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New Managers September 2018

MARKETING CHALLENGE: Diane Harrison: Substance Over Form

 

In the final months of 2018, a mid-term election year here in the U.S., rhetoric is forming and tempers are soaring as candidates try to create narratives that suit their political objectives. It calls to mind the phrase 'form over substance,' where what is said often bears little to no resemblance to what is actually happening. It feels like we never got past the 2016 election, yet here are the midterm seats up for grabs.

I'd like to offer a cautionary message for the investment conversations also heating up in this fall of 2018, and suggest that 'substance over form' is a far better approach to take with investors. When it comes to parting people and their money, they tend to care a whole lot more about what you will do with their investment than what you might say.

SMOKE AND MIRRORS WON'T DISGUISE SUPERFICIALITY

In the accounting world, the concept of 'substance over form' entails the use of judgment on the part of financial statement preparers to ascertain business sense from transactions and events and to present them with the truest value. The label attached to a transaction, such as a loan, a commission, a sale, etc. is not the primary driver of the economic value that such financial statement preparers arrive at in their deliberation. The substance of the outcome or result of such transactions will ultimately determine what their recorded value will be. Thus, 'substance over form' reflects the economic valuation of transactions and events recorded in financial statements rather than their label to depict a fair view of the entity

Relating to investment management, the 'substance over form' approach to winning over investors follows a practical and simple route. If managers want to move investors to their side, best to offer them actual accomplishments and descriptions of investments made and results earned. This can work particularly well with alternative a......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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