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Mastering Financial Jargon

The Importance of Buzzwords

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Financial Jargon Overview: Mastering financial jargon is an important way to demonstrate your expertise to other people in the field. This is especially critical when you need to make favorable impressions in a hurry. On the other hand, having just a superficial knowledge of what the terms mean, without a plain-English grasp of the underlying concepts, can prove disastrous in the long term. In particular, if your position involves working with members of the general public who do not understand financial jargon completely, your effectiveness depends heavily on being to able to communicate with them in jargon-free language.

Financial Jargon Case Study #1: One of my superiors at AT&T, henceforth called Mr. X, was an outstanding example of how mastering the use of jargon can create the illusion that you know a lot more than you actually do. He had a mind like a steel trap when it came to buzzwords. Superb memory, along with glibness and audacity, helped him impress his superiors. He also had a keen eye for talent, making sure that top-notch people worked for him. Taking credit for all they did (when things went well, of course) was another key ingredient in his personal recipe for success.

I was under one of Mr. X's direct reports during my final 17 months at AT&T. In what would prove to be my penultimate month on that job, before I accepted an offer from Touche Ross, he burst into my office in an agitated state (as he always was) and said that we had to talk, urgently. As we marched into his office, Mr. X told his secretary that he didn’t want to take any calls. He shut the door behind us, handed me a marking pen, gestured me towards the white board that filled one wall, and sat down.

"Tell me all you know about cost accounting," he said.

"That’s a very broad topic. I only took one semester of it while I was at Wharton," I replied.

"Great. That’s more than enough. Tell me what you know."

So, for somewhere between one and two hours, I surveyed the highlights of cost accounting. Mr. X asked the occasional clarifying question, but he mainly sat back and soaked in my lecture. He took few, if any, notes.

About a week later, Mr. X was announced as the chief financial officer (CFO) of a new joint venture between AT&T and the state telephone company in Spain. This was a plum job, as he described it: a big pay increase despite a much shorter work day, which included lengthy midday siestas and workday tennis breaks. When I related my story to my workmates, no one doubted for an instant that I had armed Mr. X with more than enough buzzwords to pass his interview for that CFO post with flying colors. Being a native speaker of Spanish certainly was another big plus for him. This took place in 1985. A few years later, I chanced upon an interview with him on PBS' The Nightly Business Report with Paul Kangas. By then he was president of AT&T Mexico. A former colleague told me that Mr. X had returned to a post in the U.S. with AT&T by the early 1990s, but that is the last I heard of him.

Moral of the Story: Even if what you know is rather superficial, you can turn it to great advantage with deft presentation and lots of nerve. A word of caution: this is risky business if you're dealing with someone who knows more than you do about the subject in question. If you get caught not knowing something fundamental and basic, it will expose you as being a pretender.

Financial Jargon Case Study #2: Follow this discussion of loss leaders for an example of how, by finding gaps in their knowledge of fundamental jargon, you can expose phony experts.

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