Approach Three: Process Perspective

Abstract

This chapter focuses on the financial analysts’ writing process and the retail investors’ reader perspective. The results show how the financial analysts’ problems in the writing process relate to the text perception of the readers.

Financial analysts are professional writers: writing dominates their working days, the accuracy of their texts is an integral part of their payroll, and their published recommendations impact the financial markets around the globe. However, most financial analysts have never been trained in writing. As a consequence, they are neither aware of their writing practices (Sect. 2.10) nor of the activity fields in text production and writing (Sect. 2.11). Furthermore, they often are not consciously setting up their line of argumentation in the texts (Sect. 2.9). Ethnographic research knows about these issues (Chapter 4), which enables researchers to contextualise text features (Chapter 5) as traces of “what is going on” (Sealey & Carter, 2009, p. 70) beyond the observable and allows for analysis, evaluation, and interpretation of situated activity of the writers. However, what they lack is process-based data for the further development of the financial analysts’ writing processes.

In order to include the process perspective, verbal data on both the production and the reception processes was combined: the corpus of statements from participants in writing courses covers writers’ issues during the writing process in general, and financial analysts’ perspectives on the writing process in particular (Sect. 6.2.1); the aggregated data from a retail investor opinion poll focuses on the readers’ perspective on the uptake of financial analysts’ text products (Sect. 6.2.2). Since these assessments of the readers are a valuable opportunity to experience financial analysts’ texts from the far side and given that the writers’ statements offer insights into the writing process of financial analysts, the results of the analysis show how the financial analysts’ problems in the writing process relate to the text perception of the readers.

In the following, I formulate the research question from a process perspective (Sect. 6.1), describe the corpus data set (Sect. 6.2) and the method applied (Sect. 6.3), discuss the results (Sect. 6.4), and draw an interim conclusion from a process perspective (Sect. 6.5).

1 Research Question

This chapter scrutinizes financial analysts’ writing processes and contrasts them with retail investors expectations and uptake experience (Appendix B). From this process perspective, the research question (Chapter 1) reads as: What are financial analysts’ main issues in the writing process and how do they relate to retail investors’ reading experience?

2 Data

The data in this part combines a writer perspective with a reader perspective on the process of communicating financial analysts’ investment recommendations. It does so by including a corpus of statements from participants in writing courses and the aggregated data from a retail investor opinion poll. The corpus covers writers’ issues during the writing process in general and financial analysts’ perspectives on the writing process in particular (Sect. 6.2.1). This corpus is complemented by a retail investor opinion poll which focuses on the readers’ perspective on financial analysts’ text products (Sect. 6.2.2).

2.1 Statements from Participants in Writing Courses

The writer perspective is covered by data from participants in writing courses. The corpus data is listed in Appendix B. The next sections explain the context in which the data was collected (Sect. 6.2.1.1), the gathering of the data (Sect. 6.2.1.2), the coding of the data (Sect. 6.2.1.3), as well as the structure of the data set that was used for the analysis (Sect. 6.2.1.4).

2.1.1 Context of Data Collection

Writing is a complex endeavour. Many factors influence the writer in the process of writing and, in turn, are influenced by the writer (see above, Sect. 2.11, activity fields). When teaching writing courses, especially for practitioners, it is vital to understand what the participants’ issues with writing are. The statements from participants provide an insight into the struggles, emotions, and problems that writers face and experience in their writing process. With this knowledge, the respective issues can be addressed. Then, appropriate measures and solutions can be developed with and for the participants during the writing course. Moreover, the statements from the participants show in which activity field (following Jakobs & Perrin, 2014, Sect. 2.11) the issues are most salient and urgent. In the transdisciplinary research framework of this study (see above, Sect. 2.1), this allows for proposing appropriate measures to improve the writing process and the text products (Chapters 9 and 10).

2.1.2 Gathering the Data

The data was collected in the context of the writing courses that I taught between 2012 and 2020 (Sect. 6.2.1.4). The statements from participants were collected at the beginning of each writing course: In a first round, I asked all the participants in each course to share his or her most important issue or insight regarding his or her writing and noted the statements on a flip chart. In a second round, I invited the participants to select the four to six topics that they would like to focus on in the respective course. After each course, I listed the statements in a table (Appendix B; Sect. 6.2.1.4).

2.1.3 Coding the Data

For the coding scheme (Appendix B), I first related all the 182 statements from the participants to the 16 activity fields following Perrin, 2013 (Sect. 2.11), by naming the main activity field(s) covered by the statement, e.g., Handling social environment. For each coding decision, I explained why I had related the statement from the participant to this particular activity field, e.g., “Knowing that the audience’s financial literacy is low” (Fig. 6.1).

Fig. 6.1

Structure of the data set: statements and reason for coding

The result of this coding process provides an overview of the writing problems that were presented to me in the writing courses so far. It is plausible that many relevant points in the respective activity fields have been identified, albeit not all the conceivable issues regarding the writing process.

2.1.4 Structure of Data Set

Appendix B provides an overview of the data set as it was used for the analysis. The data is represented in six columns (e.g., see Fig. 6.1). The structure from left to right reads: course code, initials of the participant who uttered the statement, the number of the statement in the data set, the statement itself, the code of the main activity field(s), and the explanation why the statement belongs to the respective activity field(s).

For each of the 182 statements, the above-mentioned system of coding applies (Sect. 6.2.1.3). Such, the example (Fig. 6.1) can be read as follows: in the writing training in GK, holding 1, 2015, the participant D.G. said: “Many people know nothing about finance, which makes writing difficult.” This statement is attributable to three main activity fields: Handling social environment, since this code includes knowing that the audience’s financial literacy is low; Establishing relevance for the audience, since this code includes trying to integrate the existing knowledge of the audience by choosing appropriate, comprehensible language; Monitoring, since this code includes consciously experiencing difficulties when performing a certain writing task.

