Financial content needs humanity

Cold and techy financial content must change

Financial content is a product in its own right, so asset managers' writing matters.

After all, there can’t be many of us who aren’t exposed, in some way, to the decisions of asset managers.

They form a vital conduit between us and the capital markets.

We trust them to make the right investing decisions with millions of pounds of our hard-earned cash.

But what do we really think about the people managing our money and the financial content they produce?

For many of us, it isn’t very positive.

So what do people think of financial content?

Cut off in their ivory towers, asset managers seem out of touch.

They appear to almost give us a wide berth, like a nervous commuter edging away from a sniffling co-traveller.

They are improving. But it can be a battle to decipher what they say in letters and reports peppered with mystifying jargon.

And as for the fees they charge us – we can’t help but wonder: are they really worth that?

Of course, we understand the job of an asset manager is far from easy. Recognising the risk a client is willing to take is a minefield.

What’s more, observing how quickly the fortunes of a previously admired colleague can reverse after a few bad investments is terrifying.

They are human, after all, with the same problems and emotional baggage that saddle us all.

How asset managers can improve

So how can asset managers improve? Well, most investors would appreciate clearer financial content.

That's where financial content agencies like Highbrook come in.

For example, most asset managers provide factsheets that explain what they are investing in. But often this only shows the top 10 holdings. They account for perhaps 25 per cent of the fund’s assets.

Could they explain where the rest of our money is going?

Ethics is increasingly important. Can asset managers be more open on climate change? What about issues such as palm oil and polluting companies?

In this new decade asset managers must understand that we want to know more, to help us in our investing choices.

We all have the same goal, after all: to make our money grow.

Perhaps the time has come for asset managers to open up and let us see their human side.

A study by Morningstar in September 2019 revealed that over the 10 years to 2019, only 23 per cent of all active funds surpassed the average of their passive rivals. That’s just counting the funds that survived the decade.

When we take into account the higher fees associated with active funds, we must ask the question: Why do so many investors prefer active funds?

Financial content needs a human touch

The simple reason seems to be that we like the human touch.

While we know a computer can track a market accurately, many of us still trust a fund manager who might foresee and side-step problems.

Value investors like an asset manager who can avoid following the herd to the expensive, on-trend companies, preferring defensive stocks and unfashionable sectors.

Those of us unwilling to risk investing in individual shares ourselves, might see a managed fund as the next best thing.

And of course, ultimately, we hope the skills of our fund manager will mean he or she can navigate market volatility.

Year-in year-out in a way that no passively managed fund could hope to do.

All in all, many of us deem the benefits associated with an asset manager to be worth the extra costs involved.

So it’s a shame many asset managers are distant and out-of-touch.

People trust people in financial content

So why does investment need a human voice?

According to the 2019 Investor and Retirement Optimism Index survey carried out by Wells Fargo/Gallup, 84 per cent of investors believed financial managers will always be needed and will not be replaced by technology.

It’s easy to forget that asset managers are human, with the same day-to-day problems as the rest of us. But this could also be part of their appeal.

Asset managers must ditch their cold and distant reputations. They must provide clear and jargon-free communications. More of us would be likely to trust them and their relationships with investors would strengthen.

Of course, there’s only so much asset managers can realistically share with us.

Their opinions have the power to move markets, which explains why they tend to be a cautious group of moles. That said, they would benefit enormously by letting the world hear their human voices and realise they aren’t so out-of-touch.

What’s more, the financial crisis of 2008 still preys on many investor’s minds. You only have to read The Big Short, Michael Lewis’ startling account of the 2008 financial crisis, to realise how superior some asset managers believed they were to the great unwashed. We all know how that ended.

Indeed, many investors would argue that it would be easier to find an honest politician, than an open and down-to-earth asset manager.

Let's change that.

FURTHER READING: Jane Austen's investment guide

FURTHER READING: Say it simply, say it fast