocations are set for the long-term and if they need to be reviewed then that will be something that’s done as part of the regular review process, once the dust has settled.
Meanwhile, the industry, including providers of buy-and-hold multi-asset funds, or platforms which try to encourage investors to exhibit long-term behaviours, will spam out a tonne of content which appears to be aimed at encouraging exactly the opposite behaviour. Why?
Content marketing – a hungry beast
The reason is pretty simple. Most providers, from investment houses to life companies to platforms to DFMs, have a content marketing strategy in place. This is a hungry beast, and needs to be fed with fresh ideas all the time. There are only so many ways to say ‘buy a portfolio that matches your risk profile and hang onto it’. So, marketing teams charged with coming up with content, inevitably get a bit excited whenever anything newsworthy happens.
This is what leads to content generators – including consumer finance talking heads – getting bogged down in relative irrelevances about what’s happening in Uzbekistani smaller companies or maple syrup futures in Canada. It’s simply that the big content machine needs to be fed with new stuff, and the only readily available source of new stuff is something that changes every day, like the investment markets.
Some of this stuff is aimed at genuinely active investors – those who like share trading as a hobby. That’s fine. But for everyone else, the best thing they can do is ignore the carefully clickbaited content that is spewing out, day after day.
The real question, then, is what can these guys do that will be of genuine value to you and your clients? Perhaps some more of the content budget could be spent on working with you to find that out, and a bit less on the other stuff. Here’s hoping.
About Mark Polson
Mark Polson is founder and principal of the lang cat, a specialist platforms, pensions and investment consultancy. The lang cat works with platforms, life companies, fund managers and large advisory firms helping them develop new propositions, turn marketing strategy into action and articulate their services in such a way that people without a financial services degree have a hope of understanding them. Bit by bit it aims to make the industry just a little less corporate and a little more human.
Mark is a prolific writer, contributor to the trade press and public speaker, even when people ask him not to be. He doesn’t play guitar as much as he’d like and spends more time than is reasonable going to gigs aimed at people considerably younger and more tattooed than him.
Follow Mark on Twitter @theactualpolson