2.2 Retail Investor Opinion Poll

In the following, the context is explained which led to carrying out the poll (Sect. 6.2.2.1), the design of the poll (Sect. 6.2.2.2), the aggregation of the data (Sect. 6.2.2.3), as well as the significance of the poll and its data as basis for further polls in the organisation (Sect. 6.2.2.4).

2.2.1 Context of Poll

The retail investor opinion poll (Weber, 2013) focuses on the readers’ perspective on two financial analysts’ text products that are aimed at retail investors: aa and ab (for data protection reasons, the product names cannot be disclosed here).

The poll was initiated by me in 2013, based on three reasons: first, my learnings from the writing training with the financial analysts in the last quarter of 2012 (Appendix B); second, several exchanges of ideas with the head of the investment research department, C.M.; and third, various discussions with T.A., editor of the publications aa and ab in 2013. In all these contexts, it became clear that the organisation’s picture of the addressees is blurry. Moreover, feedbacks from target readers led to the supposition that their financial literacy is not sufficient to fully understand the financial analysts’ publications. Even though there were assumptions regarding the target readers’ profile, the addressees’ previous knowledge had never been systematically taken into account.

The poll was finally set up by W.C., head of private banking. I was part of the poll’s advisory board. Such, the poll was designed in a transdisciplinary framework as collaboration between the researcher and practitioners from the very beginning. However, for reasons of data protection regulations in the financial industry, the data is not disclosed in full detail.

2.2.2 Design of Poll

The leading question of the poll was: How do the readers assess the publications aa and ab? Moreover, the target readers were asked to give feedback on whether they considered the publications interesting, on how often they read which topic, on several details of the publications’ content and form, and on potential improvements.

The poll was designed as an online questionnaire and paper-pencil questionnaire, conducted between August 20 and September 4, 2013. In this period, 9817 readers of ab received the questionnaire (2737 electronically, 7080 on paper), and 8079 readers of aa (1219 electronically, 6860 on paper). The distribution form, electronically or on paper, was chosen according to the distribution form in which the addressees received their publications.

2.2.3 Aggregation of Data

The response rate to the poll was relatively low. 7% of the ab target readers answered, and 10% of the aa addressees gave feedback. Nevertheless, the poll led to explorative results. Of special interest were extreme stances and feedbacks as they showed the range of issues that need to be taken into account regarding the addressees of financial analysts’ publications.

Moreover, the results gave hints as to where the audience does face problems with the financial analysts’ text products. Based on an open question regarding main issues as experienced by the readers, the second most frequent point was that the texts are too complicated and contain too many technical terms.

2.2.4 Significance of Poll

The poll was a success in several respects: first, the fact that it was realised showed that the organisation, in particular the business unit private banking, had understood the necessity of realising what the addressees’ needs are in order to establish relevance for them with financial analysts’ publications. Second, the poll was an initial systematic and evidence-based measure to improve the text quality. Third, the poll created data for further analyses and for the development of measures to improve quality; the aggregated data would serve as a benchmark for a next poll, laying the ground for cyclical research in this pivotal point. And fourth, as a result, the organisation committed itself to a quality management cycle regarding the target audience.

3 Methods

To analyse the research question from a process perspective, two methods were applied and combined: half-standardised interviews (Sect. 6.3.1) and a questionnaire (Sect. 6.3.2).

3.1 Half-Standardised Interviews

Investigating real-life writing processes requires an approach that mirrors the struggles, emotions, and problems that writers face and experience in their writing process. With this knowledge, the respective issues can be addressed, and appropriate measures and solutions can be developed. Therefore, I conducted half-standardised interviews with participants in the writing courses that I taught between 2012 and 2020. The answers are collected in full range in Appendix B, Sect. 6.2.1, and discussed in Sect. 6.4.

The decision for half-standardised interviews with this sample group is based on three reasons. First, the data broadly covers writers’ issues during the writing process in general, and financial analysts’ perspectives on the writing process in particular. This is of relevance, as the sample group corresponds with the community of this study (Kemper et al., 2003) that has been analysed in depth with an ethnographic approach (Chapter 4). Based on this ethnographic knowledge, the researcher can ask decisive questions. Second, the setting of a writing course allows the participants to focus on their writing process without being distracted by workplace issues. Third, given the setting of a writing course without performance pressure or requirements, there is a considerable likelihood that the participants answer the questions to the best of their knowledge and do not try to invent appealing answers in order to fulfil any performance targets. The resulting self-evaluative data can be considered an approximation to writers’ subjective theories about their conscious writing practices (Sect. 2.10).

The interview questions were asked at the beginning of each writing course: in a first round, I invited all the participants to share their most important issue or insight regarding their writing and noted the statements on a flip chart. In a second round, I asked the participants to select the four to six topics that they would like to focus on in the respective course. After each course, the statements were listed in a table (Appendix B). With this method in the tradition of transdisciplinary action research (Sect. 2.1), insights were gained as to what the financial analysts’ main issues are in the writing process.

3.2 Questionnaire

From the beginning of the writing courses in 2012, it became evident that the financial analysts and their organisations as a whole only have a blurry picture of their addressees. The task then was to convincingly show how retail investors experience the reading of financial analysts’ text products. Given the transdisciplinary framework and since financial analysts’ enthusiasm for statistics resulting from researchers’ analyses is rather subdued and they are more inclined to believe in results stemming from questionnaires, I initiated a retail investor opinion poll. Such, the results would be meaningful and trustworthy for the financial analysts. The questionnaire was designed in a collaboration between the researcher and practitioners from the very beginning, which is also reflected in the phrasing and order of the questions (Bühner, 2011).

Questions that explicitly query retail investors’ reading experience of the publications aa and ab are of pivotal relevance for the research question of this section (Sect. 6.1). Examples for such questions—and process-oriented answers from readers’ perspectives—include the following:

Question: What do you particularly like about the publication aa?

