Head of Policy
In the sector press
We’re all guilty of it: creating language within our tribes, using words and acronyms that show others our expertise in the chosen subject matter. Whether football or business, charity or health, the languages of our specialist subjects emerge whether we like it or not.
Although it is not normally consciously created as a barrier, the definition of jargon as "words or expressions used by a group that are difficult for others to understand" implicitly involves befuddling the lay person.
Investment, of course, is no exception. There’s the technical jargon that describes investments, which brings with it the assumption of prior knowledge of assets, or things you can buy that hold value. Examples might be equities – owning a bit of a company – and bonds – lending your money in return for interest payments. But it goes much deeper than this. The investment industry makes communication unnecessarily complicated, rolling out investment reports that need translating.
Lucy Kellaway has spent years recording "corporate claptrap" and last year wrote a fantastic article on how to be "fluent in flannel". It’s available on the Financial Times website. Her guff rules include many that the investment industry swear by, in particular rule one – never use a short word when a long one will do – and rule two – use spin to disguise negatives. She points to Uber as an expert in rule two, having "underinvested in the driver experience" and being "in a reputational deficit" – or in her words having "screwed its drivers" and "its name is mud".
So I did a quick review of some recent investment reports from charity investment managers, and there’s plenty to prove my point. When discussing the outlook, "broadly constructive" and "cautiously optimistic" are two popular phrases, which I read as "we think it might go up, but we’re not sure because we can’t predict the future, so we’ll temper our enthusiasm with a get-out-of-jail adverb".
"Volatility in markets" is almost always used to describe falling values. And I’ve no idea where the fascination with animals comes from. "Hawks" and "doves" are used to describe people or institutions that have a view on interest rates. To be "hawkish" is to think interest rates should go up; "dovish" is to think they should go down. A bear market is typically one with falling investment prices; bulls are used to describe rising prices, although could be applied equally to the mumbo jumbo we spout.
Although I have spent an amusing half hour lamenting the nonsense my industry produces, there is a more serious point. In general, charity investors aren’t the experts that might represent pension funds or other institutional investors. And, unlike many individual investors, they don’t tend to use charitable funds to pay for independent financial advisers.
The lucky few are able to recruit investment experts to their finance committees, but more often than not the majority of trustee boards rely on their investment managers to translate the twaddle into plain English. Without that, as my research showed, it is difficult to build trust – an essential ingredient for charity investment success.
This article was originally published in Third Sector magazine in October 2018
Head of Policy
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