Yellen, the Fed and the power of messaging
Despite standing at just 5 feet 3 inches tall, it is nearly impossible to miss Janet Yellen when she walks into a building. Just watch for the swarm of journalists following her every step.
Since taking over for Ben Bernanke in 2014 as the Chair of the Federal Reserve, Yellen has become perhaps the most visible person in finance. She has captivated audiences with her economic commentary and regularly speaks to millions that hang on her every word after Federal Open Market Committee meetings throughout the year.
Not only does Yellen function as the ultimate monetary policy decision maker, she also holds the very important position of head spokesperson responsible for communicating Fed decisions and future expectations to the financial media and investing public.
Given the significance and complexity of the Fed’s messaging, this is no small task. These decisions impact economies across the world, and one slip of the tongue can lead to mass confusion and subsequent market chaos. Yellen must also constantly be on her toes as reporters incessantly shower her with leading questions about the direction of interest rates. Should she make a statement too dovish or hawkish, the soundbite could lead to unintended consequences across the entire financial system. The mere phrasing of her sentences can create or destroy billions of dollars of wealth.
The World Affairs Council hosted the Fed Chair in Center City Philadelphia yesterday, in what would be her final speech before the Fed’s quiet period leading up to next week’s meeting. Given the event was right in our backyard, Gregory FCA was in attendance to see firsthand how Yellen delivers her messages while handling the intense and relentless spotlight.
After watching Yellen give her speech and take questions (including one about Donald Trump potentially crashing the financial system), we identified three lessons from her approach that can help financial services companies across the U.S. hone their own messaging strategies.
- Know your audience
Shying away from complex financial terminology is not in Yellen’s repertoire when delivering speeches or explaining monetary policy. She does this to accurately and clearly articulate her point, but also because she knows her audience possesses a similarly sophisticated economic intellect.
Financial services firms must apply the same concept to their own messaging. When speaking to the media, cater your language to the intended audience to ensure your words resonate and stick in their mind. Tone down the financial jargon when jawing with a local newspaper reporter. But when a Bloomberg senior analyst calls, demonstrate your expertise with specific, high-level commentary.
- It’s about more than just what you say
Yellen utilizes a steady, monochromatic tone of voice when interacting with the media because she understands the intense scrutiny given to her every word. Should she overemphasize her position on a certain economic indicator or statistic, it could lead to a media frenzy focused around a (perhaps misguided) extrapolation of what the perceived emphasis could mean.
While lesser known financial executives aren’t held to the same level of scrutiny, it’s important to understand your words carry weight. A bold emphasis on a certain topic can be interpreted in a litany of ways. Financial services professionals without proper media training can unintentionally sway from their intended messaging points simply because they haven’t practiced their delivery. It’s best to nail down a specific strategy beforehand. How you say it is equally as important as what you say.
- Under promise, then over service
Despite the Fed’s massive influence, macroeconomic conditions are in a constant state of flux. Because of this, the Fed follows the tried and true tactic of under promising and over delivering, and never makes explicit predictions about the future. Financial services professionals, especially financial planners, should follow the same model in their own communications by outlining realistic expectations for their customers and clients.
These lessons are a good place to start, but a solid messaging platform takes time and training to develop. Never overlook your marketing or messaging efforts. Setting a solid foundation and following time-tested strategies will ultimately dictate your success.
For more lessons learned from the Fed, check out our post about leveraging the FOMC calendar to get face time with the media.
This post is a collaboration between Ben and another member of the Gregory FCA team, Freddy Martino.