- December 23, 2023
- Posted by: CFA Society India
Contributed by - Hemant Adhikari, CFA, Member, CFA Society India
I am sharing some of the tips and best practices in Financial Report Writing that I learned during the workshop
Why Do We Need to Learn “Financial Report Writing Skills” in the Generative AI Age?
Aarti: “Financial report writing is a skill that is essential for anyone who wants to communicate the financial performance and position of a company or organization”.
Now we are in the age of Generative Artificial Intelligence (Gen AI). The Gen AI can generate and process large amounts of data and information. Now, we have one question to ask.
Do we still need humans to write financial reports?
The answer is “Yes”.
Aarti Krishnan explains that the Gen AI can help us with data collection, normalization, analysis, and visualization, but it cannot replace the human element of writing. She further adds that Gen AI can also lead to a loss of originality as it generates the content based on what is available on the internet. With the excessive use of Gen AI, there will be a scarcity of genuine content. Now if someone writes the original content effectively and remains authentic, he/she would have a high chance of standing out.
She says that writing brings clarity to our thoughts. It helps us to express our opinions and arguments and engages our audience with our message.
Ms Aarti Krishna started her presentation with “Why Writing Matters to an Analyst” and put forward her view on this. After explaining the “Why” part of her presentation, she addresses the “What” and “How” part of it.
What Makes a Financial Report Good or Bad?
Here she explains the following dos and don’ts of writing a financial report.
- Brief Introduction: Start your report with a brief introduction that summarizes the main purpose, scope, and findings of your report. This will help your readers to get an overview of what you are going to discuss and why it is important.
- Analysis should end with some conclusions: After you present your data and analysis, you should end your report with some clear and concise conclusions. The conclusions should answer the main questions or objectives of your report. The conclusions should not be vague or ambiguous, but rather specific and actionable.
If you are writing a report to recommend a “Buy” on stock, conclude the report with a strong buy recommendation. Don’t leave the conclusions with confusion. Confusion and ambiguity leave the client uninterested in your report.
- Avoid too much use of jargon: They can be useful to convey complex or precise information, but they can also shrink your audience and confuse your readers. You should use jargon only when you can yourself visualize what they mean, and when they are necessary for your report. Otherwise, you should explain them in simple words or avoid them altogether.
In terms of strategy, we have been recommending a 1s5s flattener on the NDOIS curve, as we pushed back on the view that the market had priced too much in for India given the inflationary environment.
- Use short sentences: Short sentences are easy to understand and read.
- Avoid double negatives: They can create confusion and ambiguity for your readers, and make your writing less clear and direct.
Ex: “It is not uncommon for Indian equities to decline ahead of general elections”.
It can also be written without double negatives and with more clarity – “Indian equities usually decline before general elections.”
- Avoid abbreviations: They can be convenient to use but they can also make your writing less readable and understandable. Avoid them unless they are widely known and accepted by your audience.
- Don’t overuse adjectives: They can be useful to add details and emphasis to your writing, but they can also make your report look more biased and subjective. You should not overuse adjectives. It is better to use facts and data to support your claims.
- Don’t Blindly Follow Americanisms: Very few people understand it.
In the following sentence the author has used a word Goldilocks. This word may be common for a few but for many, it’s use would make the sentence difficult to understand.
“The economy continues to enjoy a period of sustained Goldilocks.”
Warren Buffett also always advocates that we should keep the writing simple.
How to Write a Financial Report: Unlearn What You Learnt at College
She then explained the steps of writing a financial report, from planning to presenting. Here are some of them:
- Decide on a headline:
Before you start writing a report, you should decide on a headline that captures the main idea or message of your report. The headline should be catchy, concise, and informative.
- Know your arguments before you type:
- Support your opinion with data:
- Impress clients with your arguments, not with complicated language.
- Decide the Key Sections of the Report
- Start with the investment recommendation – 100 word thesis
- Provide an industry and business overview
- Business Deep Dive
- Your detailed thesis: Five arguments supported by numbers on why it’s a “Buy”, “Sell’, or “Hold”
- Risk: After you support your opinion with data, you should show the risk factors that may affect the subject company or organization and risk mitigates. She further adds that it is better to change a “Buy” recommendation to a “Sell” recommendation if the risk factors are too big to mitigate.
Various Writing Styles: These styles depend on the purpose, audience, and tone of your report. Here are some of them:
Templates are predefined formats or layouts that can help you to write a report quickly and consistently. But the Template style of report writing can make the report look similar to many others and reduces the chances of standing out from the crowd.
A topical writing style is a writing style that focuses on a specific topic or issue that is relevant or important for the report. It is used to highlight a key aspect or feature of your company or organization, such as a new product, a new market, a new strategy, or a new challenge.
The witty commentary writing style is a writing style that uses humour, irony, sarcasm, or exaggeration to express an opinion or message. We can use a witty commentary writing style to attract and engage your audience.
Blogs are informal and personal forms of writing that can be used to share your thoughts, opinions, experiences, or stories related to your report.
In conclusion, financial report writing is a skill that can be learned. it is still relevant and valuable in the Gen AI age. Gen AI can help us with data and information, but it cannot replace the human element of writing. Writing brings clarity to our thoughts, helps us express our opinions and arguments, and engages our audience with our message. By following the tips and best practices that we learned from Ms Aarti Krishnan, I hope to improve our writing skills in general and financial report writing skills in particular. This workshop will definitely help us to create better and more effective reports.