Brevity is the soul of wit
Polonius, the character in Hamlet, was regarded as being verbose and overly garrulous but contradicted everyone by saying “brevity is the soul of wit”. He meant that clever people can express intelligent things using very few words.
We recently ran a tender for a charity and because it was initially a relatively small sum to invest we asked eight investment managers to answer a handful of questions on no more than four pages. Asking the managers to comply to this brevity made it uncomfortable for them, but in the end all managed to provide thoughtful, interesting and differentiated replies.
This gave the charity’s trustees a manageable 32 pages to read. But that was not all. Each manager supplemented their four pages with a series of appendices. The total pack of reading material therefore expanded to close to 400 pages, or an average of 50 pages per manager (although some were more loquacious than others!).
The French philosopher Bliase Pascal famously said that, “If I had more time, I would have written a shorter letter” and this goes to the heart of the matter. Brevity requires focus on the message and a commitment to its contents. Amazon tries to do something along these lines in its leadership principles.
You have to consider that for the manager to get onto the long list, it is highly likely they can do the job and meet the mandate asked of them. If not, most will decline to send a proposal. So why does brevity fail? The following is taken from an investment services tender scoring system, where of the criteria applied by the charity was “submission size (e.g. number of sides of A4 etc)”
0 marks - Satisfaction: Bidder will not be able to meet the needs of the purchaser. Evidence: No evidence provided or evidence which does not comply with any answer
through to;5 marks - Satisfaction: Bidder is likely to be able exceed the needs of the purchaser. Evidence: Evidence is comprehensive, highly credible of high quality and relevant to the question asked.
We imagine any investment manager reading this will be crying out, “I hate to complete long and unnecessary tenders. I wish all RFPs were four pages long but my Compliance Team makes me put in all the additional information!”
The issue is one of trust and evidence, but also cost. Imagine if you were offered a summary report (in four pages) of various investment options at a cost of £x from an established and trustworthy supplier, or the full evidence of their workings at a multiple of that cost: which would you choose?
The fact that most of the evidence is not independently verified makes it rather like the student marking their own homework. Would you pay many times as much just to see the written evidence even though your are unlikely to read it and that it will doubtfully change the outcome? What is the best use of the charity’s funds and your time?
Charity investing is all about managing risk, and risk is more than just volatility and the word count. If you are seeking brevity and reassurance with your investments please do not hesitate to contact us.