Beware of Headlines Like This: “Like Buying Amazon at $3.19!”

If you’re like me and many other people, you’ll click on a headline link like the one above and the promises of a quick fortune will continue from there to get you to subscribe for investment advice. Beware, this is click bait, plain and simple. And most of these services will only take your money.

Read between the lines

Yes, you might get lucky, but remember, if you bought Amazon at $3.19 that would’ve been many years ago and how likely would you or your financial advisor for that matter have held it through all the ups and downs? That is the read between the lines headline, but it also won’t be covered in whatever ad you end up reading.

This article, however, is not about sound financial planning, however. That would take an entire book or at least a 12-page white paper.

The point of this article is to help you avoid the old “bait and switch,” over promise and under deliver, predatory financial newsletter advertising that’s everywhere. These ads are also not helping the reputation of seemingly legitimate companies like Motley Fool, so I’ll be covering that issue here as well.

Here’s another headlines below and hook below that are not helping to build Motley Fool’s image as a legit newsletter that provides seemingly sound investment advice:

“How Eight Minutes and Five Bucks Could Change Your Financial Life.”

“It’s true. I made 54% on one stock in little more than a year. Simply read my personal investing story below to discover how you could too! I’ll reveal the name and ticker symbol, and tell you how YOU can make some serious green in your brokerage account.”

You’ll need about an hour to read the rest of the email (why are they always so long?), so I’ll save you some time.

If you fork over your credit card # you’ll get access their Stock Advisor Newsletter for $5 a month.  After that you get charged $99 for the year.  The Gardner’s seem to provide in-depth research and decent advice, if you’re looking to add to an already broadly diversified portfolio, so it’s sad to seem them pushing so hard to get subscribers with lame email headlines like the one above.

While this article isn’t pushing any individual stocks, of course the Motley Fools and hundreds of others are pushing their expert stocking picking skills everyday.  If some of them spark your interest, the guys over at Stock Gumshoe will uncover a lot of the more enticing ones for free. Check it out: https://www.stockgumshoe.com/

 

 

 

Should I buy, sell or do nothing?

Originally posted July 2012 (Updated because it’s still relevant and even more true today).

I know, I’m asking the wrong question. Your financial advisor would (should) say, “well that depends on a lot of different factors.” I bring up this topic, however, to point out that we’re at one of those points (again), when investors are uncertain of what to do with their money and asking this question (again).

So, how is the investment industry responding?  As always, there are a lot of opinions and commentary out there, but are we making it easy for investors to:

1. Find the information they need
2. Read and watch investment commentary
3. Understand why and how they’re investing
4. Decide what to do next

In most cases, investment companies aren’t hitting even one or two of these items let alone all four. Some are doing a good job, but typically it’s the new players with relatively small amounts of assets under management (maybe a topic for another post). Back to the topic at hand. How are the big asset manager doing with regard to helping investors make the right decisions?

#1 Make it easy to find an answer to the big question.  I don’t want to pick on or praise anyone in particular, but of the 10 largest asset managers in the world, only half of them provide a link or article on their public homepage that begins to answer this question (I won’t even get into finding information about investment philosophy and process, that’s even harder to track down).  For most I had to navigate at least one or two levels to find some investment perspective and often it’s buried in an area like “Resource Center,” “News and Insights” or I had to pretend to be a financial advisor.  Sorry, but this is not the first thing my mom (sorry mom, no offense) will click on.

#2 Make it easy to consume. When I found commentary or perspective about the current environment, there aren’t many firms that present information in a way that makes me want to read it or watch it.  Unfortunately, most falls into one or more of the following content traps: 1) large blocks of copy 2) no visual elements (I just fell into this one myself) 3) weak or nonexistent headlines and 4) not another talking head!

#3 Make it easy to understand. This is closely related to #2, because if I can’t understand something I’m not going to want to read or watch it, but it’s still worth mentioning as a separate item because a lot of investment firms fall into the trap of writing long and complex commentary that often doesn’t take a stand. It may sound obvious, but most of your audience doesn’t have an MBA, so whenever possible it’s good to avoid industry jargon. With regard to not taking a stand, if investors are only looking for a recap of how the markets are performing they’ll go to the Wall Street Journal, Bloomberg or the hundred or so other choices they have.

