Scott Burns: ‘Equity’ versus the euphemism
December 22, 2010 by Scott Burns
By SCOTT BURNS Universal Press Syndicate
Dec. 21, 2010, 10:33PM
Words are important. Recently, for instance, Sheryl Moore declared war on MoneyWatch personal finance columnist Allan Roth. Moore is the CEO of www.annuityspecs.com, a website she founded that offers support for those who sell equity indexed annuity products. She is also a self-appointed defender of what she calls “fixed index annuities.”
What had Roth done? He called her chosen product an “equity indexed annuity” when the industry now likes to call them “fixed index annuities.”
To show Roth the importance of word choice, Moore vowed to deliver a petition with hundreds of thousands of signatures from offended members of the insurance industry. She also promised to include signatures from the chief executives of every major vendor.
Roth has accepted her challenge — if she delivers 200,000 signatures and the signatures of every insurance CEO whose company sells the product.
Over the top?
We normal human beings might think the whole deal is a bit over the top, but that would reveal our lack of theatrical imagination. So let’s work on this a bit.
Remember Amazing Grace, the wonderful movie about the fight to end the slave trade in England? Well, this could be something like that. Moore could gather the signatures. She could bring them to Roth in a nearly endless scroll.
With a flourish similar to the gestures of William Wilberforce, Moore could stand before Roth as though he were the morally errant Parliament. Then she could roll out the petition and demand that the columnist recant his linguistic crimes. She could demand that he free the suffering insurance sales force from verbal bondage.
Are you in tears yet? I didn’t think so.
The issue here isn’t human freedom; it is marketing. It is branding for a financial product. That’s the only reason I am writing about it – it affects you and me as consumers of financial products. The issue is who controls the vocabulary that surrounds a product. The right words will sell a product; the wrong words won’t.
Here, history tells a story. When equity indexed annuities were introduced they were called, yes, equity indexed annuities. It was a logical choice: The credited yield was based on the price appreciation of an equity index. With the roaring stock market of the ’90s, the word “equity” made the annuity sexy. Salespeople hinted of investment nirvana – equity-like returns without risk.
The basic offer was simple: Your investment would get a portion of the capital appreciation of an equity index. In return for giving up both the dividend income and some appreciation, you would never experience a loss.
But then something really bad happened. Equity prices plunged. Not once, but twice. Perhaps you noticed.
Today, the S&P 500 index is still below its peak level in August 2000. It first reached its current level 12 years ago. So the word “equity” went from being a magical selling tool to being a sales killer. That’s why the insurance industry has made such an effort to rename the product.
Officially, no change
To this day, the literal-minded folks at places like the Securities and Exchange Commission and the Financial Industry Regulatory Agency still call equity indexed annuities just that – equity indexed annuities. That’s because the institutions with oversight responsibility don’t get free trips to Hawaii for selling the product.
Moore argues that since the industry hasn’t called equity indexed annuities by that name for nearly a decade, neither should Roth or any other journalist. We should only use the chosen vocabulary of the sales force.
This is not “a failure to communicate.” This is marketing euphemism at work. In the world of product marketing, if a word becomes a problem, the solution is to change it with skilled euphemism.
This is how pornography got to be “adult entertainment.” It is how prison got to be “correctional facility.” It is how a dead hospital patient got to be a “negative patient care outcome.” It is how a tax got to be a “revenue enhancement.”
Words make a difference. They influence how we think.
Do you, for instance, think former Sen. Robert Dole would have gone on television as a spokesman for Viagra if the pharmaceutical industry had not first magically euphemized “impotence” into “erectile dysfunction”?
Somehow, I doubt it.
UNIVERSAL PRESS SYNDICATE
