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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
  • De-gross
  • 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
  • Stack ranking
  • Tranche
  • Value at risk (VAR)
  • 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; Jan. 2, 2020; and Jan 29, 2021. I appreciate the support of my readers. Thank you!

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

Should you link to others in your blog?

If your blog focuses solely on your own content, perhaps it’s time to change. Consider incorporating links to other people’s content.

High quality links reflect positively on you. “…The ability to aggregate really strong links helps bloggers’ credibility,” as Sara Quinn says in Naveed Saleh’s The Complete Guide To Article Writing. A section of Saleh’s book, which aims at aspiring journalists, inspired this post.

1. Help your readers

Links to good resources help your readers by explaining things in detail that isn’t appropriate for a blog post. Links can also address concerns relevant only to a small subset of your readers. You avoid alienating your mainstream readers, while satisfying the appetites of the few.

I often link to articles to give examples of the points that I make in my blog posts.

2. Provide attribution

It’s not nice to quote someone’s words without giving them credit. These days it isn’t enough to simply name them, if a relevant link is available.

However, a link alone doesn’t give you free rein to use other people’s material. Check out the resources for understanding “fair use” in my blog post, Legal danger for financial bloggers: Two misconceptions, three resources, one suggestion. By the way, the “Legal danger” post is a good example of enhancing credibility to linking to resources.

What’s your policy?

Do YOU link to resources outside your blog or corporate website? What’s your rationale for your policy? I enjoy learning from you.

 

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.

Help your readers by linking to definitions

Using words that your audience doesn’t understand can cut your readership. That’s why I recommend using plain language or defining terms by writing parenthetically. But what if 95% of your readers prefer terms like “quantitative easing” and “duration,” but you want to accommodate the remaining 5%?

Link to online definitions, but cautiously

Glossaries can help you cater to a small number of less sophisticated readers. You can link from technical terms to their definitions. This works well in online content, such as websites, blogs, and even in PDFs that are read online. In printed documents, you can refer to a glossary at the back of the piece or at an easy-to-type online address. However, be aware that it takes a very motivated reader to click, read the definition, and then return to your document. I’d only use this technique when less sophisticated readers are a small minority.

You can find good definitions online, with glossaries such as Investing in Bonds, the Morningstar Investment Glossary, or the NASDAQ Glossary of Stock Market Terms. You can also do a Google search, typing “Define: Term.”

Don’t blindly accept any definition you find. Read the definition carefully to see if you agree with it.

Create your own glossary

Another approach is to create your own glossary that lives on your website. This may be the only solution if you have concerns about linking to third-party websites. Your compliance professionals may worry about seeming to endorse someone else’s website or being vulnerable to changes that occur in the content after you post your link. Plus, what happens if that page disappears? Broken links disappoint your readers and damage your credibility. Creating your own glossary gives you control over the definition and your readers’ access to it.

Another potential advantage: You can cross-link from your glossary definition to other relevant content. This could increase readers’ engagement with your website.

 

Image courtesy of  arztsamui at FreeDigitalPhotos.net

Updated 7/15/21

Plain language: Let’s get parenthetical

Plain language makes your documents more appealing and easier to understand. But circumstances may require you to use jargon. For example, you may be a financial marketer or professional working for bosses or departments that insist on using technical or unfamiliar terms.

You can help reader comprehension by explaining the term in the sentence where it first appears. Parenthetical explanations are useful, whether you literally enclose the explanation in parentheses or set it off using some other technique.

Here’s a good example from The Wall Street Journal (June 28-29, 2014), p. A2:

“We are in a Goldilocks-like age at the moment,” said asset manager Jack Flaherty, referring to markets perceived as not too hot and not too cold—just right.

Goldilocks is a colorful image for readers who grew up with the story of Goldilocks and the three bears. However, it has a specific meaning in a financial context, so it demands explanation. Otherwise, the reader may wonder if “Goldilocks-like” refers to folks who wander into other people’s houses or try out different beds.

Option 1. Explain technical terms between commas

One classic approach to explaining technical terms is to use the term and then add an explanation that’s set off between commas. Here are examples:

  • “And the duration of the index, a measure of how sensitive bond prices are to changes in yield, has risen to seven years from 5.8.”—WSJ (June 30, 2014), p. C6
  • “Much of the focus on the ‘Volcker rule,’ which bans most speculative trading by banks, has been on how it forced them to rein in trading desks.”—WSJ (July 1, 2014), p. C12
  • “Foremost is free cash flow, or what is left over to reward shareholders after investment needs have been met.”—WSJ (July 2, 2014), p. C1

By the way, I’m using examples from The Wall Street Journal to combat the idea that your sophisticated readers will be insulted if you explain technical terms to them. Plenty of very smart investment professionals read The Wall Street Journal daily. I’ve never seen one throw it aside in disgust with its style of writing.

