Too Much Communication

Advisors are often surprised that they lose clients due to communication issues more often than on account of investment performance issues. Yet the industry has made an enormous push over the recent past to provide more information much more often. Total transparency is an oft-stated goal. Good advisors are always looking for ways to increase their number of client “touches” because they are convinced that staying in front of their clients means more business and better client retention. That’s why what I’m about to say to advisors may sound counterintuitive, scandalous or just plain wrong.

You may be communicating with your clients too much. Here’s my reasoning.

1. Make every contact substantive and meaningful. Most of the communications I receive, well-intentioned or not, are utterly worthless. I throw out what I think is junk mail before it even gets inside. I don’t pick up calls from numbers I don’t recognize. I delete hundreds of emails a day without looking at them. I could not possibly read everything that crosses my desk if I wanted to. I don’t want to be bothered if it isn’t important. And if I do engage with something and it turns out to be ill-supported, ugly, jargony, superfluous, frivolous or poorly written, I get really ticked at having been duped into bothering. I’d rather it wasn’t sent than have it be a waste of time. If you want to be heard in a very crowded and noisy marketplace, make sure what you offer is of the highest quality and that it’s both substantive and meaningful. Less is often more, especially when and where the less is really, really good. I’m extremely cynical about business communication generally, consistent with most consumers, I think. I’m not even going to pay you any mind — much less listen — unless the quality of what you offer is extraordinary. Don’t make client communication an add-on obligation to be delegated. Make it worthwhile.
2. Good sales skills and good investment management skills often work at cross purposes. Virtually every sales training talks about confidence, assurance, outcomes, stories, decisiveness and success. We’re told to act like celebrities who control our destinies and those of a select few. The markets, on the other hand, are wildly random, manifestly uncertain, require a careful process and data-driven analysis, and provide outcomes that are never assured. We can only improve by correcting for and learning from our inevitable mistakes. When advisor communications pretend that the advisor is something s/he is not and that the markets are something they are not, disaster looms. Clients aren’t stupid. The most prominent communication in our business is some form of “I can get better returns with less risk than the other guy.” To any client paying attention (and you can be sure the next guy will encourage that attention span), that’s an accident waiting to happen. 
3. Keep it real. The recent finale of Breaking Bad provided an obsessive television watcher’s dream. Every plausible loose end was tied up and packaged with a neat bow on top. Real life is rarely like that. The markets surely aren’t. Sometimes markets move for a clear reason (e.g., down big in the aftermath of 9.11). But usually they don’t. You don’t need to insist that they do (“markets were off a bit this week on account of…”) and try to tidy up every little thing. Your clients won’t think you less of an expert if you don’t pretend to know everything. In fact, your credibility will be enhanced when you admit a lack of knowledge but then, when it’s important, you find out and communicate what the facts really are.