When sharing important but complicated financial concepts such as investment strategy, fiduciary duty and compensation structure, how do you decide what to leave in and what to omit as “TMI,” or knowledge overkill, harmful to your cause?

Learning vs. Sharing Knowledge

Step one is to recognize the difference between the wisdom you’ve acquired, versus how much of that wisdom to pass on to others in the form of effective advice.

As an advisor, you recognize that it’s the totality of the evidence versus any one point that offers the solid foundation from which you can confidently serve your clients’ highest interests. As such, every detail seems essential to you. And in the context of your own education, it is. But when it comes to communicating your understanding, you must straddle a finely balanced line. Investors don’t want to know EVERYTHING that you know. They want to know everything that MATTERS about what you know. And here’s the tricky part: They get to decide what matters.

Inform versus Suffocate

In crafting your communications, you want to provide enough solid evidence so your readers can reach their own conclusions. That way, they won’t lose their resolve when the going gets tough. But you need to avoid burying them in information overload before they get there.

If you’ve got eight examples of the point you’re making – say, the importance of minimizing costs – choose one or two of the most powerful ones and keep the rest for another day. Favor the illustrations whose sources are the most objective (academic versus industry-funded), the most respected (such as the University of Chicago versus your local community college), and the most current.

If you’ve got eight points to share about why investment expenses should be kept to a minimum, either pick the two or three most salient ones and explore them as space permits, or briefly list all eight without as much detail – if you can do so in a way that is still helpful. When in doubt, err on the side of covering one or a few points well, rather than trying to cover all possible ground.

Get to the Point, But Accurately

Another tactic to effective communications is to omit finer details that, while technically correct, obfuscate the main point and impair readability. If there are too many caveats, exceptions , clarifications and qualifications your audience will drown in them. Scan your writing. If every sentence includes waffle-words like “mostly,” “likely” and “possibly,” it’s time to wield your editing X-Acto® knife.

At the same time, it’s important to know when to include substantive shades of meaning, without which you risk misinforming your readers, and running afoul of compliance as an added bonus. For example, I rarely use the phrase “risk premium” without the word “expected” preceding it. It’s critical that investors understand that evidence-based risk premiums are by no means guaranteed.

As another example, one of my advisor friends shared his thoughts recently about a rule of thumb that Larry Swedroe of the BAM ALLIANCE has long used to explain the difference between index investing versus passive investing:

“All index funds are passive, but not all passive funds are index funds.”

I remember hearing this adage years ago. A quick Google search finds it dating to at least 2007, in this thread from the Bogleheads forum.

In 2007, it’s likely the statement was 100 percent accurate. Still, “all” is a bold word. As my advisor friend observed: “When I see an ETF like the YieldShares High Income ETF that has an expense ratio of 1.65% and is based on an index, the ISE High Income Index, that’s composed of a number of actively managed funds, I wonder if I need to amend that statement to, ‘Most index funds …’”

Here’s where the soul-searching begins. On the one hand, it’s easier to grasp the essential concept as Larry words it, plain and simple. And, by and large, it’s still an accurate rule of thumb with few exceptions. On the other hand, investment choices have indeed evolved since 2007. The waters have muddied some since then. Should “all” become “most”?

Personally, I would err on the side of accuracy and go with “most.” But for general audiences, I would not explain why. The point is to deliver useful guidance, not force your readers to wander through the backstory that leads to it. Should someone want to know more, you are prepared to explain, and that’s all most readers will care to know.

Express Wisdom, Wisely Expressed

How did you reach the evidence-based investment strategy you espouse today? It’s one of the questions I ask when meeting with new, passively minded advisors. For some, it’s an overnight epiphany; for others, it’s a gradual discovery. For all of you in this important community, it’s a cherished, life-changing experience.

In a way, your role as an advisor is to take your clients on that same fulfilling journey. You cannot think for them; you can’t force the discovery. But you can help them think faster and discover more easily. Open up the express lane to understanding, and your relationship will go far.