(Original: “Was finden Sie am aa besonders gut?”)

Example of readers’ answers:

good overview about what is going on in the financial markets; appealing structure of publication;

many topics are covered.

Question: What do you dislike about the publication aa?

(Original: “Was finden Sie am aa weniger gut?”)

Example of readers’ answers:

the texts are too complicated: they contain too many figures, numbers, and jargon; the pictures are boring; not enough concrete recommendations for investments.

Question: What do you particularly like about the publication ab?

(Original: “Was finden Sie am AB besonders gut?”)

Example of readers’ answers:

concise and informative, yet not too much text; great variety of topics; focusing on the crucial points and events on the financial markets.

Question: What do you dislike about the publication ab?

(Original: “Was finden Sie am ab weniger gut?”)

Example of readers’ answers:

not enough comprehensible investment recommendations; language is difficult to understand; too much marketing for the bank.

In Sect. 6.2.2, the poll and its questionnaire are described in more detail. The results, as discussed in Sect. 6.4.2, proved to be a convincing and useful tool for the writing coaching with the financial analysts: they became more aware of their writing context as well as the needs and requirements of their readership (see also Sect. 2.3). Furthermore, they began to develop their writing style and writing process along this insight (Part III).

4 Results

The results point out the financial analysts’ main issues in the writing process and explain how these issues relate to the retail investors’ reading experience. In the following, the results are discussed from two angles: the catch-22 situation of the financial analysts (Sect. 6.4.1), and the retails investors’ perspective where expectations clash with reality (Sect. 6.4.2).

4.1 The Financial Analysts’ Catch-22

Analysing the statements from the participants in the writing courses shows how their issues in the real-life writing process correspond with the phases described in the dynamic system of situated text production (Sect. 2.11 and Appendix B). The results from the subgroup of financial analysts (Fig. 6.2, light grey) indicate their most frequent problems, stemming from mutually conflicting and dependent conditions—a catch-22 situation.

Fig. 6.2

(Note ^aAs always in qualitative approaches, frequency numbers must be considered ordinal data. In the case of the present study, they provide researchers with a rough estimate of the relevance of a certain category of a certain activity field in the writers’ mindset when reflecting on their writing processes.)

Summary of data in Appendix B

The results as presented below provide an explorative overview of issues raised by the writers investigated so far. The size of the data sample is due to the fact that taping of the writing coaches with financial analysts was not allowed. Since I carry on coaching financial analysts in their writing process, the data sample is steadily growing, and it can be assumed that the results of this small sample will be confirmed and salient in a much larger sample.

More important than the actual numbers of the occurrences in this explorative overview are the moulding and form of the financial analysts’ statements regarding their writing process and their issues with writing based on text samples that were discussed in the writing courses. In this qualitative study, these statements define the thinking space with a method that does not cover breadth but reaches deep.

The next sections summarise the experience the writers expressed when raising issues in the most frequent activity fields in Fig. 6.2. These sections do so by discussing how the writing process and, as a consequence, the communicative potential of the text products are influenced by the financial analysts’ writing situation: the constant time constraint (Sect. 6.4.1.1), the paradoxical task (Sect. 6.4.1.2), and the blurred target groups (Sect. 6.4.1.3).

4.1.1 Too Little Time

In order to save costs, many banks and financial institutions have reduced the size of their research teams (Waltersperger, 2013). This means that fewer analysts have to cover more companies and thus write more texts, which leads to increasing time pressure when making forecasts and recommendations (see also, e.g., Sect. 5.4.1.1), and also to longer working hours. Shelton gives an impression of what this means by outlining a day in the life of a senior analyst (Shelton, 2017).

Sample day in the life of a senior analyst

5:30AM: Check Relevant News

Check the news to see if there have been any overnight news releases related to the team’s coverage universe, or if there have been any market-moving events.

6:00AM: Put Out Fires As Needed

If there is news on the tape, the senior analyst determines whether or not it affects the analyst’s investment opinions, and how much action should be taken with this news. If there is no news on the tape, the senior analyst’s morning may involve speaking at the firm’s morning meeting, or meeting with institutional clients or members of a company’s management team.

7:00AM: Morning Meeting

If a senior analyst is presenting an investment idea to the firm, the analyst might do so during the firm’s morning meeting. Alternatively, the senior analyst might meet with clients or company management.

8:00AM: Check-In with Traders and Salespeople

Regular contact with other team members throughout the firm ensures that an analyst’s ideas are well known and understood.

9:00AM:

Participate in team meeting with team members.

10:00AM:

Conference call with company management team to clarify some points regarding the company’s business model and to schedule an investor visit to a distribution centre. Attend internal meeting. Review logistics for non-deal roadshow.

12:00PM:

Lunch with industry contact.

1:30PM:

Review junior analysts’ work and offer constructive feedback.

2:30PM:

Call clients with latest investment ideas.

3:30PM:

Continue to call clients; check in with trading desk regarding unusually high trading volume in a particular stock.

5:00PM:

Review earnings report in search of any important points. Contact management team to clarify any questions. Determine the effect of the earnings release on the analyst’s investment opinion.

8:00PM:

Review research note and model. Make nuanced changes as required.

9:00PM:

Develop talking points for tomorrow’s morning meeting. Review client call lists as calls will need to be made early in the morning.

10:30PM:

As soon as note is published, prepare a voice mail blast for distribution to certain clients.

11:00PM:

End of day.

Shelton’s description is underpinned by a piece of information published by Reuters (Berry, 2016):

In an email dated May 23, 2016, Credit Suisse told its staff […] that they should leave the office by 7 pm on a Friday and not return until at least midday on Saturday – unless a major deal is launching or imminent, bank insiders told Reuters.

