Most firms write investor letters without a clear framework to guide them.
As a result, the quality of your communication suffers.
Instead, you can follow the playbook of the investor letter-writing greats. To name a few, these include:
When you reach this level, your audience uses your letters as a blueprint for how to invest and draw parallels between life lessons and investing.
The five key criteria that the greats excel at and that you should use to guide your letters are:
Let’s dive in.
You should assume that people reading your letter are looking at your company for the first time.
This includes your clients. While your clients know you on a personal level, you must always remind them of how you serve them. Doing so strengthens your relationships and, as a result, transforms a client into an advocate.
Therefore, always remind your audience how you serve them, and how you intend to continue serving them to accomplish your long-term vision. This builds trust and provides a clear reference for your decision-making. Over time, you can make your investor letter a single, easy-to-find document that serves as your source of truth over the long term.
Even the most capable wealth managers make mistakes and suffer routine setbacks.
When you are updating your clients, address broader industry issues and be honest about both successes and setbacks. Transparency builds trust and shows investors that your firm is accountable for the outcomes of your decisions, warts and all. Sharing bad news can strengthen your relationship with clients because it shows them you are open and honest.
Educate readers on what is happening in your industry and how it affects your decision-making.
You must aim for your reader to walk away more informed about your industry and firm.
But be careful. Each term should pass the ‘grandma test’. This test assumes you are speaking to a smart, avid reader who does not dwell on finance terms all day. In an attention-starved, short-term-focused world, educating your investors through differentiated insights helps engage your clients and establishes your firm as a thought leader.
Wealth management firms are often overcome by the ‘curse of knowledge’.
You have plenty of expertise but are so in the weeds of your niche that you struggle to communicate what you know to people who are unfamiliar with what you do.
Therefore, you must convey your expertise in a relatable way. Start with an anecdote or a quote to break the ice. Make it easy to follow along so that people truly grasp what you do and what makes you special.
First and foremost, keep your letters digestible for someone with around 5 minutes to spend. This has the added benefit of creating space for future conversations. In the case of quarterly letters, the total length should be no more than 2,500 words.
Within your letter, creatively use headlines, subheadings, summaries, bullet points, call-out boxes, and charts to make it exciting and unpredictable for your reader. You can ensure these formatting options feature consistently by creating a template with placeholders for each section
Use clean, professional layouts with plenty of white space, and ensure the text is easy to read. When you have an easily skimmable document, your reader feels compelled to engage with it, regardless of their existing knowledge of your firm.
By following these five criteria, your letters become a source of wisdom that your audience looks forward to reading. And when you have a captive audience, opportunities present themselves for your firm.
If you neglect these criteria, then there’s a strong chance that your letters will be ignored among the ocean of unread emails your audience receives.
Want to know more best practices to establish your firm as a thought leader? Check out our insights library here.
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