The Dangers of Finance Jargon (Musings after the CFA Institute Research Challenge)

I just came back from the US to watch my son compete in the prestigious CFA Institute Research Challenge (IRC) in Atlanta, Georgia. Enrique and his teammates Shaun, Sarah, Jayhan and Kyle from the Ateneo de Manila University represented the Philippines (having won the national championship on January 23, 2015) and Asia Pacific Region (having won the regional championship on March 12, 2015).

The CFA IRC is an annual global competition that provides university students with hands-on mentoring and intensive training in financial analysis. It may well be today’s most prestigious global competition on financial analysis. A total of 4,000 students from 850 universities around the world joined the competition and that afternoon, it was down to four teams competing for the global championship. Being in the audience composed of top finance students and CFAs (Chartered Financial Analysts) all over the world and listening to the CFA leaders’ speeches reiterating their mantra during the event, “The future of finance starts here,” I can’t help but feel how important that crowd was in shaping the world’s future. Not just Finance but the entire economy because Finance propels the world’s economy and we’re still fresh from the havoc of 2008 and still remember what unscrupulous money people coupled with the general ignorance of those highfalutin severely mutated financial instruments brought upon us all.

Premise:

I am not anti-Finance because I am a Finance person, having been an investment banker before I decided to be a full-time mother. In fact, I suggest that we all read Finance and the Good Society written by Nobel Prize winner and esteemed Finance professor Robert Schiller in order to bring back that much needed trust in Finance people and the Finance industry in general. I heard that after the 2008 crash, finance people snatched the title as the most distrusted profession in the world from the lawyers. 🙂

Finance Presentations

First of all, I must say that all the contestants in this competition were really good. The amount of work they put in is evident. I know this because I saw first hand how much time, effort and sacrifice for seven months my son and his teammates put into this for them to get to the global finals – all the financial models they prepared, the interviews, research, report preparations, the challenge of condensing that enormous body of work to a 10 minute presentation divided among five presentors, plus long sessions of brainstorming on how to answer the questions that the judges will throw at them during the 10 minute Q&A portion. I tell you, it’s not as simple as answering a Miss Universe question that a world peace with a witty twist answer can get away with. They answered complete with slides (either used in the presentation or prepared in anticipation of questions).

I’m sure all the adult CFAs holding the most prestigious positions present during that day would agree with me that those kids would beat them if they were to do those presentations side by side!

Unfortunately, I still observed, that In general, the layman would still find finance presentations either of the two:

1.) Boring; or

2.) Intimidating.

Most of the time, it’s not even an “or” but both 1 and 2. Finance presentations, at least the typical ones, lose the attention of their audience in the first few seconds when they start flashing those graphs with tiny numbers that don’t make immediate sense to the listeners. I must be honest here that despite understanding the finance jargon (at least most of the terms), and knowing how much work these kids put into their reports, I still had to keep myself from yawning as a sign of respect to the presentors.

So why is this so?

1.) Are Finance people really boring?

Of course, I’d like to believe otherwise. That very same night after the competition, there was dinner and dancing at a bar near the hotel and all the people looked crazy-normal just like any other group in a bar. They (We) were all dancing with gusto, both on-beat and off-beat. They were also drinking and yelling and jumping, not at all boring or nerdy-looking to me.

I remember a story of a movie producer who had dinner with my sons to talk to them about their possible interest in showbiz after she saw their dance posted on You tube. She shared with us, “I used to be an accountant in the US but you know naman how boring finance could get…” Of course, she didn’t know that the parents of these kids she was talking to were both Finance people. I ended up defending our pack but I guess she wasn’t totally wrong, because as I said, even I, find a lot of the finance presentations boring!

Among the well-intentioned advice to the Philippine team’s presentation was to tone it down, not to be flamboyant, but more serious-sounding. You see, my son who did the opening and concluding parts of their presentation, loves presenting and he respects his audience that much that giving a boring presentation is the last thing he wants to do. Steve Jobs is his peg for a great presentation – interesting, intriguing, goes straight to the point, moves the audience to action, and no small fonts on your slides please, just big words and images that add impact to what you’re saying.

In their global presentation, his opening line was, “Investing. More fun in the Philippines!” I think he had to stand his ground to keep that “flamboyant” line. He was happy he did because it elicited smiles and soft laughter from the reserved Finance audience.

It bothers me why the norm of finance presentations should be reserved (with the risk of being boring), not “flamboyant.” When you check the definition of the word flamboyant, it says “tending to attract attention because of exuberance, confidence and stylishness.” Synonyms are exuberant, confident, lively, animated, vibrant – adjectives that to me make a good presentation, don’t you agree?

So if Finance people are not boring, why do they allow or even prefer their presentations to be boring? This brings us to the second question.

2.) Do Finance people want to keep the mystery in their work and sound intimidating?

If presentation is a means of communication, then regardless of your field, you should apply the principles of effective communication. Simple, interesting, concise and moves the audience to action.

But what do we always see in finance presentations? A vomiting of numerical data. And this holds true even for some seasoned finance presentors. I am not saying that these numbers are not important. Sure, one has to go through all the financial models and computations that are necessary to come up with the right decision, but in presentations, I guess you have to sift through and just show in your slides the necessary data that are important for the decision making of your audience.

