You Know Too Much

Hard to believe, but there was a time when you knew nothing about investing.

You still had to learn that falling yields meant rising bond prices; that equity investing is not just about earnings; that leverage works both ways; or that cryptographic hashes link blocks in the chain.

Since then, thousands of hours spent reading, thinking, and talking about investing have deepened your understanding and insight to a level that would astound your former self.

Today, the success of your investment strategy now depends on that accumulated knowledge. But when it comes to marketing that same strategy, what you know can work against you.

A bias to remember

The Curse of Knowledge is a cognitive bias that occurs when a person assumes that others have the same level of understanding as they do.

In the context of marketing an investment firm, the curse primarily manifests in jargon-heavy, complex explanations, particularly around investment strategies and processes.

It’s not that your audience won’t understand you. Allocators are smart. It’s that the harder you make them work to understand, the higher the chance they disengage. So, if there is a simpler way to say something, choose that path.

The curse in action

"The fund's investment strategy employs a top-down macroeconomic approach, utilizing a proprietary algorithm that incorporates a Bayesian regression model to account for non-linear relationships between economic indicators and stock returns, and a GARCH-class volatility model to dynamically adjust exposure to market risk."

No CIO would ever speak those words. That’s a good litmus test for whether copy needs a rewrite. Below is a simpler, more human version.

"Our investment strategy performs deep macroeconomic analysis on the global economy to uncover dislocations in the US stock market. We use an algorithm, developed and trained in-house, to help us identify opportunities, finesse timing, and manage risk."

How to manage the curse

Because you’re so immersed in what you do, it can be difficult to notice when you’re sliding into technical territory. Here are a few hacks that should bring clarity to your writing:

• Read your copy out loud.?Reword any sentences that are difficult to say or that sound like no human would ever speak them.
• Allow your copy to breathe.?With time and space between you and your words, jargon and over explanations tend to stand out more clearly.
• Get feedback.?Ask a friendly investor or outsider you trust to read your copy and highlight any sentence or paragraphs they found difficult to get through.

The Curse of Knowledge can have a significant impact on the effectiveness of your investment marketing material. By being aware of the bias and using the above steps to keep things simple, fewer people will stop reading your stuff.