The Investment Association’s responsible investment framework is a step in a very good direction.
But its promotion of a common language to define and categorise responsible investment might be impeded by two challenges.
First, research says the investment industry scores quite poorly on readability.
In other words, the material it puts out to inform and educate clients – from mums and dads to professional investors – tends to be too complex for the audience it’s aimed at.
Second, the same research shows that, when it comes to labelling content, the industry doesn’t have a very good track record on accuracy. But more on that later.
“Almost all investment content overshoots.”
Readability is a measure of how easy something is to understand. And ‘reading age’ is one way of expressing readability.
The average UK reading age is said to be between 9 and 11 years – which is what most UK newspapers and government websites aim for.
Business audiences sit above that, with the financial media averaging 14.8 years; speeches by Bank of England economists are 18.2; and complex academic papers covering investment issues are much higher still, at 20.7.
The lesson is, if you want people to understand what you’re writing, you need to meet their reading age. But if you overshoot, and force the reader to work hard to understand what you’re saying, then your material veers towards unreadability.
The problem is that almost all investment content overshoots.
Our research paper assessed the readability of 54 blogs, papers and other written content from 18 award-winning businesses. It found that investment content achieves a mean reading age of 18.3 years.
That’s practically the same as Bank of England economists. It’s also much closer to the 20.7 academic score than the 14.8 financial media average – and way above the consumer average.
Overshooting once in a while is fine. We all have some capacity and appetite to consume complex material each day – the sort of material you might need to read twice, preferably having shut off as many distractions as possible.
But consistent overshooting will be materially unhelpful to the cause of educating and informing. And it’s unlikely to promote engagement.
There’s a good example of a piece of challenging investment content from the IA’s framework itself (although much of the paper is very readable).
The definition and supporting text for the section on ‘Sustainability Focus’, requires a reading age of 18.5.
Putting this in context, it’s about as hard to read as an exam question from the last year of school or a textbook from the first year of university. That might be fine if you know the subject inside out.
But it might not be find if you don’t. I was an undergraduate history student when I picked up a friend’s chemistry textbook. I soon put it down because it made such little sense. Might some people feel the same when they read sections of the new framework?
The second challenge is that, according to the same readability research, the labels attached to investment content, such as ‘professional investors only’ or ‘suitable for individual investors’, have no bearing on their readability.
There’s no correlation at all – which implies that readability does not feature prominently in the content creation process for the companies we surveyed.
In fact, anything labelled ‘private investors’ is more likely to be more complex. This section of material achieved a mean reading age of 19.4 – even closer to academic levels of complexity than the investment content average.
If the industry can overcome these two challenges, then the Investment Association’s framework could have a profoundly positive impact.
But investment businesses will probably need to do two things first.
The first is to say more about ESG, responsible investment and ‘green’ issues – because they don’t appear to communicate much about them at the moment.
In fact, our analysis found just two pieces of content with ‘green’ labels from two firms. That’s 11.1% of companies covering the topic – and just 3.7% of all material.
This feels too low – but it can be easily improved upon.
The second thing is to make material more readable.
Readers find shorter, crisper sentences much easier to understand than longer, verbose material. They also prefer not to have to use a dictionary.
These two things can unlock better engagement – and with better engagement the IA’s common language will fall not on deaf ears but on those which are actively listening.
David Butcher is Managing Director at Communications and Content