This constant time pressure of the financial analysts impacts the writing process in various activity fields (Sect. 2.11) and also the text products (Sect. 5.4). Below, an example from each activity field will be discussed that causes problems in the writing process and on the text products due to lack of time (Fig. 6.2): Controlling, Establishing relevance for the audience, Comprehending the task, Handling tools environment, Handling social environment, Monitoring, and Staging the story. The analysis of time issues in the financial analysts’ writing process enables the researcher to develop tailor-made measures for a more relaxed writing process that, at the same time, enables the writers to increase the communication potential of their text products (Chapter 9).

Controlling: “Ich beginne einfach mal mit Schreiben und muss dann oft das Ganze mehrfach umstellen.” (Appendix B, statement 016). Translation Marlies Whitehouse (MW): “I just start writing and then often have to rearrange the whole thing several times.” The skipping of planning techniques due to time pressure leads to uncontrolled writing and losing the plot, which in the end costs even more time and leads to, e.g., incoherent argumentation on the text product.

Establishing relevance for the audience: “Dieses Schreibtraining macht klar, wie viel es noch zu tun gäbe, wenn wir den Kunden schreiben.” (Appendix B, statement 058). Translation MW: “This writing training shows how much there would still be to do when we write to the investors.” Practices such as double-checking whether the investment recommendation is really written comprehensibly and comprehensively for the target readers are not performed due to lack of time. The results are text products that do not fulfil the target readers’ needs.

Comprehending the task: “In einer Empfehlung sind die Zahlen massgebend, nicht der Text.” (Appendix B, statement 114). Translation MW: “In a recommendation, the figures are decisive, not the text.” Practices such as picturing the audience are neglected in order to omit time-consuming intralingual translation for investors who are less familiar with financial terms.

Handling tools environment: “Die Fingertechnik ist super! So kann ich Zeit sparen beim Schreiben.” (Appendix B, statement 015). Translation MW: “The finger technique is great! It saves me time for my writing.” In the writing courses, the usage of the recommended writing techniques paid off and showed the financial analysts how they can save time by, e.g., being able to successfully handle the finger technique (see Sect. 8.3.2) as a tool for writing.

Handling social environment: “Ich fühle mich gestresst durch das Umfeld, wenn ich schreibe.” (Appendix B, statement 007). Translation MW: “When I am writing, I feel stressed by the environment.” The constant time pressure can be compounded by noise and surrounding activities in open-plan office spaces. Often, there are 50 to 100 or more financial analysts working on one open floor, some of them are on the phone or have meetings while others have to write under time pressure. This can cause stress and lead to incoherent text products because the writers are distracted over and over again.

Monitoring: “Manchmal verstehe ich den Text selber nicht mehr, aber ich muss ihn publizieren.” (Appendix B, statement 055). Translation MW: “Sometimes I no longer understand the text myself, but I have to submit it.” Practices such as ensuring that the text is coherent and that the line of argumentation is clear are omitted or cannot be performed due to time pressure. And even if the proofreaders go back to the author for ameliorations, the line of argumentation, for example, cannot be changed anymore as there is usually only time for corrections of orthography and punctuation.

Staging the story: “Ich sehe den Text als Ganzes. Ich habe keine Zeit, ihn einzuteilen und Zwischentitel zu setzen.” (Appendix B, statement 112). Translation MW: “I see the text as a whole. I don’t have time to organize it and find subtitles.” Practices regarding the dramaturgy of a text by, e.g., selecting appealing subtitle are not prioritised and left out in order to use the time for other tasks. As a result, there is, e.g., a lack of guiding subtitles that facilitate comprehending the financial analysts’ line of argumentation.

4.1.2 Double-Bind Situation

The performance of the analysts, i.e., the accuracy of their estimates, is factored in their annual assessment and is therefore part of their financial compensation. This is intended to ensure that the analysts deliver forecasts that are as accurate as possible. At the same time, reliable forecasts are never possible given the volatility and unpredictability of the financial markets. This means that they are expected to deliver accurate forecasts of a phenomenon that is too dynamic to be predictable. This leaves them with two options: either staging accuracy against better knowledge or disappoint both their employer and the financial community by being honestly modest and admit that their forecasts are reasonable scenarios, but not quantified probabilities. In other words: the financial analysts are in a double-bind situation.

The term “double bind” was coined by Bateson et al. (1956), and the so-called double-bind theory was further developed, among others, by Watzlawick et al. (2011). Studies in organisations building on Bateson and Watzlawick point out that the double-bind situation puts the employees concerned in a difficult position as they can never fulfil the (contradictory) requirements, no matter what they do (e.g., Kutz, 2016; Tracy, 2004; Wendt, 1998). In the case of financial analysis, the double-bind situation promotes strategic formulations: a prognosis is then written in such a way that it always somehow applies—similar to the oracle in Delphi (Temple, 1989). Hedging phrases and consensus estimates are key examples of this double-bind situation.

4.1.2.1 Examples Consensus Estimate

A consensus estimate is the average of estimates made by various equity analysts for certain key figures (e.g., corporate earnings). The analysts take this consensus as reference value for their own estimates. In other words, they refer to a seemingly neutrally calculated value, but they themselves have contributed significantly to its calculation. The next paragraphs explain the background, the procedure, and the impact of this system, based on several examples.

The analysts who cover a company with their research and analysis are usually listed on the company’s homepage: the name of the institution where the financial analyst works and his or her email address are indicated.

Once a first analyst has published an estimate, the others do not want to deviate too far from it. This makes them more likely to end up close to consensus. As the following example from 1992 illustrates as well, this practice has a long tradition (Fig. 6.3).

Fig. 6.3

updat_E_PNC_MMM_1992-08-03, lines 11–14

The analysts’ consensus estimates are summarised and published publicly. In the financial analysts’ text products, the consensus is a point of reference in two ways as the following examples will illustrate: first, the peer group’s consensus estimates are compared with the individual financial analyst’s estimates; and second, the consensus estimates are discussed in relation to which actual figures the company reported and how strongly these figures deviate from the estimated figures (Fig. 6.4).

