End the Scourge of Financial Jargon
This Opinion was coauthored by Casey Snyder, a financial consultant with Wells Fargo’s Sedoric Group.
Do you know your CAAP (cyclical asset allocation portfolio) from your VRDN (variable rate demand notes)? And are you up to date (or UTD) on your TIPS (Treasury inflation protected securities)?
If you understood these acronyms — randomly picked from among the many used in our profession — you deserve a round of applause. Advisors encounter hundreds of financial acronyms every day. And in a world overflowing with jargon, the list keeps getting longer.
In an ideal universe, communication trends would reflect progress toward greater clarity. Alas, we reside in a messier realm, where more specialization has led to more complexity — and more confusion for those out of the jargon loop. All too often, abbreviation can become outright obfuscation, as when a contingent deferred sales charge becomes a CDSC. At least when Fed chairman Alan Greenspan spoke, a decade ago, he was intentionally vague. “If I turn out to be particularly clear, you’ve probably misunderstood what I said,” he once quipped.
The curse of self-inflicted linguistic fog is nothing new. In his great 1946 essay “Politics and the English Language,” George Orwell railed against the way laziness and political expediency were debasing the language. More recently, entrepreneur and humanitarian activist Dan Pallotta wrote a blog post for the Harvard Business Review in 2011 titled “I Don’t Understand What Anyone is Saying Anymore.” Describing the jargon disease, Pallotta listed “five strains of this epidemic” that we have all encountered in one form or another: Abstractionitis, Acronymitis, Valley Girl 2.0, Meaningless Expressions and, most lethally, Abstract Valley Girl 2.0 Acronymitis Using Meaningless Expressions. “We have forgotten how to use the real names of real things,” Pallotta wrote.
The advent of Twitter, which encourages brevity and a rapidly expanding vocabulary of LOLs, catchphrases and emoticons, hasn’t helped matters and is likely creating a new human language — or at least a dialect. The ease with which we communicate has yet to mitigate the potential meaninglessness of what we communicate.
As budding financial advisors a few decades ago, we were expected to speak the language of Wall Street. Tom remembers acquiring a 423-page glossary of shorthand phrases and acronyms that he still offers as a guide to aspiring investors.
We would like to think that our profession doesn’t intentionally mislead with every new term, but to outsiders — and even insiders — it may seem that way. Who can quibble with the innocuous-sounding “Simple IRA,” even though the first word stands for “saving incentive matched plan for employees” and the plan is anything but simple?
Sometimes we’re tempted to surrender. A few years ago a witty colleague and friend of ours, Tony Mattera, developed a system called the Jargon Master Matrix. The matrix uses 42 trendy words to produce three-word phrases (“interactive visionary infrastructure” is one example) that make the creator sound like a savant. Or, as Tony puts it, the Jargon Master Matrix is “guaranteed to produce credible phrases that even the savviest executives would be loath to admit they don’t understand.”
We recently uncovered the term “fintech.” It sounds modern, and it is: Fintech, according to Investopedia, is a “portmanteau … that describes an emerging financial services sector in the 21st century.” The word “portmanteau” — literally, “carry your coat” — evolved from meaning a large leather suitcase to meaning a hybrid that combines two concepts. We can’t be sure what fintech means — but if it involves a portmanteau, we feel better already.