Have you ever thought of using FBI negotiation tactics to improve your investor relations practices? Understanding how people think, process, and respond to communications is critical in executing a successful investor meeting.
In Chris Voss’s book Never Split the Difference, Voss shares his experiences in utilizing a thoughtfully deployed communications strategy to catalyze the success of many high-stakes FBI negotiations. Keep reading to see how strategic silence, calculated responses, mirroring, and other FBI tried and true methods can help improve your investor relations practices and achieve your communication goals.
In recent years, hedge funds, private equity, and traditional asset management firms have placed great emphasis on strategically building investor relations programs with the goal of increasing transparency and overall investor satisfaction.
In fact, respondents showcased this trend in our recent IR Survey with nearly 70% stating they believe that Investor Relations is viewed as a crucial function in their organization, and they are actively looking for ways to define and improve their existing Investor Relations strategy.
Focusing on communication – the core element of any Investor Relations program – is a great place to start. Below are some helpful tips I learned from Voss’ book that can be useful when evaluating your own firm’s process.
Listen Carefully, Speak Slowly
Don’t rush your communications. Nothing signals distrust more than quick movements, rash judgments, or interruptions. In his book, Voss states that successful communication begins with listening because it helps make the conversation about the other person and enables trust.
According to Harvard Business Review, listening is more than just being silent – you should include body movements like “Hmm” and head nods and listen attentively to the point where you can recite their statement word for word to truly create a trusting environment.
Practical tips for investor relations pros:
- When walking into a meeting with an investor, keep your introduction short and sweet. Whether it’s a quarterly review call or a simple check-in, open up the conversation to hear what they have to say, first. Are they not feeling talkative? Get them started with questions about what they care about – their families, a sports team, or a passion project they have.
- Count to ten before responding to anything. This gives you time to think of your response and frame your wording to reflect what you want to portray. Rushed responses depict a lack of confidence in the information you have to offer. Clear, thorough answers are worth the wait.
- If you’re asking a question, count to thirty before saying anything else. Introverts especially will appreciate the additional response time. Allow your investor to hear, process, and form a response on their own time. The silence may be uncomfortable at first but is necessary for meaningful and thought-out answers.
Avoid being overly nice –instead, use labeling
When speaking to your investor, don’t use “fluff” or overly formal language that communicates a sense of separation between the two of you. We are all people, and we all want to be spoken to in a way that is honest, thoughtful, and to-the-point. Strive for being "honest and trustworthy' vs. “nice” by acknowledging and labeling what your investor is thinking and feeling.
By labeling uncomfortable or unspoken feelings you perceive your investor to be having, you are bringing them out into the open for discussion. Statements like “I see that you are concerned that your investment isn’t doing as well as you anticipated.” or “I believe you are feeling a bit uneasy about the risk profile of this particular strategy” helps your investor feel heard and understood.
If your statement is wrong, they will be more likely to clarify what they actually think. FBI negotiators use labeling to diffuse high-intensity situations and establish a level of trust to the point where a calm, productive conversation can begin.
Practical tips for investor relations pros:
- Don’t be afraid to label a negative feeling your investor may be having. Do they seem unhappy with their investment performance? Address it! Labeling this feeling with an “I see you are unhappy because...” statement can change the tone of a conversation from confrontational to open to discussion.
- Avoid superficial “nice” statements. Investors can tell when you're not genuine. Is there a change in the fund’s risk profile or performance outlook? Be upfront about it and open up the conversation to hear any concerns they may have. Being able to address their concerns on the spot will ease their uncertainty and leave the lines of communication open for future questions.
- Be Consistent in Transparency: By labeling your investor’s concerns and airing them out, you can address their needs in a more effective, targeted way. Ease their worries with more touchpoints, such as additional phone calls throughout the quarter or bi-monthly status update emails. Using a CRM software will help you keep track of these touches and see how engaged your investors are, allowing you to critically analyze what is effective in your communications and what isn’t.
Body Language and Mirroring
Conversations don’t rely as much on what we say but on how we say it. According to the 7-38-55 rule, 7 percent of a message is based on words, 38 percent from tone of voice, and 55 percent from body language and facial expressions. To ensure the success of a meeting, pay close attention to the tone of your voice and how your body language is aligning to what you’re saying.
Upward inflections in your voice, arms, and legs crossed, and feet pointed towards the door are construed as signs of distrust in conversations. Use a downward inflection at the end of a statement to portray confidence in what you are saying and open up body language to create a sense of openness and trust.
Another tactic used to create trust and confidence is mirroring statements and body language. The FBI uses statement mirroring in negotiations to get their counterpart to elaborate on what was said and sustain the process of connecting.
In meetings, try repeating back what your investor says helps them feel like you’re truly listening, and that their thoughts are being understood and heard. Mirroring sends a subconscious signal that you are both connected and on the same wave-length, ultimately establishing trust.
Practical Tips for investor relations pros:
- Mirror the body movements of your investor during the conversation. Just like yawning after you see someone else do it, people are more likely to mimic a movement like crossing legs or a head-tilt when they are locked into a conversation. If your investor is leaning forward with hands closed, try and emulate their movements to create a sense of trust.
- Repeat what they say. Repeating three or four words verbatim after your investor speaks ensures that you are listening and hearing what they have to say. Keep in mind the tone, volume, and cadence of their speech as well and try to match the best you can. If your investor makes a statement that is confusing, repeat it back to them so they can hear and explain further.
- Keep your inflection in mind. Ending a sentence with a downward inflection shows you are making a definitive statement and confident in what you're saying.
- Track, learn, improve. Understanding each of your investors' preferences and how they communicate and digest information takes time but bucketing your investors by characteristics such as these can prove to be an effective method for tailoring communications. Tracking these details and your investor communications in a centralized location can be helpful for evaluating the effectiveness of your efforts and identifying areas for improvement.
Use these tips to create a communication plan that works for you and or your organization, but keep in mind that each meeting is a learning experience as well as an opportunity for growth. Need some ideas for enhancing your investor relations? Check out these three Customer Success Ideas for improving your IR initiatives.
We love to hear about how professionals in the IR and fund marketing functions at asset management firms view their roles, so feel free to reach out to us with any comments or suggestions. To learn how Imagineer’s software solutions can help your organization improve its IR strategy, reach out and request a demo today!