Soup Du Jour: Alphabet Soup
“Excuse me, sir. Seeing as how the VP is such a VIP, shouldn’t we keep the PC on the QT? ‘Cause if it leaks to the VC he could end up MIA, and then we’d all be put on KP.” If find yourself re-iterating the same phrase as Lieutenant Steven Hauk, (“I would like to leave the room now,”) after hearing this delightfully funny, yet confusing, line from Robin Williams in Good Morning Vietnam, then you probably share the same sentiment about acronyms as I do.
Now don’t get me wrong, I have been guilty of using acronyms and abbreviations myself and there are situations where they have a tremendous benefit for the speaker and audience. For instance, memorability and ease of use come to mind. Ask yourself, would it be easier to remember to bring your Self-Contained Underwater Breathing Apparatus on your next dive, (let alone trying to type it on a tiny keyboard or even saying it out loud) or your SCUBA. After all, we live in a world that now seems relegated to communicating in 140 characters or less, so one can see why their use has become almost a second language.
The financial services industry is notorious for using acronyms and I cannot tell you how many times I have attended a conference where the speaker throws out a few, only to watch attendees desperately google them on their phones.
At Northland Wealth we pride ourselves in our ability to communicate effectively with the families we serve, and amongst ourselves internally. A good rule of thumb is to always spell out any acronym before we use it. It could be quite confusing to sit down with your AR (Advising Representative) which used to be called a PM (Portfolio Manager), and have them tell you they have made an allocation to a PE (Private Equity) fund that has undergone a years’ worth of DD (Due Diligence) and is expected to have a double digit IRR (Internal Rate of Return) with an approximate 1.2x MOI (Multiple On Investment). This can be confusing enough even without the acronyms.
In addition to actually spelling it out we also take the time to ensure our clients are not only familiar with the acronym itself, (that’s one thing), but we also want to make certain they have a solid understanding of what that acronym actually means. Simply stating, for example, that an investment achieved an IRR (Internal Rate of Return) of 18% versus a TWRR (Time Weighted Rate of Return) of 13% means nothing whether it is spelled out or abbreviated, if everyone in the discussion does not have the proper context and education.
Our second rule is to make a conscious effort to only use them occasionally and where it is appropriate to do so. It is one thing for a CFA (Charted Financial Analyst) holder at the firm to introduce themselves as a CFA to the manager of an L/S (Long/Short) hedge fund, but we would most certainly not introduce ourselves as such to a prospective or existing client of the firm as Grant Dawes, CIM, and PFP. (Chartered Investment Manager & Personal Financial Planner)
Lastly, our third and final rule is: when in doubt, ask for clarification. It can be difficult to ask sometimes, especially in a group setting, but believe me when I say that there are probably other people in the room who have the same question regardless of their level of expertise. The last thing we want to have happen is a situation that leads to confusion over what is being discussed. Both parties may end up walking away feeling confident about what was communicated but in reality both are on completely different pages. I recall the first time I heard the KISS (Keep It Simple Stupid) method and well, it could have been extremely embarrassing if I hadn’t asked for clarification.