#4 Make it easy to make a decision. Again, the marks are low.  I couldn’t find one that made it clear what investors should do today other than to buy another product.  Does your chief economist or investment officer think we should sit tight or make a change to our asset allocations?  If you’ve already told the same story a hundred times, please forgive us, we need to hear it again.  I know it can be scary, but let your compliance dept. do the worrying, take a stand and be persuasive.  Investors want to be educated and convinced.

While every investment firm has a viewpoint and it exists somewhere, we pay enough fees to expect that it will be easy to find, consume, understand and make a decision about what to do with our money.

 

It’s Not Always About How You’re Different

The trust challenge in the investment industry is not going to be solved by differentiation but rather by whom and how your message is delivered.

With the markets hitting new highs and the recent financial crisis becoming a distant memory, it seems like a good time to reflect on what we’ve learned, if anything.

As I dug a bit deeper on the topic of “lessons from the financial crisis,” which only returned about 40 million results, the idea of rebuilding trust came up more than a few times.  I then stumbled upon a presentation that I think offers some interesting perspectives on the topic.

Titled simply “Trust,” the author, Justin Basini, argues that trust building begins with managing risk and clearly communicating them as opposed to marketing products and services benefits.

It sounds simple enough, but it’s actually a fairly radical idea given the investment industry’s historical focus on product benefits, as opposed to managing risks, expectations and discovery of clients’ needs and objectives.

To clarify, Justin is not saying that the industry shouldn’t discuss benefits.  He’s simply saying that there needs to be a more balanced approach to communicating benefits, as well as risks and expectations in a clear and simple way.

Unfortunately, this tendency to focus on benefits, as opposed to risks, was amplified during the recent economic crisis.

Most crises’ start with a mistake, and either move into the social conscience as a conspiracy or incompetence.  For the entire investment industry, public perception moved directly from crisis to incompetence due to the complexity of the issue and the belief that business leaders simply didn’t manage risk appropriately or didn’t realize what they were getting into.

Top-down communications don’t work right now

The question then becomes, how do you deal with it?  Many firms continue to apply a “top-down” approach to communications.  Meaning, the CEO or spokesperson comes out with the corporate approved message.  The age of top-down communications, however, is dead (at least for the time being).  Messages now flow through numerous and sometimes unexpected channels.  As a result, marketing and corporate communications need to adapt.

You must empower and arm your entire company with the right messages for partners and consumers.  This is critical because society doesn’t trust the face of corporate America – the CEO.  They’re more likely, however, to trust their peers.

What this also means is that for the time being, the trust challenge is not solved by differentiation but rather by whom and how your message is delivered.

Making a difference and finding what you truly believe

Companies and the entire industry also need to prove to distribution partners and investors that they’re worthy of trust.  One of the ways you can do this is by recognizing and communicating what your role is in the global economy and what your responsibility is to your community and to people’s lives.

In other words, how do you make a difference as opposed to how are you better or different?

It sounds risky, especially given the negative market environment we’ve just experienced, and finding that right message can be difficult, but in reading another interesting post by Steve Gardner, President of Gardner Nelson + Partners it’s clear that the companies that are willing to communicate what they really believe, no matter what the market environment, will be rewarded in the long run.

P.S. As this post was publishing I received an email about John Hancock’s new “Trust” campaign.  The ads are aimed at stressing the importance of trusted advisors with one boasting, “People don’t trust the market.  People don’t trust the economy.  People don’t trust the government. But you, they trust.”

Seems we were thinking along the same lines.

ING U.S. is Becoming Voya Financial and Orange Money?

I don’t get it, on many levels. Number 1. Some experts seem to think Voya Financial is a great new name for the company formerly known as ING U.S. (Spun off from Dutch parent ING Group).  Oh, I get it now, the value of the IPO is worth more to them than the brand equity they built up in the ING name. Time will tell if this seemingly short-sighted strategy works out in the long run.

