Targeted Musings on Financial Marketing

Key ingredients of effective investor education

30 Oct 2018

When investors make a decision to purchase a financial vehicle, they are setting aside hard-earned money in the hopes that they will achieve a positive outcome. Naturally, the decision of which investment product to select in the service of one’s goals is a serious one, and investors are right to not take these decisions lightly. Financial marketers figured all of this out a long time ago: in order for an investor to choose your financial vehicle, they need to understand it (a tall order indeed for some particularly complex financial products). There’s too much at stake for investors to blindly choose something without taking a closer look. This general understanding of the importance of investor education has given rise to a glut of sub-standard education materials—confusing, meandering, or nakedly self-serving. We think investors deserve better, and that financial services firms stand to benefit from producing high-quality investor education. With that in mind, what follows are some key ingredients for creating effective investor education.

Learn more about The Underappreciated Utility of ETF Investment Cases


Put yourself in the audience’s shoes.

This might seem like a tall order, but it is absolutely critical for crafting effective investor education. Naturally, putting yourself in the audience’s shoes requires you to understand who your target audience is. Is your target market sophisticated financial advisors? Novice first-time investors? Are they thinking about retirement or saving up for a down payment on a house? Defining your target audience will help you put yourself in that audience’s shoes. It will also help you decide on what sort of language is most appropriate.

Be useful, not self-serving.

The most informative investor education in the world is useless if the consumers of the content don’t trust it. As you put together your investor education materials, be sure to use neutral language. It’s fine to stack value propositions that might tend to favor your own financial products, but it’s also important to be honest and balanced with the language you use. Excluding key information might make some investment products look more attractive in the short term, but if investors realize you’re not being one hundred percent upfront in your communications, they may not engage with your content again.

Build from simple to complex.

Once you’ve determined who your target audience is, it’s important to start at a point of common ground—the group of terms and concepts that the audience is already familiar with. After “setting the stage” with some context that helps the audience feel comfortable, you can begin to build up into more intermediate and complex concepts. If you dive right into complex material without setting the groundwork, you may lose your audience, and the entire piece will likely fall flat.

Use analogies that fit.

The temptation to use analogies to explain complex concepts is understandable, and in some instances, it works. We’ve seen successful ETF explainers that compare ETFs to everything from flowers, to dance groups, to art collections. But if the analogy doesn’t quite fit, it may not be worth the trouble to try and shoehorn your investor education into it—you may end up only confusing your audience.

Finally, use examples to reinforce comprehension.

Once you’ve laid out your conceptual framework, it’s time to bring everything home by using an example to show those concepts at work. This allows the audience to use their own critical thinking skills as they follow along.

By putting yourself in the audience’s shoes, truthfully engaging with them, building from simple to complex concepts, and using analogies that fit, you’ll be well on your way to producing quality investor education materials, which can often be a requisite as you seek to effectively market investment products.