This aspect reminds me of a comment by one of my colleagues when I had a five year stint as a Financial Consultant in a USAID project on renewable energy. We were discussing what to include and what not to include in the report. Back in college at the Ateneo, our teachers always reminded us to be concise in our reports, but my colleague, also an Atenean, gave this remark, “I also want to make this report concise, but knowing them, I think they expect us to make our reports long with a lot of numbers and data in order to justify the fee!”

Sometimes I wonder if this is the same reason why most finance reports and presentations are long, uninteresting, intimidating. Is it a way to justify the fees? Plus, the more intricate-sounding it is, the more it becomes exclusive only to the big F boys.

I rebel at this thought. Finance should never be exclusive and excluding because Finance is everybody’s business. And because of this, it is even the responsibility of Finance people to make it interesting, engaging and easy to understand for all.

3. Is this an Emperor’s New Clothes Syndrome?

Do you remember the story of The Emperor’s New Clothes? It is a short tale by Hans Christian Andersen about two weavers who promise an Emperor a new suit of clothes that is invisible to those who are unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, no one, not even the emperor, dares to say that he doesn’t see any suit of clothes until a child cries out, “The Emperor is not wearing anything at all!”

Sometimes I wonder if there are Finance people out there who don’t understand all those highfalutin terms, who find those presentations boring, but just don’t want to say it because of fear of being branded as dumb, stupid, incompetent, unworthy of belonging to the big F boys’ club?

 

There are dangers in keeping Finance talk boring and intimidating.

1. Less people will be interested to enter the field. Don’t you notice how kids these days opt for the seemingly more exciting marketing, advertising, etc. and shy away from Finance because it looks boring?
2. Less people will get hold of their finances well. Because of the tendency to look at finance as intimidating, the regular folk can’t get a good grasp of how he should map his saving and investing. And we wonder why only less than 1% of our population is investing in the stock market?
3. In 2008 we allowed severely mutated financial instruments that probably not everybody understood to proliferate because of the Emperor’s New Clothes Syndrome. Maybe nobody dared to shout, “The Emperor is not wearing anything! There’s nothing in these instruments!” soon enough because nobody was brave enough to say, “Wait I don’t understand it!”

These are real dangers of keeping the Finance jargon exclusive, excluding, boring and intimidating. Nobody wants all these to happen.

These thoughts have been running in my mind years ago, way before the CFA IRC happened, and that is why part of my advocacies is to really make Finance more palatable to the general public. I guess my training came when I decided to be a full-time homemaker. I would always explain the books I read to my young kids in a language that is easily understandable, interesting and fun. And these books included The Intelligent Investor and other Finance books.

I will unabashedly say that the Philippine team may not have won last Friday’s global championship but they gave the best presentation, not only from this biased mother’s perspective but from their peers as well. After all four finalists (Asia Pacific, Europe and two US teams) delivered their presentations, there was a 15 minute break for the judges to deliberate. During that time, a lot of people already approached the Philippine team to congratulate them. However, the judges didn’t agree with the common sentiment. But of course, the decision of the judges is final and must be respected.

 

After the awarding ceremony, when the Philippine team emerged out of the room, they were greeted with a warm and long applause. It was truly touching that I teared up. During this time and way into the dinner and dance party at the nearby bar, a lot of the people approached to congratulate them for a great presentation, “You should have won!” or “In my scorecard, you’re the winner!” Some of the students were even asking how they prepared for it, “Man, you looked so confident walking around the stage, you weren’t even looking at your slides. How did you do that? How were you able to put up your slides right away to answer the questions of the judges?” Another one (among the finalists) said, “My mother watched the livestream and said, ‘You did well son, but you’re only second to the Philippines!’ and that’s already my mother talking!”

The following day, while my husband and I were talking to our son, he seemed okay and not bitter at all. It was also the first time we learned from him how thoroughly they prepared, even for the minutest details of their presentation (e.g. how to pass the mic without distracting the audience, how/who manipulates the clicker at certain parts of the presentation, how to put up the slides relevant to the answer being given during the Q&A, how they prepared and indexed the slides ready for flashing should there be questions on the financial models, how to get cues from each other on who will answer the questions and divide the airtime as evenly as possible among the five of them during the Q&A, and many more!) All these, he said, paid off because they all felt they gave their audience a great presentation. They were definitely overwhelmed by the praises and congratulations from their peers. What also struck me was this remark, “Ma, some were asking us about the low market penetration rate of 6% and other specifics we mentioned in the report. I was happy to know that they understood our report and got them engaged in one go! To me, that IS THE recognition.”

To that I said, “Well, maybe your role in the industry is to help make Finance more fun, engaging and easy to understand for all!”

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ANNOUNCEMENT

Given the right approach, Finance is Fun! Join us on May 9, 2015 1:00-5:30pm together with the whole family in an afternoon of learning and bonding in the FAMILY FQ WORKSHOP BY THE FAUSTOS at the SMX Convention of SM Aura, Taguig City. Click this link to find out more about it: https://fqmom.com/family-fq-workshop-by-the-faustos/

To watch the CFA IRC presentations, click this link:

link: http://livestream.com/livecfa/RC15-FINALS

Attribution: Images from cspdsmc.wrdpress.com, marinarnfiles.wordpress.com, CFA logo from their website, photo from the CFA IRC on April 17, 2015 put together by the author to help deliver the message of the article.

Tags: CFA, IRC, Institute Research Challenge, Finance is fun, Family FQ, Family FQ Workshop, Family FQ Workshop by the Faustos

This article is also published in PhilStar.com and RaisingPinoyBoys.com.