So Many Changes - So Little Time. The CARD Act of 2009

The first mandates within the CARD Act of 2009, including increasing consumers minimum time to pay their bill, a longer notice period for changes in terms, and the ability for consumers to opt out of changes with enough time to shop for a new card went into effect on August 20th. There is much more to come in 2010.

One of the cornerstones of the CARD Act is that all the forms and statements that credit card companies send out “have to have plain language that is in plain sight.” The law makes specific requirements for each type of document in terms of content, language and in some cases even type size. The requirements were based, in large part, on extensive consumer research sponsored by the Federal Reserve. An overview of the research and results can be found at http://tinyurl.com/l6o6fr

For card issuers already struggling with the August 20th portions of the law (see Countdown to the CARD Act Part One) the clock is ticking to get all of these reporting changes designed, coded and tested in advance of the February 2010 deadline. I’ve summarize the key content and formatting changes to each type of document in a blog post on The Digital Nirvana
http://thedigitalnirvana.com/

Banks are going to crank up their rates and wring every last late fee out of the system before these changes go into effect next year so watch your bills carefully. But once all the howling ceases this will be a very good thing for consumers and provide many opportunities for service providers as well.

- Elizabeth Gooding

Social Media and Investor Relations: Surf’s Up!

I think social media and shareholder communications go together like surfboards and big waves. It’s a great big ocean of opportunity. It’s exciting. It’s fun. It can draw a crowd. And if you don’t know what you’re doing, you can totally wipe out. (Cue theme music http://tinyurl.com/aqh5nj)

Maybe you think you’ll just stay out of the water, so to speak. Unfortunately, since social media is happening with or without your participation, you still need to know what people are saying about your company. There was a great post from Bruce Johnston at DBJ Associates on what can happen when you don’t have a social media policy, which includes a link to the toe tapper video “United Breaks Guitars” which logged over 20,000 comments. http://www.dbjassociates.com/?p=208

Part of your strategy needs to center on gathering information about your brand and being prepared to respond to it – whether it is positive or negative. Customer service, marketing, product management and investor relations can all learn a lot, and build a better brand by putting an ear to the Web 2.0.

In a recent interview regarding his CEO’s foray into the Twittershpere, Mark McKenna, Managing Director of Communications of Putnam said, "Bob is one of the first to recognize that that we need to get our content out there." http://tinyurl.com/n4n2h8 The good news? Bob Reynolds @robertlreynolds is the first CEO in the mutual fund industry on Twitter and Putnam got a lot of great PR from that initiative. The bad news? The strategy that Putnam has portrayed is about “getting the content out there.” Just talking, not listening. This may wow the folks in PR, but it won’t create a lot of fans among Twitterers.

One company that is doing a great job of leveraging the social web from shareholder relations to customer service is Johnson & Johnson. Marc Monseau the Director of media relations at Johnson & Johnson started their blog very humbly with the comment “it’s clear to me how important it is not just to watch, but to join in productively. Doing that will take some unlearning of old habits and traditional approaches to communicating — and I will have to find my own voice.” Three years after jumping into it, they now have a corporate blog, JNJBTW, the Johnson & Johnson health channel on YouTube, a corporate Twitter account and a Facebook page.

On August 6th Doug Chia, Senior Counsel & Assistant Corporate Secretary for Johnson & Johnson made his first post on JNJ BTW titled “Don’t Let Your Vote Go Uncounted.” The post was intended to let shareholders know about the elimination of the “broker vote” in uncontested director elections and does a great job explaining it in plain English.
http://jnjbtw.com/2009/08/dont-let-your-vote-go-uncounted/ This post provides a valuable service to the average investor who may not know that their broker can no longer vote their beneficial shares, and also helps to build trust. It’s smart, it’s timely and it is completely consistent with the rest of J&J’s social media strategy.

Maybe it’s natural that the marketing guys are going to paddle out before the general counsel, and maybe you need to start small so you can take a few spills without damage. But, once the lawyers are in the water you can bet it’s safe to swim.

So, Dude, check the water, paddle out, make a plan and ride the social media wave. Just remember, there’s always another wave coming.

- Elizabeth Gooding

Count Down to the CARD Act

The clock started ticking on May 22, 2009 when the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act was signed by President Obama. It is a landmark piece of legislation that provides American consumers with stronger protection against unfair credit practices than previously imposed by the Federal Reserve under changes to Reg Z and Reg AA. It also gave issuers less time to comply than the Fed: the first date for compliance is this month, only 90 days after the law was passed. Tick. Tick. Tick.

I'll be doing a series of posts on the CARD Act and its impact on communications this month.
Read the rest at http://thedigitalnirvana.com/

Elizabeth
www.Linkedin.com/in/EGooding

Shareholder Services: A Best-Kept Secret Opportunity for Content and Delivery Management?

