Please ensure Javascript is enabled for purposes of website accessibility

5 Ways to Maintain a Competitive Edge, No. 3: Outcommunicate Your Rivals

By Motley Fool Staff - Updated Oct 12, 2017 at 11:41AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you can take complicated ideas and get them across to customers better, you have a winning advantage.

Getting ahead isn't simply a matter of having a great idea, nor of being intelligent or improving your mastery in your chosen arena. The key is to focus on the edge that you can keep for the longer term. In this episode of Motley Fool Answers, Alison Southwick and Robert Brokamp are joined by former Fool Morgan Housel to talk about figuring out what your sustainable advantages are, both in investing and in life. He lays out five possible advantages that you and the businesses you invest in might already have, or want to cultivate, in service of acquiring an edge. The third: better communication. Not only does it pay off for the customer when you can get complex concepts across clearly, but it helps them trust you, too.

A full transcript follows the video.

This video was recorded on Aug. 22, 2017.

Alison Southwick: No. 3: the ability to communicate more effectively than your competition.

Morgan Housel: I think this is really important in financial services and it's something that The Motley Fool ...

Southwick: I was going to say. This sounds like The Motley Fool.

Housel: ... has done since day one. It's really the essence of The Motley Fool -- the ability to take something that is complicated and intimidating, like investing, and just communicate it better than other financial advisors or brokers who might be out there. I think there are a lot of really smart financial advisors out there who could add a really good service for their clients, but they can't communicate very well with their clients.

There's something I mentioned in the piece. For a lot of financial advisors it's hard for customers, especially if they are novices to investing, to distinguish between confusion on the customer's end and obfuscation on the financial advisor's end. If the financial advisor is using big terms and lingo that the customer doesn't understand, from the customer's point of view it's hard to distinguish between, "Do I just not know what he's talking about, or is he trying to pull the wool over my eyes?"

You see this a lot. A great example besides The Motley Fool is Josh Brown of Ritholtz Wealth Management. Josh, Barry, and Michael Batnick -- those guys are big on Twitter and Josh is on CNBC a lot -- have the competitive edge as financial advisors because they are incredible bloggers, and they can communicate their vision to the world in ways that anyone can understand.

Someone who has no experience in investing can read Josh's blog and say, "I know what you're doing, and I trust you because I've read so much of what you're doing. I know how you see the world and I know how you invest, so I'm comfortable going to you as a client just because of that. Just because of your ability to effectively communicate what you're doing." That sets up a new level of trust and, I think, especially in financial services that is a sustainable competitive advantage.

It's sustainable because it's so difficult for people to do. Effective communication is a really difficult thing that I think is difficult to teach some people. So, if you're able to do it well, that's an edge that will stick with you.

Southwick: And people like Josh and Barry also speak with a confidence that a lot of people sometimes lack in finance, too. That obfuscation that you talk about is what people resort to when they really don't know what they are talking about a lot of the time. Whereas Josh and Barry are like, "This is how it is. This is my strong opinion. Take it or leave it. I'm too busy. I'm moving on to the next thing."

Housel: Exactly. No problem saying, "I don't know." They're not going to try to BS their way through a question. If you ask them a question that they don't know they'll tell you, and that, itself, is a communication tactic that sets up trust.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.