Option 2. Put the plain language first

Another approach is to start with the plain language and then add the technical term or nickname, as in the examples below:

  •  “The Australian dollar, also known as the Aussie, has risen 6.5% against the year, making it the second-best-performing major currency after the New Zealand dollar.”—WSJ (July 2, 2014), p. C4 — This is an example of introducing the less familiar term parenthetically.
  •  “David Einhorn of the hedge fund Greenlight Capital recently observed that some companies he is betting against—or selling short, in Wall Street parlance — have become the targets of takeovers, even though, in his view, they have significant weaknesses.”—The New York Times (August 8, 2014)

Option 3. Avoid using the technical term

When possible, it’s great to avoid using the technical term. I bet nine out of 10 financial experts would have used the term “spread” in the following sentence: “Investors have flocked to the $1.6 trillion junk-bond market in recent years, attracted by the income the bonds paid above debt perceived as safer issued by investment-grade companies at a time of historically low interest rates.”—The Wall Street Journal (July 25, 2014)

By the way, if you need help talking your executives into using plain language, check out my MarketingProfs article on “Seven Ways to Talk Your Financial Execs Out of Jargon and Bad Writing” (registration required).

Avoid this option: Enclose the explanation in parentheses

Did you expect me to recommend the use of actual parentheses? I didn’t find any good examples of parentheses usage in The Wall Street Journal. Actual parentheses can be distracting, as explained in “Better writing without parentheses,” by my friend Harriett Magee.

 

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Simple language helps your readers, even when they understand technical terms

Plain language helps your readers, even when they understand technical terms.

The Yahoo! Style Guide makes a great point on this topic:

Even if more technical or sophisticated language is appropriate for your site, your readers will appreciate simpler language in the areas where their eyes are scanning to determine what a page is about.

Example of how to use simple language

How does this apply to you? Let’s assume, for example, that you’re writing a piece about the Barclays Capital US Aggregate Bond Index. That’s quite a long name—too long for a snappy headline or heading. If you were speaking face-to-face with bond geeks, you might refer to “the Agg” because you can judge from your conversation—and their faces—whether they understand your language. However, such “insider” language probably isn’t right for a printed piece.

What’s the solution?

You could substitute “bond index” or “investment-grade bond index” in your headline or heading. As Yahoo! suggests, this will help your readers to skim. If they don’t immediately realize you’re talking about the Agg, they’ll quickly pick it up when they dive into the body of your piece, where it’s good to be precise about your index.

Try using plain language. If you do it right, you’ll enjoy the results.

To learn more about plain language and other pillars of powerful written communications, check out the June 26 webinar, “How to Write Investment Commentary People Will Read.”

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.

Ammo for your plain-language battle with compliance

“Our compliance officer makes us write like this.” That’s the complaint I sometimes hear when I push financial professionals to write better. If you’d like to push back, consider the point made by Joseph Kimble in Writing for Dollars, Writing to Please: The case for plain language in business, government, and law. Kimble is a lawyer who has taught legal writing for 30 years at Thomas Cooley Law School.

Lawyers and compliance professionals say that legal jargon is necessary to protect your firm. However, Kimble suggests that jargon may be part of the problem. How’s that? Readers often fail to understand legalese and other jargon. As Kimble says, “…this in turn will be more likely to engender disputes and litigation that never should have happened in the first place.” This makes me think of some of my pet peeves, such as the use of “mitigate.

Plain language can be a lawyer’s friend. “If anything, plain language is more precise than traditional legal and official writing because it uncovers the ambiguities and gaps and errors that traditional style, with all its excesses, tends to hide,” says Kimble. I agree.

However, even when compliance professionals let writers use plain language in the body of a communication, they may insist on technical terms in the disclosures as a form of protection for the company. Kimble’s book suggests that technical terms are a small part of legal documents—and that would presumably include documents governed by FINRA and the SEC. Those bodies may require certain information, but they don’t normally require specific wording. Rather, legalese just gets copied from old forms and models. In fact, the SEC favors plain language. Kimble mentions the SEC’s plain-English rules and Plain English Handbook as one of the “historical highlights” of the plain language movement.

If you’re looking for evidence of the benefits of plain language, 60+ pages of Kimble’s book are devoted to evidence of how plain language is “saving time and money” as well as “pleasing and persuading readers.” His book is among the sources I mention in “Seven Ways to Talk Your Financial Execs Out of Jargon and Bad Writing” on the MarketingProfs blog.

 

Disclosure: I received a free copy of this book after mentioning it in another blog post. 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.