In developing the Shareholder Communications Symposium and working with our sponsors and clients, I’ve been spending a lot of time lately in the area of shareholder communications, digging deep into issues related to new SEC rulings that affect everything from the way prospectuses, proxies, and other critical investor-related documents are written (new, plain language) to the way they are delivered (say goodbye to the thick stack of printed materials that no one reads!).

One of the outcomes of this activity is my growing sense that there’s a lot of opportunity in them thar hills, for both the public companies and investment firms that need to respond to the regulatory changes and the solution providers that support them. Here are just a few of my thoughts:

1) Thanks to the SEC’s spate of recent initiatives – notice & access, summary prospectus, retail voting, compensation disclosure & analysis, plain language guidelines – the pressure is on for investor relations and shareholder communications professionals to create new content that is developed by finance, compliance, and other executives and is readily deliverable both in print and on the Web. In many ways, they’re having to rethink authoring, compliance, and distribution processes and tools they haven’t touched in years, and they’re hungry for direction and advice.

2) The scope of this attention and activity ranges far beyond the annual report, which is the big bit of content most people think of because of the important public-facing role it plays. However, this specialized dossier is much more than the thick piece of marketing collateral it often is considered to be. Rather, it is a highly-visible compliance document that is subject to the same kind of strict controls as an SEC filing, proxy, prospectus, governance document, or annual meeting presentation.

3) With the economy stagnant and the ‘usual suspects’ in marketing and Website/portal development pretty well saturated, content management and delivery vendors are scouting hard for new points of entry into the organizations they seek to serve. Given the regulatory squeeze the shareholder services community now finds itself in, it seems to me that there’s a marriage to be made there, a relationship that stands to be as long and as fruitful as any we’ve seen in the content technology space.

The trick for vendors is to recognize that shareholder services are quite strategic, highly regulated, and enormously complex. The trick for shareholder services executives is to quickly get comfortable with the notion that compliance with the new mandates may require enhancing or replacing (even if only in part) their current technology solutions.

So there it is, a little more than my $0.02, submitted, as Rod Serling would say, for your approval.

- Steve Weissman

Want to dig deeper and to talk more? Join me at the Shareholder Communications Symposium, October 6-7 in Chicago. Click for Agenda and Registration information.

Turning Paper Off Means Turning Online Readers On

Delivering documents online rather than via print today is no big deal, and at this point, not even the hardest-core Luddite argues against its efficiency. But deliver does not equal receive and certainly doesn’t equate to understand, something organizations up and down the corporate spectrum are now discovering daily, and to their great dismay.

In the rush to embrace electronic means of delivery, many companies have overlooked the obvious fact that the experience of reading online is vastly different than it is on paper. A few examples:

• Screens are much smaller than most pieces of paper, so they can’t present as much information at any one time.
• Screens therefore require more ‘page turning’ – i.e., scrolling and/or clicking – thereby interrupting the reader more frequently and offering more opportunities for abandonment.
• Screens also flicker, glow, and optimally handle only a limited palette of fonts and colors compared to paper, forcing readers to work harder to internalize the content.
• Perhaps most importantly, looking at a screen doesn’t trigger the tactile response that holding a piece of paper in the fingers does, and the absence of this primal connection means people don’t connect with the process in as fundamental a way.

Comfort, Comprehension Greater on Paper than Screen
The net of all this is that readers typically don’t get as much out of their online experiences as they do with paper. They spend less time with the material, retain less of the content, and take action less often based on what they read – and as a result, marketing directors, sales executives, and issuers of prospectuses and other shareholder communications often end up disappointed in the results of their electronic distributions.

This is important to bear in mind when evaluating the impact of governmental mandates aimed at embracing the new media. For instance, the SEC’s recent ruling on Summary Prospectus gives mutual fund companies permission to send paper-based summaries of their offerings to prospective customers and provide all the gory details online. Issuers love this because they can reduce the amount of money they spend on paper, printing, and postage when soliciting new business. But they are also finding that people don’t engage with their online content the way they do with paper, and conversion rates are suffering as a result.

(You can learn more about this, and other related topics, at our upcoming Shareholder Communications Symposium.)

Recast Content to Reap Rewards
The lesson here is that simply delivering less paper-based content is not enough to get people to put down the paper and pick up the mouse, even if a major Federal agency says it’s OK. Instead, organizations must turn their online readers on by redesigning information for the new medium, meaning that time, energy, and, yes, money must be spent on new document structures, formats, and even writing styles to facilitate understanding. Failure to do so means a return to paper as a primary channel, and lost opportunities for production savings.

– Steve Weissman

“To view information online in a way that lets them rapidly understand key information, users need simple formats that don't require them to slowly page through presentations that are optimized for print rather than interaction.”

– Jakob Nielsen's Alertbox
Investor Relations (IR) on Corporate Websites
May 25, 2009

Summary Prospectus - to Partner or Not To Partner?