Fig. 6.4

updat_G_ZKB_kaba_2012-09-20, lines 259–329

“Kabas Resultat übertraf die Erwartungen, selbst auf bereinigter Basis. Die EBITDA-Margen lagen mit 16% im Rahmen der Erwartungen, die Zahlen weiter unten in der Erfolgsrechnung resultierten in einem Ergebnis, das 4% über dem Konsens lag.” (updat_G_ZKB_kaba_2012-09-20, lines 471–475). Translation MW: “Kaba’s result exceeded expectations, even on an adjusted basis. EBITDA margins were in line with expectations at 16%, the figures further down the income statement resulted in a result 4% above consensus.”

Should the peer group as a whole ever assess the situation wrongly, it can be argued that—for whatever reason—nobody was able to make a more accurate estimate and that the consensus proves that the performance of the individual analyst should not and cannot be doubted because all analysts covering the company calculated similar key values. If the company’s figures do not confirm the estimated figures, the consensus and the estimated figures are adapted, as the following example shows:

“Sollten sich die Massnahmen jedoch vollumfänglich im Ergebnis niederschlagen, sehen wir bei unseren Schätzungen und auch bei den Konsenserwartungen ein deutliches Erhöhungspotenzial.” (holcim 2012, updat_G_ZKB_holcim_2012-09-06, lines 277–280). Translation MW: “However, if the measures are fully reflected in the result, we see a significant upside potential in our estimates and also in consensus expectations.”

Summarising consensus estimates with Krotter:

Three analysts are out hunting when they see a deer about 50 yards away. The first shoots, but his shot hits a tree five yards to the left of the target. The second analyst carefully lines the deer up in his sights and shoots, but unfortunately that shot whistles five yards to the right of the deer. The third analyst puts down his gun without shooting and says, ‘we got it.’ (Krotter, 2009, p. 144).

4.1.2.2 Hedging Phrases

With hedging phrases, analysts are able to elude a clear statement by which they can be measured. Often found examples of this are sentences such as “we are cautiously optimistic,” “we expect more volatility,” or “the earnings have missed the estimates” (Bessler & Stanzel, 2007; Bischof, 2013). The alert readers may ask themselves how it is possible that corporate earnings can fall short of analysts’ estimates: the analysts should forecast the development, so, the estimate has missed reality, not reality the estimate. The analysts are criticised for this reversal of the viewpoint from various sides, including from their own ranks, e.g., the famous financial analyst Morgan Housel when he writes about “stupid things finance people say” (Housel, 2021). Some of the critics also claim that the financial analysts’ estimates and recommendations are as hollow as the advice that is randomly generated by tools such as the phrase generator that explains its function as follows: “Financial Advice Generator. Generates random financial advice and impenetrable finance jargon. Impress your stock broker” (Rissacher, 2022).

Whereas such hedging phrases can be critised because they do not appear to be reliable and valid, hedging phrases are also an expression of the fact that analysts sometimes simply don’t know how the markets will develop. “I can’t explain what’s going on with my models anymore. What am I supposed to write? The investors seek for guidance” said J. S., financial analyst at a large Swiss bank (Spillmann, 2013).

This paradoxical task of the financial analysts and the impact thereof on their writing process is reflected in the statements that they made in writing courses. Below, I will discuss an example from each activity field (Sect. 2.11) that causes problems in the writing process (Fig. 6.2): Controlling, Establishing relevance for the audience, Comprehending the task, Handling tools environment, Handling social environment, Monitoring, and Staging the story. The understanding of the paradoxical task and its impact on the financial analysts’ writing process enables the researcher to develop writing strategies and writing techniques (Chapter 9) that allow, e.g., for clearer lines of argumentation and more comprehensible texts.

Controlling: “Oft muss ich meine Empfehlung begründen. Ich weiss, was die Argumente sind, kann es aber im Text nicht schlüssig darlegen” (Appendix B, statement 110). Translation Marlies Whitehouse (MW): “Often, I have to justify my recommendation. I know what the arguments are but cannot present them coherently in the text.” Being torn between contradicting tasks makes it difficult to control the writing process, e.g., finding the right words to express one’s own stance. Required are reliable techniques that enable the financial analysts to set up a stringent storyline for their recommendations.

Establishing relevance for the audience: “Verständlich zu schreiben, ist schwierig. Ich weiss zu viel” (Appendix B, statement 002). Translation MW: “Writing comprehensibly is difficult. I know too much.” Including all the buts and ifs obscures the main message. However, as experts who have to hedge their recommendations, financial analysts are often inclined to include as many details as possible and forget that the readers might be inundated with information that does not help them come to a decision.

Comprehending the task: “Die Texte müssen vor allem stimmen im Peer-Vergleich: Ich will gut dastehen bei den Peers” (Appendix B, statement 005). Translation MW: “Above all, the texts have to be right in peer comparison: I want to look good with my peers.” Given the system with the consensus estimates, the statement of this financial analysts is understandable. Nevertheless, by focusing on the peer group, this analyst neglects—or even ignores—the needs of the actual target readers, the retail investors.

Handling tools environment: “Es hilft mir, Strategien zur Entwicklung von Argumentationslinien zu haben” (Appendix B, statement 054). Translation MW: “It helps me to have strategies to develop lines of argumentation.” Having reliable strategies helps financial analysts to develop ideas as to how they can set up their line of argumentation in their recommendations. With the right techniques, it is easier for them to find solutions for the double-bind situation that they are in and for offering the readers stringent reasoning.

