In the latest in a monthly series of DC columns from Newton Investment Management, Catherine Doyle says stripping out jargon and keeping communications simple is key to creating greater inclusiveness and winning round lay DC members
As we turn the page to 2018, the world feels like a complex place, with geopolitical developments, political chess moves and volatile markets. All this makes for a complicated picture and one that is hard to read.
Defined contribution (DC) is one of the few areas of finance in which complexity is viewed unfavourably. The ability to communicate clearly and simply to members is prized, particularly in a world where individuals are too busy being assailed by social media and a multitude of other distractions to focus on their pension pots.
And yet human beings are drawn to complexity. We enjoy being dazzled by jargon, a fact frequently exploited by advertising companies. The more intricate and scientifically erudite a formula sounds, the more likely we are to give credence to it. Indeed, as one financial participant pointed out when focusing on a somewhat different sphere, how many people really know what probiotics are and how they interact with gut flora? Despite this, we are lured by their apparent superiority as such products sound impressively complex. In contrast, simplicity can be challenging to deliver and does not have the mystique or aura of complexity. It may even sound dull, prosaic or perhaps lay us bare to unwelcome questioning. Such vulnerability may not be welcome in a world where language is often used as protective armour.
These thoughts bring me to the world of pensions, and the energy we expend as an industry shrouding our investment strategies in technical wizardry and its associated jargon and acronyms. Why is this a problem if human beings are programmed to bask in complexity? While some areas of investment are undoubtedly challenging to distil in a few words, others can and should be expressed in simple language for lay DC members, without the need for the recipients to tune in to some rarefied code. Stripping back the jargon can be the ultimate act of inclusiveness and result in a much greater appreciation of an investment strategy and of pensions as a whole; indeed it is something we have strived to embed in our own diversified growth funds. As an industry, we still have a way to go to achieve this worthy aim but, by resisting the temptation to elevate what we do to heady technical spheres, and by endeavouring to keep strategies rooted in more familiar concepts, we will have a greater chance of winning our audience round and fostering greater engagement among DC members.
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