Would you print less to add more value?

February 1, 2009

Johnson’s World by Steve Johnson

Big Wave Advisors ( http://www.bigwaveadvisors.com ) is my financial planner. David Nielsen, Big Wave’s owner, is an outspoken advocate of adjusting one’s portfolio as often as necessary to meet changes in the market, in contrast to the mainstream wisdom of “buy and hold.”

Big Wave makes extensive use of a fairly recent innovation called Exchange Traded Funds (EFT) to accomplish the investing goals of its clients. The Securities and Exchange commission webpage at  http://www.sec.gov/answers/etf.htm explains just what an EFT is. Pretty boring stuff, but I did garner one exciting tidbit. EFTs, like most investments, are required by law to provide investors a prospectus before the purchase is cleared.

Therein hangs a tale.

Given the volatile nature of today’s market, and Dave’s investment philosophy, it only makes sense that he trades my shares frequently. Sometimes he will only hold a position for a matter of weeks before selling.

ProShares is a group of 64 EFT funds, most of which are “short,” meaning that they increase in value when prices drop. Obviously this makes ProShares very popular right now.

Every time Dave buys me shares in any ProShares EFT I receive a prospectus in the mail. Every fund, every buy, every time. Yes, I’m required by law to receive a prospectus, but I’ve already received it!

The ProShares consolidated prospectus is a 160 page 8½”x11” perfect bound book covering 64 different EFTs. It is as about the same size as some rural phone directories. Yesterday I found in my mailbox three separate envelopes, each weighing 11 ounces, each containing exactly the same prospectus, which I’ve probably received 15 times since it was last revised in October 2008.

Some printer has a nice little slice of business cranking out these books for ProShares Trust. Some mailer likewise has an easy, steady account fulfilling prospectus requests for either ProShares or for Raymond James Financial Services, who Dave at Big Wave uses to clear his trades.

Another winner in this deal is the United States Postal Service, collecting several dollars for every single prospectus that is mailed.

Today I received yet another duplicate ProShares prospectus in my mail, but I also received something else: a prospectus from a ProShares competitor.

Barclay’s iShares was one of the first to enter the EFT market. The iShares prospectus I received was, like the ProShares prospectus, probably printed cold web, but that is all the two have in common.

The iShares prospectus was 5½”x8½” in size, 32 pages and edge glued. It weighed in at 2 ounces, and was specific to one particular fund. Worthy of note was the text discretely centered on the front cover.

“Would you prefer to receive materials like this electronically? See inside cover for details.” After following the instructions on the inside cover, I found myself at a website touting the benefits of electronic delivery. First was “immediate availability.” Hmm, yes that is a real tangible benefit. “Less mail” may or may not be a benefit, depending upon your point of view. “Better for the environment.” Of course we can’t forget that one. At least they didn’t say green.

“Automatic postal mail forwarding” needed some explanation. The claim is that if your email ever bounces you’ll be sent a printed copy in the US Mail. This line deftly transcends the “print mail vs. email” argument by offering the advantages of both.

I should emphasize that the email option is clearly presented as just that: an option. No attempt is made to coerce me toward electronic delivery if I don’t want it. Ironically, a consumer receiving the modest iShares mailing would be far less likely to jump at the chance to unclog his mailbox than a recipient of massive ProShares mailings.

The potential for a printer, mailer or distributor to add tremendous value here are mind boggling. I’m sorry to say that most of us would not seize the full opportunity if we were given a chance to approach to ProShares folks.

We might suggest the use of even lighter papers to save on mailing. Perhaps, depending upon our plant, we’d save the prospect a few cents with saddle in place of perfect binding. Of course we’d tout our mailing expertise.

Would we dare suggest the ProShares consider the iShares model, which would instantly eliminate 90% of the printing from the account? Would we willingly kill (or severely maim) the golden goose before it had laid a single egg for us?

Could any of us be so bold as to suggest adding an electronic delivery option, and then offer to manage it as part of the printing proposal?

How many of us would opt to be just one more printer bidding on a job? How many of us would seize the chance to conquer bold new worlds, even if it meant sacrificing much needed short term print volume?

What would you do?