Handling social environment: “Die Kohärenz leidet, wenn Kollegen am Text mitgearbeitet haben” (Appendix B, statement 013). Translation MW: “Coherence suffers when colleagues have collaborated on the text.” Successful collaborative text production requires that all writers pursue the same goal with the text. In the case of financial analysts, this is difficult as it needs a great deal of agreements among the individual writers and their strategies regarding, e.g., the consensus estimates, their personal performance which has an impact on their payroll, and their use and coinage of hedging phrases.

Monitoring: “Während des Schreibens überlege ich mir die Worte sehr genau und google zwischendurch” (Appendix B, statement 065). Translation MW: “While writing, I think about the words very carefully and google every now and then.” A careful choice of words is necessary to master the catch-22 situation: it ensures that the recommendation is duly hedged and that the standing among the peers is good. However, googling, for example, repeatedly interrupts the writing flow and hampers stringent text products.

Staging the story: “Mit doppeldeutigen Phrasen kann ich sicherstellen, dass meine Empfehlung irgendwie sowieso stimmt” (Appendix B, statement 062). Translation MW: “With ambiguous phrases I can ensure that my recommendation is somehow true anyway.” Hedging phrases help the analysts fit any scenario, be it for performance reasons or simply because they do not know how the markets will develop. Whereas this practice might help the financial analysts, it does not serve the target readers. Research-based measures and writing techniques (Chapter 9) show ways of how to stage the story and, at the same time, benefit the writers and the target group readers.

4.1.3 Blurred Target Groups

Knowing the addressee is key when the text product should serve the target reader as a basis for a decision. In the financial sector, this factor has been widely neglected so far because the expertise of financial organisations consists in investing and banking, and neither in language awareness nor in context awareness, let alone in assessing the financial literacy of the customers. Brought to the point by the Chief Investment Officer of a large Swiss bank: “We do not really know who our readers are. It might be worthwhile finding it out” (Curti, 2005).

The blurred vision of the target group is accompanied by the decimation of text products: due to massive cost reductions, the variety of text products has been cut down and the remaining publications are used for a wide variety of addressees and investor groups with very different financial knowledge. A type of text that was originally intended for a certain group of target readers is now used undifferentiatedly for a wide variety of target groups. This is particularly difficult for retail investors; compared to institutional investors, they have less financial knowledge and thus, as a result, less financial literacy (Sect. 6.4.2.1). In addition, more and more banks, driven by cost pressure, outsource their financial analysis and buy their text products from other, larger banks or brokers. The texts are then provided with their own logo and sent directly to customers (e.g., Raiffeisenbank-Mittelrheintal 2017). This practice of rebranding involves the risk of neglecting the information needs of the target groups and of diminishing the texts’ communicative potential. The theoretical claim beyond this practical problem has long been discussed: “Es gibt keine Textverständlichkeit an sich! Anstatt dessen haben wir es mit einer Liste von Faktoren zu tun, die sensibel gegenüber Textsorten, gegenüber unterschiedlichen kommunikativen Absichten, gegenüber unterschiedlichen Lesergruppen und Leserzielen und gegenüber verschiedenen Nutzungszusammenhängen von Textinformationen sind” (Meutsch, 1989, pp. 16–17) (Translation MW: “There is no text comprehensibility per se! Instead, we are dealing with a list of factors that are sensitive to text types, to different communicative intentions, to different reader groups and reader goals, and to different contexts in which text information is used.”).

A process that is designed to improve the text products of an organisation before publication is document cycling. In the typical document cycling (e.g., Jakobs & Lehnen, 2005), a text passes through several stations. In the case of financial analysts’ text products, the document cycling consists of five stages (Sieg, 2003): first, the text is read by a member of the financial analyst’s team and is returned to the author for revision. Second, after the necessary corrections have been incorporated, the text is checked and adapted in the bank’s internal or external proofreading department with regard to spelling, style, content, and specifications. Third, the text is sent back to the author for approval. Fourth, the text is processed by the team that finalises typesetting, graphic design, and layout. Fifth, the text product goes into print or is published electronically. The analysis of these stages shows that none of them includes the target readers’ previous knowledge or needs because they have not been defined by the organisation. As a consequence, the document cycling may improve the factual quality of the text product, but it does not adapt the texts to the target readers’ needs, e.g., by taking their financial literacy into account and by reducing the occurrence of financial jargon.

The next sections discuss the statements from financial analysts as to how they experience their writing process regarding the lack of a clear target reader group (Fig. 6.2) with an example from each activity field (Sect. 2.11): Controlling, Establishing relevance for the audience, Comprehending the task, Handling tools environment, Handling social environment, Monitoring, and Staging the story. Understanding what it means for the financial analysts and for their organisations to write for a blurry target group enables the researcher to develop measures (Chapter 9) that show ways, e.g., to a more effective writing process, to a clarification of the target reader profile, and to addressee-oriented text products.

Controlling: “Wie erkläre ich angemessen, was ich meine?” (Appendix B, statement 009). Translation Marlies Whitehouse (MW): “How do I adequately explain what I mean?” Finding the right words is very difficult when the addressee of the text is not clear. The financial analyst does not know, for example, whether cross-domain translation (Sect. 2.8) is necessary or whether financial jargon will be understood. Thinking about this issue during the writing process brings insecurity and costs precious time.

Establishing relevance for the audience: “Die Adressatengruppe ist nicht klar definiert. Für wen schreibe ich eigentlich?” (Appendix B, statement 001). Translation MW: “The target group is not clearly defined. Who am I actually writing for?” Knowing the addressees is a precondition for establishing relevance for the audience. Focus and perspective on matters need to be adapted to the target readers’ needs and their ability to understand the core message in the text product.

Comprehending the task: “Ich glaube, viele Leute verstehen nichts von Finanzen, das macht das Schreiben schwierig.” (Appendix B, statement 056). Translation MW: “I think, many people do not understand anything about finance, which makes writing difficult.” Being insecure about the audience’s financial literacy raises problems for the financial analysts: they are surrounded by financial jargon all day and they are not trained to write for laypersons. The pondering as to what works in a text and what does not takes thinking time and thereby accentuates time pressure, for example. Research-based writing coaching (Chapter 9) can help solve these issues by showing ways of adapting texts to target readers’ needs.

