There are a number of ways that platforms should communicate with their investors, as Kuflink chief executive Narinder Khattoare explains…
The primary requirements for any would-be investor are: what are the likely returns? How safe is my money? And what term is my money tied up for? However, while the basics might be easy to articulate and transmit, every investment company needs to make sure that they are not just communicating the obvious but are also talking about other areas which might not occur to investors before they commit.
Transparency – This has so much to do with the culture of the company offering investment opportunities and is key for any investor wanting to make an informed decision as to whether to invest. Either on their website or in written material, a business should lay out all the facts and not shy away from dealing with the negatives as well as all the positives in their proposition. For example, in the peer-to-peer lending sector, transparency demands that they should be able to show the performance of their loanbooks, the default rates, how the money is spread across different types of assets, their location and, in the event of a default, the robustness of the recovery process.
Regular communication – We all want to communicate good news, but the best investment companies must be seen to be consistent. It’s all well and good to keep reporting things that are positive, but investors need to know what is going on a regular basis. Most will appreciate that not all businesses will be performing optimally all of the time, particularly through a pandemic, but now is not the time to shy away. Investors don’t want to be left in the dark.
Regular contact can be presented in different ways. It can comprise emails on performance, videos of senior management and emails to investors outlining the ‘state of the nation’ and where they are as a business, as well as predictions for the next 12 to 24 months.
As a case in point, if there is an issue like negative press, it is important that it is met head on. As you will know, there was a measure of negative press coverage around our 2019 audited accounts which came to light recently. However, we were open and transparent with our investors via email about what happened and what will happen going forward in order to give further clarity and reassurance. We have talked personally to our bigger investors and others who have been concerned. Overall, the response from our investors was very positive and demonstrates the importance of being upfront. As a P2P lending platform, we are here for the long term as we further enhance our systems and internal processes.
In conclusion, the value of good communication helps businesses like ours to be properly accountable to investors and bridges the gap that can tend to widen when contact is irregular and impersonal. It is always good to communicate with investors about where the business is going – while some will want to be on that journey for the long term and some only for the short term, it is key to let them know your plan so they can have confidence knowing where they stand. Lastly, good communication provides a strong incentive for repeat business and the chance that investors will recommend us to others.