Recently I’ve been doing quite a bit of research into the potential impact of the SEC’s Summary Prospectus Rule on financial firms and financial printers. While this issue is clearly top of mind for financial industry associations such as the ICI and NAVA, I was surprised to find that it was not on the radar at all for print-centric organizations such as NAPL, NPES, PRIMIR and Xplor. Then it occurred to me how concentrated the traditional offset prospectus printing business had become. A very small group of very large printers control the market, and the rest of the crowd has stopped competing for it. With the advent of the summary prospectus, and the trend toward digital printing, a good chunk of that market may be up for grabs and the big players are shoring up, or partnering up with their offers to hang on to their clients. For example:

In March, Bowne entered into a strategic alliance with Firehouse Financial Communications LLC ("Firehouse"), a Massachusetts-based document simplification firm. Firehouse's design and content capabilities have been integrated with Bowne's content management system and robust composition network and marketed as the the Bowne Firehouse Summary System for Summary Prospectus.

Also in March, Broadridge expanded their long-time partnership with NewRiver by signing an exclusive agreement to offer NewRiver’s Prospectus Express and Virtual Document Warehouse products for pre-sales and first-dollar prospectus deliveries in the brokerage market. With Prospectus Express, Broadridge can offer a solution that not only makes the summary prospectus available online, but also links directly to the statutory prospectus in support of the SEC’s requirement for layered disclosure. Virtual Document Warehouse (VDW), the companion product, provides a comprehensive library of print-ready summary prospectuses (via PDF) with links to the corresponding statutory prospectus. Using VDW, Broadridge will be able to fulfill first-dollar delivery requests using print-on-demand rather than traditional pick and pack processes, thereby creating efficiencies for investment companies and brokers. NewRiver has also started tracking the funds implementing stand along summary prospectus in their Summary Prospectus Index which can be found at http://tinyurl.com/mc37o2

In May, Merrill Corp. another market giant in offset prospectus printing, announced a joint marketing agreement with Mobular Technologies to market Summary PRO AR, a new software application designed to meet the technical requirements of the rule for linking and web presentation. Summary PRO AR is built on the same technology platform as Mobular's Proxy Notice and Access solution.

In contrast, a firm not particularly known for prospectus printing, DST, announced in February their intent to “go it alone” with their “eProspectusDirect fully integrated, single-vendor solution,” offering printing and mailing of annual prospectus (using their Digital Press Technology inkjet printers versus traditional offset), first-dollar fulfillment combining the prospectus with the confirmation mailing, electronic delivery and Internet hosting of compliance documents, and consent management services.

The summary prospectus rule, approved in January 2009, requires mutual funds to deliver a summary section in the statutory prospectus. Fund companies have the option to print and mail the full statutory prospectus to their shareholders or they can send only the 4 page summary prospectus document, as long as they post the statutory prospectus to the internet within 24 hours. The rule also requires cross referencing between the summary and the statutory prospectus and specific online navigation links. Shareholders who receive the summary prospectus must be able to easily request a printed copy of the full statutory prospectus and their order must be fulfilled within 5 days. The huge potential shift in print volume, investor website requirements and untested demand for follow-on statutory prospectus fulfillment means substantial change for mutual funds and financial printers alike.

So while the traditional players are trying to hang on to business and offer companion services, the rest of the industry should be assessing their own opportunities to shore up, partner up and maybe gobble up some of the shifting print volume and demand for enhanced online compliance solutions driven by these new requirements for layered disclosure. This will be an area of particular focus for the October Shareholder Communications Symposium.

Elizabeth

www.linkedin.com/in/egooding

House Bill affecting Retirement Plan Participant Reporting

This week, the US House of Representatives subcommittee on Health, Employment, Labor and Pensions approved a bill that would require the Labor Department to impose penalties on retirement plan administrators that don’t fully disclose fees deducted from investors’ 401(k) accounts. The legislation would require that fees be broken down into four categories: administrative fees, investment management fees, transaction fees and “other charges.” The fees would also have to be “rolled up” into a single number for clarity.

Proponents suggest that the 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984) will help workers better evaluate their retirement options by requiring simple fee disclosure on the investment options contained in their employer’s 401(k) plan. Current law does not require all fees to be disclosed; and often the information can be difficult for workers to find and evaluate. Many 401(k) statements, for example have fees buried within other categories in the participant’s account summary. A practice I have advised retirement plan providers against for years. More at:

http://edlabor.house.gov/newsroom/2009/06/house-retirement-subcommittee.shtml

The committee also voted in facor of legistlatin that would allow independent financial advisers to provide investment advice to plan participants. The Conflicted Investment Advice Prohibition Act of 2009 (H.R. 1988) would restore federal safeguards that ensured that investment advice provided to workers on their employer-sponsored retirement plan be independent and free from any conflicts of interest. The investment-advice legislation would also allow an employee to receive investment information via a computer model. More at:

http://edlabor.house.gov/newsroom/2009/06/house-retirement-subcommittee-1.shtml

If passed, these regulations will have a fairly major impact on participant communications and require recordkeeping systems changes as well as design changes to 401k participant statements and reporting websites. Stay tuned!

Elizabeth