I’ll admit Voya (short for voyage) isn’t a bad name. And the idea of a “voyage” is a good representation our personal journeys toward financial independence.  Hopefully, we all reach it some day, but it sure can seem like a long, arduous voyage at times. On second thought, is that a good mental image? Also, I’m not sure I get that “Voya” is short for voyage. Why not just call it Voyage Financial?  Anyhoo, what I do know is there’s a lot to be said for the confidence, trust and brand equity that’s built into the ING name.  For example, let’s fast forward a year or so, when all the rebranding/IPO hype is a distant memory, and assume I missed all the great advertising, which I probably did because I fast forward through every commercial.  Therefore, I have no clue that Voya was once ING.  Would you invest your money in a company you’ve never heard of?  You might, but I wouldn’t.

Number 2. Actually, I could be on to the third or fourth point by now, but what is “Orange Money” and what does it have to do with a financial voyage? Oh, I see, it has nothing to do with your financial voyage.  It’s a campaign that leverages the brand equity and color recognition ING built with the color orange and it’s about the importance of having distinct buckets of money for saving, investing, etc. So why is this campaign still running and prominently displayed on the new Voya Financial site? Is this just a matter of bad timing?  I guess so, and it’s confusing to customers because ING U.S. is becoming Voya Financial. And they’re now all about supporting you on your voyage to retirement readiness, and by the way, keep an eye on your orange money if you want to make up for your shortage in retirement funds. Does this make sense to  you?

It’s all very sloppy and unclear to me.

If you want to be Voya Financial and you’re about the voyage to retirement readiness, don’t muddy the waters with a campaign about orange money. It’s done, it served it’s purpose.  It’s pretty good, but it brands ING U.S. Let me be as clear as possible about this: Brand positioning that’s about the voyage and orange money just doesn’t make sense. Unless you want to go on a voyage for orange money.

It’s fine to keep the orange color as part of the brand identity, but to keep this campaign running at such a tricky time in the development of this new brand just isn’t sound branding. If you have a new name and new message, get behind it and make sure you explain it clearly.  And by the way, who is Voya Financial and why should I keep or move my money there?  Answer: Because nothing has really changed except the name and the website, which by the way, my wife says isn’t as easy to use anymore.

Topic for next post:

Regardless of the weird new name, confusing ad campaign, and “enhanced” website,  my wife will probably keep her money there because it’s just too much of a hassle to move it.  Maybe that’s why financial companies think they can get away with this kind of muddled work?

The financial market meltdown: What has changed since 2007?

The short answer: not much.  Remember the saying “too big to fail?”  Well, with the collapse of Bear Stearns, Lehman Brothers, AIG, and the list goes on, the quote should change to “Way too big to fail”  I know that doesn’t exactly roll off the tongue, but you get my point. I hope.

The government, industry leaders and many academics, however, say that despite consolidation and even more money in the hands of fewer financial institutions — now called “systemically important financial institutions” (SIFIs) there are a number of new regulations in place that will deal with future meldowns.  Let’s take a look at the big “systematically important” ones:

1. Dodd-Frank reform legislation passed in 2010 is being touted in Washington as a way to deal with future meltdowns of big financial institutions without risking taxpayer dollars or giving creditors a free pass.

It would work like this: The FDIC, using its new powers, would seize so-called SIFIs and wipe out their shareholders. It would then convert the SIFIs’ parent company debt to stock in a new SIFI at a severe discount. The new SIFI could raise short-term cash to fund its operations by borrowing from the Treasury or via Treasury-backed loans. The Treasury would have first claim on everything the new SIFI owns. The Fed would be out of the game.

So how does that take the taxpayer out of the equation? The money used to “raise short-term cash to fund its operations” doesn’t come from trees.  Well, as far as the Treasury is concerned is does because they either just print more or ask for more from taxpayers.