Handling tools environment: “Ich kann nicht hinter mein Wissen zurück, deshalb kann ich mir den Adressaten nicht vorstellen.” (Appendix B, statement 004). Translation MW: “I cannot go behind my knowledge, so I cannot imagine the addressee.” In this case, the financial analyst is not able to perform cross-domain translation and experiences difficulties in “mediating knowledge across domains and their linguistic varieties” (Sect. 2.8) because he does not understand what it means not to understand a text in this field. Here as well, research-based writing coaching (Chapter 9) offers exercises and techniques to better understand the far side of a financial text product.

Handling social environment: “Ich schreibe mehrheitlich für die Peer Group; ich will ein gutes Standing bei den Kollegen” (Appendix B, statement 061). Translation MW: “I write mostly for the peer group; I want a good standing with colleagues.” A reaction to the blurry target group is to focus on addressees that are known, e.g., the peer group, and, at the same time, on the personal standing in the community. While this behaviour is easy to comprehend, it does not serve the target readers who need the financial analysts’ recommendations as base for their investment decision.

Monitoring: “Es ist schwierig, einen Titel zu finden, der ankommt” (Appendix B, statement 011). Translation MW: “It is difficult to find a catchy headline.” In the writing process, Monitoring also includes ensuring that the text quality corresponds to the audience’s needs. This financial analyst experiences problems when it comes to expressing the essential in a few words that will appeal to the target readers.

Staging the story: “Wie konstruiere ich eine gute Story?” (Appendix B, statement 115). Translation MW: “How do I construct a good story?” By finding the storyline, the writer decides the dramaturgy of a text by, e.g., setting a line of argumentation. Thereby, based on context awareness, the writer also includes the prior knowledge of the audience. If the audience is unknown, this part of the writing process becomes difficult. Against this backdrop, the researcher can offer research-based writing techniques and strategies that help solve such issues in the writing process.

4.2 Retail Investors’ Reading—Needs and Reality

Analysing the answers to the questionnaire of the retail investor opinion poll shows the gaps between the target readers’ needs and how these needs are fulfilled by the financial analysts’ text products. On the one hand, there are overarching matters that financial analysts cannot influence when writing their recommendations, e.g., the quality of the printing paper that was negatively commented in the questionnaire. Such an issue needs to be solved by the entire financial organisation. On the other hand, many issues raised can and need to be addressed by the financial analysts themselves. These can be categorised in three groups: financial literacy, information misfit, and lack of guidance (Fig. 6.5).

Fig. 6.5

Summary of poll data (Translation MW)

The results as presented in Fig. 6.5 provide an explorative overview of issues raised by the target readers investigated with the bank’s questionnaire. In the practical world, the poll was considered a success in several respects as explained in detail in Sect. 6.2.2.4. In a nutshell: it triggered the organisation to commit itself to a quality management cycle to improve the fit with the target audience’s needs. From the academic perspective of the present study, the poll enabled the researcher to intensify the collaboration in the transdisciplinary research project with the bank. This resulted in further scrutinising the financial analysts’ text products and their writing processes and in contrasting the results with the target readers’ needs in order to develop an effective writing coaching that takes the writers’ context into account (Chapter 9).

The following sections discuss the issues mentioned by target readers in the questionnaire that can and should be considered by financial analysts in their writing process and in their text products: financial literacy misfit (Sect. 6.4.2.1), information misfit (Sect. 6.4.2.2), and guidance misfit (Sect. 6.4.2.3).

4.2.1 Financial Literacy Misfit

In the category financial literacy misfit, the target readers’ feedbacks included “jargon, number-heavy, and complicated language structure” (Fig. 6.5). In other words, writers of text products in financial analysis largely lack cross-domain translation (Sect. 2.8), context awareness (Sect. 2.3), and language awareness (Sect. 2.4). Hereby, the replies of the target readers confirm the results in Sect. 5.3.3 that are based on the analysis of financial text products: retail investors’ financial literacy (Sect. 2.5) is too low to thoroughly understand these text products.

Research on financial literacy has increased considerably in the wake of the financial crisis 2008. Thereby, studies have shown that there are large differences in financial literacy between the various investor groups: while institutional investors, such as insurance companies or pension funds, can be expected to have a strong financial literacy, retail investors very often lack basic knowledge of the financial sector (Guiso & Viviano, 2014; Hansen, 2015; Lusardi & Mitchell, 2011; OECD, 2014). Examples of such low financial literacy are:

• retail investors have problems in understanding investment recommendations;

• many retail investors are not able to read and understand bank statements correctly;

• often, retail investors cannot distinguish between real and nominal returns;

• it is not possible for many retail investors to estimate the difference in risk between a single share and a share fund;

• more than half of around 1600 respondents thought that with an initial investment of USD 100 and an annual interest rate of 2%, the amount saved after 5 years would be USD 102 (Guiso & Viviano, 2014).

It is, therefore, all the more important that the target reader groups are defined by the organisations and known to the writers of financial analysis text products. Such, the financial literacy of the addressees can be taken into consideration in the text production process, and the text products can exploit their communication potential.

4.2.2 Information Misfit

In the category information misfit, the target readers’ feedbacks included “missing topics or contents, redundancies, missing details” (Fig. 6.5). What appears to be contradictory, makes sense when we consider that the questionnaire was sent to unspecified groups of investors with different levels of financial literacy. For investors with high financial literacy, the provided information is not enough, they wish, for example, for more details on technical issues or financial matters. In the professional discourse, this problem is foregrounded, for example, in an interview with Mirko Sangiorgio, CEO of Santro Invest: “We investors need more qualitative analysis again” (Waltersperger, 2013). For investors with low financial literacy, however, the texts are too comprehensive, they wish for simple pieces of information and short recommendations.

