There are three major aspects to finance. The first is looking at data and analyzing it to assess the probability of an outcome in the future: GDP growth, a stock price going up or down, a portfolio of properties losing value, a credit card debt being defaulted on. This is perhaps what is most commonly thought of when discussing finance, and much of it is quite simple to do both conceptually and technically: you get a bunch of inputs, you analyze the inputs according to a set formula, and you present the results.
The second part of finance is simply selling. This is the part of the job where you convince someone to make a financial decision they would not otherwise make; this could be to take out a loan, to buy some shares, or to take a company public. This is often overhyped (or demonized) in the public as an aggressive tactic-heavy cat-and-mouse game like selling a car, but in reality financial selling is very much about appealing to a customer’s or client’s rational side and assuring them that the financial opportunity being prevented is in their best interest. While this can be done nefariously, it is more often done in a much more quotidian and pragmatic way, and ends up with people making decisions that really are in their best interests. The financial machine doesn’t always work, but it usually does.
The third part is storytelling. This doesn’t sound like a normal part of finance, but it’s actually the most important part, which may be why it is so overlooked. While we can analyze data to assess future probable outcomes, we also know that history doesn’t repeat as much as it rhymes, and so we always need to buttress our data analysis with some kind of narrative that explains how this data developed and why it is going in the direction it is going.
Additionally, for us to effectively sell a financial product, no matter what it is, we need to have a compelling story behind the sales pitch that will convince a party to make the decision we are selling them on. That can only be done with a powerful story. Take, for instance, the decision to buy a share in a company. If the salesperson can provide a research report that tells the story of that company while also telling a story of why that company’s share price will go up, the chances of the sale being successful will increase.
Few financiers think of themselves as storytellers. Most of the best ones, however, do. The key question in being successful in the industry is not just how to find the best data and how best to analyze that data—the key question is finding out what the right stories are not only to sell but also to make accurate predictions about how the story is going to end.
In finance, the storytellers who tell stories well and can give clients spoilers are always in high demand.