As my regular reader well knows, this blog often returns to the subject of the use of language in financial services, or more often its misuse.
I’ve been aware of one of the biggest and baddest examples since my earliest days in the financial world back in the mid-80s – “investment” as in “investment banking,” as opposed to “investment” in “investment management.”
When I first started doing this, I couldn’t get my head around “investment banking” at all. I was writing campaigns for long-since-disappeared investment banks like County NatWest and BZW without really having the faintest idea what they did, or how what they did fitted together, or how they made their money, or – in particular – why they were called “investment banks.” As I recall they usually consisted of three main business units – Corporate Advisory, which did pretty much what it said on the tin, Securities, which was institutional share dealing, and some sort of debt business which issued bonds for corporates. What they didn’t consist of was investment management, which was explicitly and emphatically separate and screened off behind a “Chinese Wall.”
You might say this linguistic confusion didn’t really matter much if all it did was confuse newbie copywriters, but recently it’s resurfaced in a much more challenging way – with this week’s reports of the Vickers commission’s plan to semi-separate and ring-fence UK retail banks’ “investment banking” activities.
Media reports have been generally approving of this, saying it’ll be a good thing if decent, ordinary retail customers are no longer vulnerable to the gigantic, roller-coaster-like profits and losses that can be made in the mad, casino-like world of investment banking, where billions are routinely lost and made on the roll of a dice.
All very well as far as retail banking is concerned. But what does the confusion around the word “investment” mean in this context, for consumers who are depending on financial institutions to look after their pensions and other long-term savings sensibly and responsibly over the long, worrying years till they get access to their money? It tells them that their precious life-savings are in the grasp of coke-riddled, wide-eyed, sweaty-palmed dice-rollers, risking their clients’ whole financial futures in a giant pin-striped lottery, that’s what it tells them.
This is disastrous for the investment management industry. If they had any sense, they’d pay the investment bankers billions of pounds to start using another word – any word, really, other than “investment.” But the funny thing is that as with so many of these language things, people in the industry no longer realise the risk that they’ll cause confusion – and so massive reputational damage is done to their industry, without anyone even noticing.