This incommensurability could be solved by defining target reader groups by the financial organisations. Such, the addressees would receive text products that fulfil their expectations and needs corresponding to their financial literacy, and the financial analysts could write for an audience they can picture and for which they can establish relevance instead of producing recommendations for a blurred target reader group (Sect. 6.4.1.3).

4.2.3 Guidance Misfit

In the category guidance misfit, the answers to the questionnaires included “too few concrete recommendations, missing overview / introduction to topic, not informative enough” (Fig. 6.5). Instead of being presented with essential facts and stringent recommendations—a potential unique selling proposition (USP) in modern banking—addressees receive shallow texts. A lean set of concise information that frames the events on the financial markets and offers guidance would be a USP in an environment where overabundance of information is a sign of the time: the Internet provides information about the financial markets around the clock (Satariano, 2018; Triebe, 2020).

In this jungle of information, platforms that offer easily understandable news have become very popular, for example, the investment platform Robinhood that claims to provide “truly digestible financial news” (https://robinhood.com/us/en/about-us/). The daily newsletter is written in colloquial language (e.g., Robinhood, 2021), and trading is seemingly easy because categories such as “Top Movers” are presented as strong indication for successful deals. At a first glance, this appears to be a very nice offer to retail investors, and even for free—in the true sense of Robin Hood from the Sherwood forest. The downside of this platform, however, is that its mechanisms and the information given distorts market reality because investors with low financial literacy act erratically, neglecting market facts (Swedroe, 2020). A recent example is described by Matt Levine, a Bloomberg Opinion columnist covering finance:

The exchange platform offers stock trading via app and mouse click and is extremely popular in the USA as an exchange trader for everyone. The users, the so-called Robinhooders, are notorious for irrational trading. One example: Before Hertz went bankrupt, less than 43′000 Robinhood traders owned securities of the car rental company. After the car rental company went bankrupt, the number was 170′000, but why does such a large mass of people throw themselves into a seemingly worthless paper? When Hertz shareholders panicked and sold their positions, trading volumes rose. Shares with high trading volumes automatically end up in the ‘Top Movers’ category at Robinhood. And what appears there is like cow dung for flies. It’s a blind approach. Fomo (fear of missing out – the fear of missing a winning opportunity) is spreading. (Levine, 2020)

On the Robinhood platform, retail investors are at the mercy of the platform’s owners as, for example, the GameStop controversy from 2021 points out. Vlad Tenev, CEO of Robinhood, appears to have limited trading in the company GameStop and other stocks based on Robinhood’s ties to investment firms that were caught in short squeezes¹ on these stocks. In consequence, there was a lawsuit filed, accusing Robinhood of purposefully and knowingly removing the stock GameStop from its trading platform and depriving retail investors from investing in the open market. “There is an innate tension in your business model, between democratizing finance, which is a noble calling, and being a conduit to feed fish to sharks” (Popper & Phillips, 2021).

The Robinhood example illustrates that in the freely accessible overabundance of facts, offers, misinformation, and news, especially retail investors are in urgent need of trustworthy guidance they can understand and recommendations that serve them as solid and selfless basis for their investment decisions. In this sense, the results of the questionnaire helped the financial organisation recognise that target-reader-oriented text products with clear recommendations and stringent arguments are a USP, particularly against the backdrop of an increasing number of digital financial institutions that challenge the traditional banking business and customer loyalty.

5 Interim Conclusion

Financial analysts are professional writers: their working days are dominated by writing, the accuracy of their texts is an integral part of their payroll, and their published recommendations impact the financial markets around the globe. Even though their writing context is challenging and paradoxical, most of them have never been trained in writing. This leads to issues in their writing process and, at the same time, relates to the text perception of the target readers.

The analysis of the statements from financial analysts in writing courses regarding their writing process (Sect. 6.4.1) indicates their most frequent problems: mutually conflicting and dependent conditions. The constant time pressure leads to, e.g., skipping of writing planning techniques, to distraction during writing, and to neglecting an appealing storyline. At the same time, the requirement for precise and accurate forecasts that apply to any future market scenario can only be mastered with refined practices, such as writing hedging phrases and reasoning with constructs such as the consensus estimate. Establishing relevance for the audience is an issue as well: the financial organisations only rarely define the target reader groups and such, the analysts have to write for a blurred audience.

The analysis of feedback from investors (Sect. 6.4.2) shows the gap between their needs and the financial analysts’ text products. The low level of retail investors’ financial literacy requires more cross-domain translation, context awareness, and language awareness from financial analysts. The misfit of information, e.g., too much for retail investors and too little for institutional investors, hampers establishing relevance for the audience; defining target reader groups by the financial organisations could solve this issue. Investors need clear and adequate guidance. If traditional financial institutions do not offer it, they miss out on an important USP. In consequence, investors consult other sources with easily understandable and seemingly simple recommendations, such as Robinhood.

The knowledge of financial analysts’ main issues in the writing process and their relation to retail investors’ reading experience is of twofold relevance: from a theoretical perspective, it allows to recognise theoretically appealing real-life issues regarding the writing process and the audience’s reading experience, and to further develop existing theories which are based on empirical results and insights. From a practical perspective, it enables the stakeholders of the transdisciplinary cooperation to develop and implement suitable measures that take the practitioners’ professional setting into account. The process perspective in this study shows that such measures have to offer solutions to overcome issues in the writing process stemming from paradoxical writing conditions. At the same time, solutions must help the writers fulfil the target readers’ expectations. Combining this process perspective with the ethnographic perspective (Chapter 4) and the product perspective (Chapter 5) enables the project stakeholders to develop concrete and successful writing techniques for professional writers in financial analysis (Chapter 8).