Posts

Avoid embarrassment by hiring knowledgeable writers

The other day, a prospect asked me for an example of a time that my financial knowledge saved someone from making an embarrassing mistake. I couldn’t think of anything then. However, something soon happened that reminded me of the benefit of working with a writer knowledgeable about your field.

Embarrassing misunderstanding

Something didn’t seem right when I read an article draft referring to an advisor using “advanced quantitative research (AQR) funds” in client portfolios.

I’ve never seen AQR used as an acronym for a style of investment management. Also, I know there’s a firm called AQR. A Google search took me to the website of AQR Capital Management, an asset manager that pursues “systematic investing” that’s available in mutual funds, as well as in separate accounts.

I asked the writer to check whether the original reference was correct, or did the advisor use AQR Funds, meaning funds managed by AQR Capital Management, with his clients?

Sure enough, the advisor used funds managed by AQR Capital Management. Luckily, we caught the error before anyone outside (or inside) the firm spotted the error. The embarrassing mistake didn’t see the light of day.

Filling in blanks

From experience, I knew what my client meant when her draft referred to the lower interest rates of the past year. But would her clients get it?

Most non-financial folks don’t follow rates closely—unless they’re mortgage shopping or applying for some other type of loan. To save my client time, I looked up and dropped in information on the fed funds and 10-year Treasury rates.

A non-expert could have asked “What low interest rates?” A more knowledgeable writer can fill in the blanks, saving time for the client.

Avoiding compliance problems

Knowledgeable writers minimize your problems with compliance. Writers who haven’t worked in investment or wealth management are likely to run into problems. Sure, they’ll make a strong case for the benefits of your recommendation. They’re also likely to step over the lines of what compliance considers permissible.

For example, they might say, “This investment will boost your returns.” They won’t be familiar with the prohibition against guarantees or with the hedging language beloved of compliance professionals. They won’t have gone through formal compliance training. They won’t even have the informal training that I discuss in 6 tips to keep your compliance officers happy.

Other benefits of knowledgeable writers

Knowledgeable writers will:

  • Ask better questions because they understand the issues raised by your topic
  • Write in a way that’s easier for readers to grasp because the writers understand jargon and can convert it into plain English

What if your writer isn’t knowledgeable?

You can’t always find knowledgeable writers. Or, maybe you can’t afford them—they do charge more than novice writers.

Here’s how you can prevent an AQR-type mistake (or at least make it less likely):

  • Avoid jargon when presenting information to a writer. If you work mostly with individuals and families—rather than institutional investors—that’s always a good practice.
  • Read drafts carefully and critically. I believe the advisor referred to above had a chance to read the article before I saw it.
  • Get more than one person to proofread your piece. Different people catch different mistakes.

Using a less-knowledgeable writer isn’t all bad. As I said, your writer may be more affordable. And, you may benefit from using an inquisitive less-knowledgeable writer, especially if you’re writing for a less-sophisticated audience. If your writer forces you to explain things in plain English, the article that results may be easier for your readers to understand. At a minimum, a less-knowledgeable writer should deliver a grammatically sound article that reads well. However, you may need to correct mistakes or misconceptions in their drafts.

You may need to try—and see the drawbacks of—a less-knowledgeable writer before you make room in your budget for someone more experienced. Many of my clients have come to me after unhappy experiences with writers who lacked specialized knowledge.

Underline your way to less financial jargon

Using less financial jargon is a goal that most writers can agree on. But how can you get there? Reading Helen Sword’s Stylish Academic Writing, a book that’s useful for non-academics, too, gave me an idea.

Here’s a suggestion from Sword:

If you suspect that you suffer from jargonitis, start by measuring the scope of your addiction. Print out a sample of your academic writing and highlight every word that would not be immediately comprehensible to a reader from outside your own discipline.

Underlining the jargon would also be a great first step for financial writers. But simply underlining what you perceive as jargon won’t get you to your goal of using less financial jargon. I  have some suggestions for you.

1. Ask a member of your target audience to help

Your perception of jargon and your target audience’s perception may differ. For example, in a comment on my post, “Words to avoid in your investment communications with regular folks,” Dan Sondhelm said, “I teach portfolio managers to not say anything to do with a ‘bet’ or ‘exposure.’ ” Those words—especially “bet,” a one-syllable word that’s widely used by regular folks—may not sound like jargon to a financial project. However, in context, a member of your target audience may be confused.

To get a sense of your target audience’s perception, ask one of them to underline words in your sample. Don’t specify that they’re looking for jargon. Instead, ask  them to underline words that they’re not sure they understand in your context.

If your volunteer doesn’t underline much, perhaps they’re embarrassed to reveal their ignorance. Another test is to say, “Please explain this text in your own words.” If they parrot back your vocabulary, you must be using jargon—or writing in a way that’s difficult to understand. Either way, you’ve gained valuable feedback.

2. Rewrite your sample’s jargon-heavy sentences in at least two different ways

Play around with different ways to rewrite your jargon-heavy sentences. Then, let your rewrite sit overnight, at a minimum. The ideas will marinate in your head while you wait.

You may come up with your best rewrite on your last attempt.

I know you can’t invest this much time into writing every time. But doing it occasionally will shake up the way you think about writing.

3. Look up jargon in dictionaries or glossaries

Sometimes people use jargon because they don’t understand their topic well enough to use plain language.

Looking up jargon in one of the online resources I mention in “How to make one quarterly letter fit clients at different levels of sophistication” (see point #4. Provide a glossary), will help you to understand it. Then, you can replace the jargon with wording that your readers can grasp.

