- Fergal McGovern, CEO of VisibleThread
Asset management firms face surmounting problems.
As investors consolidate, there’s more competition for fewer clients. Legislative bodies are getting tougher on regulation and compliance, such as the MiFID and KIID directives. And, Edelman’s 2018 Trust Barometer charts the sharp erosion of trust in the financial services sector.
At the same time, few asset management firms are prioritizing the use of plain language in their communications. Yet plain language has a direct impact on all of the challenges asset management firms encounter.
Why does plain language matter?
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Our recent analysis of the largest 69 asset management firms in the world highlighted that 98.5% of their websites don’t meet basic readability levels.
We compiled the research into our 2018 Asset Management Clarity Report and it’s available on our website.
The thesis behind the report is that people are time poor and need to get answers to questions quickly. Data also shows that people’s reading ages are lower than assumed. In the UK, the average reading age is below that of an 11 year old. In the USA, the average reading age is at 7th or 8th grade level. Even if people do have higher reading ages, technology has changed the way people read. Skim reading, especially online, is how many people now gather information.
Any website analytical tool will show that if people don’t find answers to their questions quickly, they’ll bounce from the site and churn. It’s impossible to track offline reactions, but it’s a fair assumption that people will react in the same way; disengage with content that is an unnecessary and onerous cognitive load.
Language clarity directly affects business efficiency and branding.
If people can’t understand a website or information documents, what does it say about an organization’s transparency? In an era when people feel cynical towards information that comes from the top down, assumptions could be made that are damaging. Not least that asset management firms use jargon-laden, obscure language to justify large fees and perpetuate a power dynamic that only they can manage funds. Or that financial services firms are hiding something.
Also, if someone can’t find the information they need in a document or on a website, they’ll need to call a helpline. That’s an additional resource cost, be it time or money, for the (potential) customer and the asset management company.
Implementing a plain language strategy immediately helps a firm commit to a “client first” strategy. Customer loyalty will increase and marketing ROI will increase thanks to improved clarity.
How do you measure plain language?
The methodology was simple.
We used an automated crawling mechanism to analyze the content on the 69 websites. The crawler approach is akin to what Google does when indexing a site, and we followed links from the root domain.
The sites we analyzed do not differentiate between retail or corporate. It’s an “apples for apples” comparison.
Four factors were used to calculate the index.
- Readability – based on the Flesch Reading formula developed by the US Navy in the 1970s
- Degree of passive voice
- Degree of long sentences
- Degree of complex language using a lexicon from the Center for Plan Language
The findings were arrived at through a composite of all four factors; long sentences or complex words weren’t measured in isolation.
Putnam Investments, owned by Canadian company Great West Lifeco, performed the best out of th 69 firms we analyzed.
- Only one in the 69 firms surveyed had acceptable reading levels for web content. 98.5% of firms didn’t meet basic readability levels
- Approximately 85% of those surveyed had unacceptable levels of passive voice. Of those that didn’t do well in this regard, four firms had scores of 0%
- Not one firm met recommended levels for long sentence use. 97% of the firms sampled used long-sentences at least three times greater than recommended levels
Technology can help firms communicate in plain language
Technology solutions can help executives who want to prioritize plain language policies in their organizations. Thanks to an objective standardized set of metrics, plain language is now able to be measured. It’s no longer the realm of subjective editorial guidelines.
The good news is that just improving one or two key metrics affects overall readability for the better.
The direct impact is much-needed trust, easier compliance and happy customers.