Success = Analysis + Communication


Tom Brakke, CFAThe CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 71st CFA Institute Annual Conference will be held in Hong Kong on 13–16 May 2018.

Well-known investment blogger Tom Brakke, CFA, of The Research Puzzle fame, believes that good communication is the undiscovered country when it comes to the ultimate success of the industry.

Put succinctly, he believes that investment professionals concentrate on their analytical responsibilities — and their performance results — but neglect their communication skills. Yet their ability to communicate within their firms and with their clients is often the real difference maker. To counteract this, as Brakke explained during his presentation at the 69th CFA Institute Annual Conference, he recommends that investment pros focus as much on communications performance as they do on investment performance.

As we all know, trying to eke out additional alpha from analysis is very difficult. In contrast, changing how we communicate, internally and externally, is easier to achieve, and its effects are longer lasting.

How Did We Get Here?

Research analysis as a profession has vocational baggage. Doing well requires deep research, constant critical thinking, and intensity. Yet these skills also can inhibit communication, as Brakke explained in his presentation, “The Missing Link: Effective Communication by Investment Professionals and Their Organizations.” Of finance professionals, Brakke says, “we have become insufferable know-it-alls.” We tend to tell everyone everything we know.

Remedies: Pare down what you know when communicating, both in speaking and in writing. Also, do not be afraid to say, “I don’t know.”

How We Usually Listen

It is typical in investing to pay attention to conversations in order to find a place where you can jump in, rather than to the grasp the speaker’s words. An example of what this is like for outsiders peering into our business is the following quote from a Twitter user:

“The natural tendency for many finance professionals is to treat every conversation as a competition. It’s exhausting.” — @LadyFOHF.

Sadly, this attitude often gets in the way of establishing client trust. Focus Consulting Group asked investment leaders, “Which behaviors/attitudes would best help to build a client-centric culture?” Of 10 choices, “more listening” swamped everything else.

Remedy: It isn’t what you know; it is how you communicate with others so that they understand what you know that’s powerful. Learn to listen!

Different Kinds of Communication

Take a moment to think about all of the venues in which you communicate as an investment professional. In all likelihood, you will discover that almost all of your non-analytical work is about communicating: There is the writing of research reports, of requests for proposals (RFPs), of shareholder letters, or presentations; there are one-on-one verbal conversations with investor relations, executives, and clients. Inside the firm, there are numerous group interactions and individual conversations, too. Each of these modes of communicating deserves your attention.

Next Steps

To improve both your own communications and those of your firm, Brakke recommends that you evaluate them using the following criteria:

  • Quality of communications: Is the substance of your message getting through?
  • Is your story correct, and are the data accurate?
  • Are your communications easy to understand?
  • Is everyone communicating the same messages throughout your organization? Or do those who interact with the firm receive different answers depending on who they talk with?
  • Are only the essential elements included within the communications?
  • If there is an important event, is there a quick response?
  • Are you and your firm approachable?
  • Are the communications in alignment with the audience (collaborators)?

Brakke then encourages you to ask your clients to grade you based on these criteria, too.

Tips for Improving Your Communications

Brakke offered a number of recommendations for more effective communications. Here is a summary of his advice:

  • Don’t think of audiences. Think of them instead as collaborators: for example, co-workers, clients, customers, and others outside your organization. When you shift your context in this way, you realize that you are not trying to develop a pithy sales pitch but instead are working to ensure that both parties are on the same playing field together.
  • Find the sweet spot by practicing your communications. Examples of the continuums that highlight the key issues are formal-versus-informal writing and simple-versus-complex concepts and language. Investment professionals do well on the former but not so well on the latter. Last, it is important to juggle the appropriate positioning for your ideas. Most finance pros do this well.
  • Avoid jargon.
  • Make your writing a narrative to improve its readability.
  • Allow for white space. Said another way: Do not drop every single bit of data into as small a space as possible. It is important that your written communications be easy on the eyes.
  • Be concise. You may be afraid of leaving something out, but leaving room for your collaborators to think of questions encourages their engagement.
  • Avoid weak cut-and-paste graphs and tables. Make sure that these components contribute to an easily followed story.
  • Don’t get lost in the numbers. Don’t believe that “performance speaks for itself.”
  • Have a clear point of view. Readers and listeners should know where you stand on the issues that are important to you and to them.
  • Don’t read your slides or text when presenting.
  • Talk with the audience, not at the audience.
  • Practice, practice, practice.
  • Set goals to improve your communications.
  • Plan to improve and evaluate your progress.

Receive updates about the conference by subscribing to the CFA Institute Annual Conference blog.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo courtesy of W. Scott Mitchell

This entry was posted in Leadership, Management & Communication Skills, Portfolio Management, Speakers and tagged , . Bookmark the permalink.