YOUR suggestions for using less financial jargon?

I’m curious to hear your suggestions for cutting the amount of jargon in financial writing.

 

Disclosure: If you click on the Amazon link in this post and then buy something, I will receive a small commission. I only link to books in which I find some value for my blog’s readers.

 

Image courtesy of stockimages at FreeDigitalPhotos.net.

Words to avoid in your investment communications with regular folks

Big words make your readers work harder to grasp your message. This is particularly true of jargon, such as “duration,” unless your piece is strictly for investment professionals.

Below are some words to avoid when communicating with regular folks. Most of them are financial jargon. Others—like “mitigate“—are unnecessarily long or confusing. Replace jargon and long words with shorter, less technical words that pack more punch. They also make it easier for readers to absorb your message.

  • Accommodative monetary policy
  • Active share
  • Alpha
  • Barbell
  • Basis points
  • Beat, when used as a noun to refer to beating analyst forecasts
  • Bet
  • Conditional value at risk (CVAR)
  • Constructive, as in “we are constructive on small-cap stocks”
  • Contango
  • Convexity
  • CorrectionCorrection means something different to individuals than to investment professionals
  • Degross
  • Disseminate
  • Downside deviation
  • Drawdown
  • Duration
  • Ecosystem
  • Efficient frontier
  • Ex-, as in “ex-Japan”
  • Expected return
  • Exposure
  • Flight to quality
  • Headwinds/tailwinds
  • Inverted yield curve
  • Kurtosis and other statistical terms (copula, eigenvectors, semi-deviation, subadditivity, etc.)
  • Leverage
  • Levered names
  • Liquidity
  • Long/short
  • Mean-variance optimization
  • Mitigate
  • Modern Portfolio Theory
  • Monte Carlo analysis
  • Orthogonal, which apparently is used to mean “uncorrelated,” although that doesn’t appear in the dictionary definition of the word
  • Pricing power
  • Rerate
  • Reversion to the mean
  • Risk assets
  • Risk on/risk off
  • Risk premium
  • Risks to the upside
  • Secular
  • Sharpe ratio
  • Size up
  • Spanning a broad risk/return spectrum
  • Spread product—a Google Alert on “spread product” yielded results related to margarine and Vegemite
  • Tranche
  • Value traps

On a related note, don’t use acronyms without first defining them. This means words such as AUM, CAGR, CAPM, CLO, DOL, EBITDA, EPS, LIBOR, MBS, MLP, TTM, YOY, and YTD. It’s often best to avoid acronyms completely. I’ve discussed this in “How to capitalize financial acronyms.”

If you’re writing an educational piece for regular folks

It’s okay, even admirable, to educate your regular Jane or Joe investors about complex financial concepts.

When you write to explain technical vocabulary, make sure you:

  • Define your terms using plain language. You can introduce the technical terms and then define them using the techniques in “Plain language: Let’s get parenthetical.”
  • Mention the WIIFM (what’s in it for me) so readers know why they should slog through the explanation.
  • Explain the benefits of the complex financial concept for regular folks. For example, don’t use a multi-billion dollar pension fund as your key example unless your readers are participants in a similar plan.
  • Use analogies, where possible, because they’ll stick in your readers’ minds better than dry explanations.

Must you bore sophisticates?

You may worry that your content will bore sophisticated readers if you go easy on technical vocabulary. No, you won’t. Not if you do it right.

Read “How to make one quarterly letter fit clients at different levels of sophistication” for my take on how to keep everybody happy.

If you’re communicating with other investment professionals

Some jargon is okay if your communications go exclusively to other investment professionals. In that context, jargon can act as a kind of shorthand. For example, “basis points” can be used in a way that’s more precise than “percent.” “Spread product” is more concise than the definition of “spread product.”

However, if you’re targeting institutional investors, don’t assume that they’re all sophisticated consumers of investment content. An investment committee, for example, can include less sophisticated members.

Still, there’s no need to make your professional communications overly complex or wordy.

Your suggestions for words to avoid?

If you can suggest words to avoid in your investment communications, please share them in the comments.

 

Updates: I updated this on April 6, 2017, and Dec. 20, 2019 to add words suggested by my readers. I also updated on Dec. 16 and Dec. 23, 2019; and on Jan. 2, 2020. I appreciate the support of my readers. Thank you!

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

Your “lollipop” doesn’t say what you think

Choose your words with attention to the many ways they may be interpreted. As a hike in the Rhode Island woods reminded me, your terminology may not convey the message you intend.

On a muggy summer day, my husband and I set off on a “2.3-mile lollipop” hike. Quickly eyeballing the trail description, my husband assumed that “lollipop” meant it was an easy hike, appropriate for little kids of a lollipop-loving age. Not so.

It turned out that lollipop referred to the trail’s shape. A path as straight as a Tootsie Pop’s stick led to a circular trail. As you can tell, the author’s lollipop image was misinterpreted by a reader in a hurry.

The author could suggest to my husband that he read more carefully. After all, if my husband had read the trail summary, and compared it to the map that appeared four pages later, he could have grasped the analogy. But it’s not realistic to expect everyone to read at such length and with such attention to detail.

In this case, writing “lollipop-shaped” trail could have guided my husband to the right conclusion, which making the trail’s shape memorable through the use of an analogy.

What are YOUR lollipops?

Are there financial terms that your readers find just as confusing as lollipop was in my example?

Do you find “lollipops” in writing about investments and personal finance? What are they, and how can we describe them better?