2. The Volker Rule establishes that insured banks can make securities transactions on behalf of their customers but not speculate for their own accounts. That sounds great, but I’m not sure how it changes anything.  Didn’t JP Morgan recently lose like $2-3 billion?  What if they didn’t have the money to cover those loses?  Well, I guess if they’re small enough, tough shit.  Sorry you trusted us.

Last I checked, investment accounts at JP Morgan aren’t “insured,” but thank god my checking account is safe.  I keep like $2,000 in there because it earns so much interest (sarcasm, in case you didn’t get that).

Ok, so what hasn’t changed? SIFIs (I hate that acronym) whether they’re retail “insured” banks or investment banks will continue to invest, speculate, take on risk and take investors money.  If they screw up and go under, you can  hope for more bailouts, especially if you’re a shareholder or customer, but I would make sure you also have enough money in FDIC insured accounts, just in case.

Guess I should think about keeping more cash on hand.

The Feck Effect

Have you seen Stephan Feck’s embarrassing performance on the 3-meter springboard?  It’s been dubbed the “Worst Olympic Dive” ever.

If you haven’t seen it, it’s fast becoming an Internet viral sensation.   The agony of defeat has always gathered a lot of media interest, but the popularity of this incident reminds me of one of the six key qualities I recently read in Made to Stick: Why Some Ideas Survive and Others Die.

It’s the unexpectedness factor, which essentially states that in order to get people to pay attention to our ideas and maintain interest, we need to violate their expectations.  And that’s exactly what Stephan Feck did when he landed on his back.  No one expects an Olympic athlete to miss the mark this badly.  Yes, some people revel in seeing others fail, but for most (at least what I like to think) it’s more a matter of interest and curiosity that’s generated by surprise and unexpectedness.

In Made to Stick, the Heath brothers also point out that we can use surprise to grab people’s attention, but it generally won’t last.  For an idea or event to endure, we must generate interest and curiosity.  “How do you keep students engaged during the forty-eighth history class of the year?  We engage people’s curiosity over a long period of time by systematically “opening gaps” in their knowledge—and then filling those gaps.”

They use a great example of the Nordstrom employee who cheerfully gift wrapped products a customer bought at Macy’s.  The story provides the first step in replacing employees’ ideas of good service and common sense with the Nordstrom way of “uncommon sense.”

No one wants to be Stephan Feck, but there is a lesson to be learned.  Hopefully he’ll figure out what it is too.

Photo credit: NBC

Warning: Extreme Use of Industry Jargon

From a recent Adweek article:

“Advertisers are increasingly willing to look at non-click metrics, such as brand lift. We’re migrating away from what we call ‘swim lane’ metrics and moving more toward the portfolio’s impact and its result so you can adjust in a meaningful way.  If your not looking at cross-channel influence, you’re shot-gunning investment across a bunch of digital channels.  Brands need to get past digital impressions and into richer, predictive analytics.”

Digital branding, advertising, content marketers, and creative technologists of the world, you’re not helping anyone by talking this way.

I know, every industry has its buzzwords and corporate speak, but in the branding and marketing world we’re always telling clients to keep messages simple and avoid jargon.

So let’s start following our own advice and stop creating phrases like “brand lift” and speaking in weird metaphors.

By the way, “brand lift” is measuring the effectiveness of an ad campaign.

Marketing is dead?

Kevin Roberts, CEO of Saatchi & Saatchi Worldwide recently proclaimed that “marketing is dead.”

My interpretation of his presentation is that he’s really just telling us we need to get better at marketing. Judging by the range of responses to Roberts’ provocative announcement, however, which includes a lot of people who make a living marketing stuff, it seems a simple and clear explanation of what marketing is would help clarify the terms of the debate.

This seemingly simple task sent me down a few dead ends, but ultimately I found one quote that I think clearly articulates why marketing isn’t dead and why it’s critical to business success to have a strong brand.

“The art of marketing is the art of brand building. If you are not a brand, you are a commodity. Then price is everything and the low-cost producer is the only winner.”

– Philip Kotler, S.C. Johnson & Son Professor of International Marketing at the Kellogg School of   Management

If you agree with this quote, and you agree that marketing is dead, then so is the brand.

Any questions?

