I am delighted to report that Altus (Finscape’s parent company) has recently moved into a wonderful new office in the heart of Bath’s riverside regeneration project. While I have personally managed to dodge any of the hard work associated with upping sticks and relocating a whole company, I have had occasion to review some of the paperwork that goes with such a move. In doing so, I was struck by the way an industry I’m not familiar with has hijacked words I thought I understood and redefined them.
It started with the original rental agreement and an email conversation about our demise. Having checked that we weren’t about to go bankrupt, I read on down the chain and deduced that demise is actually a term used to define the part of a building that a tenant has leased. Next came the cost of dilapidations on our current office. Initially, I thought that was fine as we’d improved the office with smart new meeting rooms, better soundproofing, and a shower. Then I discovered that dilapidations meant paying someone to take all the improvements out!
Once I’d got over that little misunderstanding, I decided to cheer myself up by visiting the new office to see how the fitout was going. Walking through the front door, everything looked incredible until the site manager told me we had a problem with a manifestation! How on earth could a brand-new building be haunted? Apparently, in commercial property parlance, manifestation is a fancy word for frosted glass and one of our panes wasn’t quite right.
The requirement to re-learn the meaning of words I thought I understood made me think about the world of investments and whether our industry might confuse its customers in a similar way. Security, for example, is a word that most people associate with safety and reliability; we use it as a catch-all for some of the most volatile assets in a portfolio. Speaking of which, portfolios had been carrying papers for centuries until Harry Markowitz appropriated the term for his investment diversification theory.
Read the small print of most online trading platforms and there will be some reference to custody, a word that most punters (and Google if you search for an example) would associate with divorce settlements. How about liquidity? Investing in drinks companies? These days conversations about gearing usually involve references to Shimano (if you like Lycra) or ZF (if you’re a petrolhead). Settlement has nothing to do with subsidence, hedge funds don’t invest in topiary and let’s not even think about the images that best execution would conjure up for most of the population!
Not that our industry makes things any clearer when we invent our own terminology. Accumulation, equalisation, transfer agency, depositary, none of the terms are particularly intuitive. And that’s before we get to acronyms like OEIC, ACD, NAV and KIID. It’s not just end investors that get confused by this stuff either – as someone who has written business requirements specifications for investment software, I can tell you that the arcane language of investments has caused plenty of misunderstandings within the industry too!
All of which explains why we kept the language of Finscape dashboards simple. Assets Under Management, Inflows, New Clients and Opportunity are deliberately familiar and straightforward terms. Behind the scenes, a lot of complex software and processing power goes into pulling together the data required to deliver those numbers, followed by some sophisticated data science to present them in one deceptively simple summary.
For data junkies, it’s always possible to drill into the detail of any of those figures, simply by clicking on them, to examine all the atomic data points that go into producing each KPI. However, there really is no need…. as Leonardo da Vinci said ‘Simplicity is the ultimate sophistication’. Could someone please tell our landlord?