The information that’s distributed to investors by financial services firms is being scrutinized more than ever before. Case in point: The Securities and Exchange Commission’s mockup of its Customer Relationship Summary form, a disclosure requirement in its proposed Regulation Best Interest, has drawn fouls recently for its lack of readability and for causing confusion among investors.
In the same way, the websites of asset managers are critical in educating investors and advisors on the products and investment strategies they offer, but too often fall prey to jargon and needless complexity. Here too, regulators have been calling for more transparency.
VisibleThread, a software company for improving sales solicitations and RFPs, put the websites of asset management firms through their algorithms and ranked them by the clarity of the words and sentences. They assess the sites on four factors:
- Readability of the content (scored on a scale of 1 to 100, where 1 basically equals a site written in an unknown language and 100 the most easily read).
- Passive voice, indicated by the percentage of passive sentences on the site (the lower the percentage the better).
- Excessive verbiage, indicated by the percentage of sentences that are longer than 25 words (again, the lower the better).
- Jargon and complexity, indicated by the proportion of “complex” words relative to the total word count (the higher the number, the more needlessly complex the language).
Here, the 10 best U.S. based asset managers when it comes to clarity in communication, followed by the 10 worst offenders.
“Financial services organizations hold people’s investments, their future, their possibilities, in the palm of their hands,” VisibleThread said in its 2018 Clarity Index report. “It is no wonder that people want to have faith in the guardians of their assets.”