The Magic Skill Investment Managers Don’t Know They Have

As belief would have it, anything useful investment managers might say to clients has already been hashed by the financial press. By the time information is written, edited and past compliance, it’s probably also past its sell-by date.

And yet, a trove of value lurks in plain sight within most managers’ content. Only by using text analytics can marketers get a feel for its true worth.

Have a look at the comparison below: On the one side, you’ve got the Economist, Morningstar, and the Financial Times, three examples of financial media. Notice the FT is an outlier – fact is, most outlets rarely use multiple images in their articles.

Not so for investment content! To the right are three different investment managers. For each, at least 20% of their articles feature two images or more. These companies aren’t outliers; their content reflects common industry practices.

And these aren’t lifestyle blogs. You’re not seeing the hottest fashion trends or a splendid coastline resort lacing financial commentary.

No, those images are charts. Each using data to tell a little story.

Why are charts so valuable to investment managers?

Managers have processes to produce their content. Typically, they result in chunky pieces: lengthy articles, bulky quarterly outlooks. So many words.

You’re expecting us to say…”and readers don’t like lengthy content!”. But that isn’t quite the case. Readers look for easy signals on whether content adds value. Mostly, they assume it doesn’t:

In our analysis of how readers of financial content behave, we showed click-through rates from social media are abysmal, and are even lower for email.

For marketing to be effective, it needs to deliver value succinctly on the spot. Charts are uniquely effective at telling a story fast.

But some charts are better than others, and just three aspects make a chart likelier to grab attention:

• The chart features at least two different data series
• It features conflict
• It creates drama in the axes

When a chart has these three qualities, its story pretty much writes itself. Let’s see exactly what this means – along with some examples.

A good chart needs two strands of data

For data storytelling, it’s useful to use a mental model called the DIKW pyramid. Its name is an acronym for the four layers of stuff you can know:

• Data is merely a collection of observations.
• Information is counting data points.
• Knowledge is contrasting bits of information.
• Wisdom is contrasting bits of knowledge.

A chart with one series offers information, but very limited knowledge. Throwing in a second series instantly sets up a setting to compare and contrast.

Here’s an example, with two charts about emerging-market economies. The chart to the left, from Manulife, offers information. But the chart to the right, from S&P Global, offers knowledge – a story of a rebound – because it lets you contrast over time.

Beware of throwing in more and more data series, though. A messy chart can offer multiple narratives, which sows confusion and may cause the reader to reject your story.

A good chart needs conflict

Really, it’s like a sitcom. You’ll always get a ‘straight man’ to balance out the oddballs. Equally, someone needs to be different, otherwise everyone’s dull.

Differently put: if all your series are going in the same direction – there’s no story.

Just look at the two charts below. In one, from Lazard AM, all four lines are heading in the same direction: up! In the other, by Fidelity, the story is mixed: one line is our ‘straight man’ – persistently high, as expected.

But the other…the other’s going down! This conflict creates a story, by pointing to a source of sticky inflation.

There’s one exception – if your data series are of vastly different nature. (The sitcom equivalent would be ‘person and clever animal’.) All ‘alternative data’ charts effectively fall into this category.

In that case, the story isn’t in what the series are doing, but that two things, which are so dissimilar, happen to be moving together.

A great chart changes how clients see the world

We already talked about how all good content changes how clients see the world. It’s just as true for visual content.

To change a world view always starts with what the viewer already knows, followed by a shift in perspective. In charts, this trick is typically achieved by using the axes themselves as part of the story:

If something suddenly happens on a different scale, or only happens in a specific quadrant, or only happens once a threshold is met.

The chart below is a superb example:

On the face of it, it shows many series, of all US bear markets since 1957. But, by tracking them by days, it cleverly creates two types of bear markets: short ones and long ones.

The chart shows us exactly where we are now. Comparing timelines, we’re well past where a short bear market would’ve. That’s the conflict.

Finally, it changes how we see the world: if we’re not in a short bear market, we must be in a long one. Comparing the other long ones, we can start to form an idea of how much further this one might last.

This story’s so rich – and it’s all told with one chart!

Investment managers are telling great stories with charts, much more than financial media! When vying for client attention – that’s a competitive edge.