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How Likely Are You to Be Influenced by Financial Jargon?

How Likely Are You to Be Influenced by Financial Jargon?

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Generally speaking, the financial advisors at credit unions are too customer-centric to use an excess of financial jargon. The same cannot be said for all financial institutions, but credit unions seem to have this quality in common – one that makes them favourable to many investors.

But financial jargon is unavoidable, to some extent. You’ll still hear it in conversation, in line at your local coffee shop or on the news. And one thing we’ve noticed is this: If you’re young, male, make a lot of money and like the sound of your own voice, you’re way more likely to be influenced by financial jargon than most.

But don’t take our word for it. It’s the point of view of Morgan Housel, in his brilliant (and funny) article Stupid things financial people say.

My job requires reading a lot of financial news. It's one of my favourite parts. But it gives me a front-row seat to the downside of financial journalism: gibberish, nonsense, garbage, and drivel. And let me tell you, there's a lot of it.

Finance is often portrayed as a complex and difficult area of decision-making, where interactions commonly are characterised by jargon, acronyms, and slogans. This provides a hotbed for technically opaque language to thrive and – in doing so – delude the consumer.

Mr. Housel quotes some examples:

  • They don’t have any debt except for a mortgage and student loans
  • Earnings were positive before one time charges
  • Earnings missed estimates

As Mr. Housel observes: “No. Earnings don’t miss estimates, estimates miss earnings. No one ever says ‘the weather missed estimates.’ They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.”

The World of Finance is Full of Doublespeak

The essence of financial jargon is not that it’s false, but that it’s phoney. Take the expression “I’m cautiously optimistic about the future of stock A.”

“Cautiously optimistic” is an oxymoron, an example of contradictory terms being used to state an implausible fact.

And what about, “we expect more volatility”? The markets are volatile – they fluctuate all the time. If someone said to you, “I expect more winters” would you take them seriously or roll your eyes? Certainly not the former!

The one we like the best is “We look where others don’t.” Jargon-loving financial advisors use this expression frequently and, almost always, it’s an attempt to deceive. Take the observation with a pinch of salt.

Conclusion

Although we could write a book about the uses and misuses of financial jargon, in our experience:

  • Levels of education make no difference in the financial jargon scale.
  • The biggest dupes for financial nonsense, as mentioned earlier, tend to be young, over-confident, high-income males.
  • Women, in contrast, are the opposite. They typically hate financial jargon with a passion and prefer the use of simple, straightforward explanations.
  • People with a higher ability for detecting financial nonsense tend to feel less secure about their finances. They take nothing for granted.
  • Liars concede that truth matters. Which is why financial jargon is a greater enemy of truth than lies are.

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About the author

An avid sportsman (tennis, rock climbing/hiking, diving), prolific reader of biographies, world traveller – some of the many interests that define Geoffrey Bailey. He’s also a widely published newspaper and magazine journalist, author of two bestselling books, and a former advertising agency creative director. Working in tandem with Allyson on Everything Retirement content, Geoffrey provides impeccable research and insight into the issues and interests (from financial to social) that concern today’s retirees.