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

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.

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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.

Alison Southwick has no position in any of the stocks mentioned. Morgan Housel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.