Investment brands are different

This post is an excerpt from Wechsler’s first Elevator Paper “Investment Brands are Different,” which I co-authored with Wechsler CEO, Dan Ross:

The world of investment marketing lives by its own rules. Whether you’re selling mutual funds or institutional strategies, retirement advice or asset allocation, the tried-and-true techniques of other marketing categoriesdon’t necessarily apply. Investment brands don’t behave like consumer brands—or like business-to-business brands. Here’s the first reason why:

A hybrid audience of professionals and consumers

Investment brands don’t behave like typical consumer brands. By and large, they’re not marketed directly to consumers. But they don’t behave like business-to-business brands, either.

The investment business has a unique brand model. Their audience is a hybrid of professional buyers and end-consumers. Professional buyers are generally intermediaries of one sort or another, such as financialadvisors or plan sponsors. End-consumers range from retail investors to plan participants to high net worth clients.

The needs and desires of each segment vary wildly. Professional buyers are swayed primarily by intellectual argument and information. But consumer brands are built by creating an emotional connection between the brand and the consumer.

Investment brands must appeal to one and all. They must deliver the facts and figures demanded by professionals, who are the primary decision-makers. (They must also deliver this information to consumers, in a lighter form.) But equally important is giving the end-consumer a feeling of confidence and trust. Investors must believe in the people with whom they are entrusting their money.

That’s the blend of intellect and emotion that drives successful investment brands.

Continue reading or download the paper.

Not Going Straight To Video

The debate about the decline of the written word has been going on for a long time now.  Recently, however, there seems to be a renewed interest in the topic.

Here’s a short list:

“Let’s Get Visual: Marketing in a post-text world”

“People Don’t Read Anymore”

“Cisco: By 2013 Video Will Be 90 Percent of All Consumer IP Traffic and 64 Percent of Mobile”

“Steve Jobs: ‘People Don’t Read Anymore’”

And my favorite from The Onion:

“National Essay Writing Contest Now Accepting Video Submissions”

You get the sense from these stories that not only is the written word in decline, but it will be extinct by 2030.

Given the topic, I’m not going to drone on about the decline of the written word or give reasons for hope and optimism about the future of prose.

Instead, I just want to make a simple observation.  All of these authors don’t seem to recognize the inherent challenges, inefficiencies and sometimes ineffectiveness of a purely visual approach to producing certain types of content for different audiences.  I can appreciate an author’s naiveté or unwillingness to look beyond his or her own businesses, markets or expertise.  I do the same thing.  Given the amount of recent focus on the topic, however, I feel compelled to respond.

Also, I’m not talking about isolated industries or topics, such as investments (my bias).  I can think of a number of industries or topics where it’s not recommended and, most likely, ineffective to create a video, animation of other multimedia experience.  A few examples:

• “Animating synthetic dyadic conversation with variations based on context and agent attributes.” (From the Journal of Visualization and Computer Animation – I couldn’t find a video version of the paper.)

• “Currency Returns and Hedging Decisions”

• “Understanding Low Volatility Strategies: Minimum Variance”

• “Compliance Issues Affecting Structured Products”

I love these:

• “LIM Protein Direct Brainstem Axon Trajectories”

• “The Relation of Diagonal Ear Lobe Crease to the Presence, Extent and Severity of Coronary Artery Disease…”  The title continues, but you get the point.

I guess the question comes down to this, if you’re the type of person who’s interested in these topics, would you rather watch the video?  Maybe, but more importantly, if you’re in charge of marketing this content, what makes the most sense from a business and strategic standpoint?  I’d be reluctant to recommend a video or other visual elements, beyond the graphics needed to illustrate the data for this type of content.

Maybe I’m preaching to the choir here, but hopefully you see my point.  The written word is never going away, at least not in our lifetime.  Markets may continue to fragment in a way that we can’t conceive of today.  And while this means the mass market for in-depth, academic insight and research may diminish, there will always be a need for concise, clear, humorous, articulate, etc. prose.  Without it, it’s tough to write the script.  Unless, of course, you’re watching YouTube (script optional).