In her latest contribution to the pages of Family Wealth Report, Diane Harrison talks about how fund managers can improve the way that they communicate with investors.

Harrison is principal and owner of Panegyric Marketing, a strategic marketing communications firm which is focused on the alternative assets sector. 

As ever, this publication does not necessarily endorse all of the views stated below, but is grateful for the right to publish them and welcomes reader feedback.

A SNAFU is a borrowed term from the military, circa 1941, that refers to a Situation Normal All Fouled Up (except soldiers used a more descriptive term for Fouled not appropriate in business vernacular).  Most people have experienced SNAFUs in their business and personal lives, with varying levels of impact.

In money management, avoiding these fouled up situations is critical when facing an investor.

Guiding the course of conduct through these types of meetings requires a vigilant eye to spot and navigate around common behavioral errors which could otherwise land a manager squarely in a SNAFU trap. Here are five common attitudes and behaviors that easily can lead to a SNAFU.

Superficial

Managers often underestimate the amount of time, energy, and resources they need to devote to investor relations. Beyond the personnel required to actively engage with investors, this can also include the tools and communication channels best suited to providing investors with a range of timely and historical information.

This investor materiel, to borrow the military term for arms, ammunition, and equipment resources, might include holding regular conference calls, scheduling periodic meetings, creating a secure firm website with an account portal, and distributing quarterly manager outlooks with performance reporting. There is a significant time and expense component to each of these, and managers will need to allocate resources to address them.

Negligent

Understanding your audience and providing good information is critical to all effective communication. For money managers, this includes going directly to their source by asking investors, advisors, and consultants what they want to receive information about, how frequently they desire it to come, and in what formats.

The financial universe is jam-packed with pundits, analysts, news channels, and reporting that bombards the investor day and night. Clearing through the clutter to provide information that doesn’t get lost in the morass of noise takes dedication and discipline. Managers who can deliver clarity and perspective in a top-down and bottom-up manner throughout their investment communication will cut through this barrage of confusing and contradictory news.

Argumentative

Being decisive and purposeful is good. Acting haughty, elitist, or condescending when interacting with investors is always bad. Investors want their money managers to be smart and devoted to their business. But no investor wants to feel inferior or stupid when asking about their investments.

They want access to their money manager to hear directly from the front lines how the financial climate is impacting their investments. While they are fine with having a layer of communication expertise present in the form of advisors, investor relations, or marketing personnel in these interactions, they prize the opportunity to interact directly with a portfolio manager.

Managers should learn from their experienced resources how best to satisfy this need and treat each exchange with the respect it deserves. Nothing builds trust between the manager and investor better than honest and direct interaction.

Flippant

While maintaining a congenial and approachable manner is important when meeting with investors, being glib or casual is not. Friendly conversation that breaks the ice with new prospects or re-establishes connection with a current or past investor is a good thing.

Treating investor concerns lightly or failing to address them at all is poor communicating and will likely leave the investor aggravated at the end of the session. If an investor does not receive key information but rather is left with a feeling of being sidestepped, there will be nothing positive to come from the exchange. Better objectives to aspire to would be to give them frank, focused, and factual information that informs and educates them about the current status and future investment horizon.

Unprepared

Investors demand preparedness from their money managers. They don’t want their time wasted, and they want the full transparency they have fought so hard to get when discussing their financial needs.

If a manager is lucky enough to be running money already for investors, the meeting or conversation with them should encompass all the details and data that each investor deserves.

Being able to look both ahead and back at the investment is a key desire of investors when discussing their investment with a manager. What has happened? Why have things occurred as they did? What developments are likely to come on the investment horizon? These are all important topics that managers should not neglect to prepare for whenever facing an investor.