Is plain English for financial dummies?
“We don’t want our clients to think we’re dummies.” When I encourage my clients to use plain English, they sometimes push back. They’re afraid they’ll seem stupid.
I disagree. I think plain, clear writing shows respect for your client’s time. I’m not alone in my belief. Folks like investor Warren Buffett of Berkshire Hathaway and former SEC chair Arthur Levitt agree with me. So does The Wall Street Journal.
Warren Buffett on plain English
Here’s what Warren Buffett says:
When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters…. They will understand plain English, but jargon may puzzle them.
Despite Buffett’s easy-to-understand style, plenty of financial sophisticates read his firm’s annual report.
By the way, Buffett’s quote comes from the SEC’s A Plain English Handbook, a great free resource.
Arthur Levitt on financial disclosures and language
Here’s former SEC chairman Arthur Levitt’s take on plain English:
For the language of financial disclosure, we need to raise the standard from “potentially understandable” to “impossible to be misunderstood.”
Take a few minutes to see if your writing passes “The Levitt test for financial risk disclosures.”
The Wall Street Journal
Almost every financial sophisticate in the U.S. reads The Wall Street Journal. The newspaper does a good job of making their content accessible to the less sophisticated. For some examples, see “Let’s get parenthetical.”
What about YOU?
What do YOU think about using plain English in your financial communications? What is one step you recommend to others who’d like to use plain English?
For more on plain English, see “Plain English and good writing.”
Image courtesy of ImageryMajestic / FreeDigitalPhotos.net
Communications need to resonate with 3 constituencies (in my view). Laypeople (smart but not knowledgeable), “amateur” professionals (smart, know something about investments), and experts (smart, know a lot and in depth). If I need to use the term “duration”, I’ll lose the attention of laypeople. If I say, “duration is roughly the time it takes to get 1/2 of your money back”, experts may think I’m an idiot! Communications have to consider a wide variety of readers. My suggestion is to use the technical terms when needed, accompanied by a plain English translation so that everyone gets it. “The duration of our bond portfolio was reduced this past quarter as we expect rising interest rates. Lowering duration effectively reduces the time it takes to receive all payments from the portfolio helps to reduce the risk of rising rates.”
That’s a reasonable response to a mixed audience.
I like how you explain “duration.” It’s not easy.
Thanks Susan. I have dealt with mainly mixed audiences in my career, so that’s why I try to cover all of the bases.
Of course, I made a mistake in my last response. My final sentence is missing the word “and” after the word “portfolio”. My editor is off for April Fools’!
You’re ahead of the crowd when you notice typos. Unfortunately, they happen to all of us, but dratted WordPress doesn’t let us correct our typos in Comments.
Unfortunately, a lot of folks don’t understand their subject matter well enough for them to write or speak clearly and simply about it. Impenetrable prose generally reflects tangled thinking.
You make an excellent point. It’s hard to write clearly when you don’t really understand your topic.
Long live plain English!
When investment professionals object to using plain English, it’s often a question of ego. They’re afraid someone–typically their colleagues–might not be sufficiently impressed with their knowledge of their subject. “We don’t want to dumb down our communication” reflects this insecurity.
But when have readers ever complained it was too easy to understand a document explaining their personal or their institution’s financial situation?
Harriett, that’s a great point that readers don’t complain that documents are too easy to understand. Thank you for taking the time to comment.