Lewis Carroll, the celebrated and much-loved author of Alice’s Adventures In Wonderland, was also known for his celebration of nonsense verse. His poem, ‘The Jabberwocky’ features in Through the Looking Glass. A poem (apparently) about a monster that lurks in the woods; it is an example of nonsense verse in full flow:
‘Twas brillyg, and the slythy toves
Did gyre and gymble in the wabe;
All mimsy were the borogoves,
And the mome raths outgrabe.
It makes no sense, but at the same time sounds like it should. It’s both disorienting and somehow familiar. Alice’s response to reading it is: “Somehow it seems to fill my head with ideas—only I don’t exactly know what they are!” This reaction is not unlike how some of the language and terminologies of our own financial sector can leave us bewildered.
The financial sector has a reputation for being intentionally opaque. While Lewis Carroll’s nonsense verse is supposed to be confusing, strange and unsettling, the finance sector should always seek to communicate with clients as clearly as possible, but often fails to do so. It’s unsurprising that people can be put off from investing when you read some of the impenetrable copy that they receive.
There are countless examples out there, but this snippet (only a snippet I promise; I do want to hold your attention until the end of the article!) from a pensions Q&A document demonstrates my point:
“What happens if I die? If you had taken phased retirement benefits, death benefits from any policy segments which you had not yet used to provide pension benefits would be paid as if you had died before receiving any benefits.”
The Plain English Campaign has been leading the charge against the obscure or confusing use of language for decades. Chrissie Maher, the founder of the Campaign, highlights the problem of heavy-handed financial terminology: “Often it means the customer is left with little clarity and all the responsibility. Terms and conditions, credit-card agreements, overdraft letters – they might as well be in a foreign language.”
Some in the financial services industry will point to regulatory requirements by way of explanation for the complex vernacular. While it is true that compliance criteria must be met, surely this shouldn’t serve to make communications more, rather than less, confusing? The FCA certainly thinks so – it raised the issue of jargon usage in its Smarter Communications discussion paper last October and challenged the industry to look at their language and reducing jargon, stating: “We are very concerned about jargon and small print and are trying to encourage regulated companies to provide clearer information to customers.”
The Impact on Investors
There’s plenty of research to show the effect that this sort of language has on investors and potential investors. There are also a number of websites established to tackle the problem head on, and both Investopedia and This Is Money offer glossaries of financial terms in a bid to deconstruct some of the mystery. But advisers should not expect customers to have this on hand at their next meeting. It is the responsibility of the industry, not consumers, to address this translation issue.
Insight and strategy consultancy Britain Thinks highlighted the effect that needlessly technical financial language has, specifically on women investors. Feedback from women who took part in the study found it “unwelcoming, patronising, full of jargon” and “not very accessible to the everyday person, not just women, the everyday worker”.
And it’s not just individual retail investors who find the vocabulary difficult to grasp, it’s businesses too. A recent study found that nearly half (47.8%) of UK Small and Medium Sized Enterprises (SMEs) have been put off from applying for finance due to confusing terminology. For small businesses seeking to grow and make a positive contribution to the economy, it is problematic if the very language used in the industry can end up discouraging them from expanding.
Confusing people with a lack of clarity is one thing, but if people believe that language is being used to exclude or even to mislead them, it becomes potentially damaging to our industry. The Plain English Campaign put this well, “If a video instruction manual is not written in clear English, the worst that can happen is you tape Emmerdale instead of EastEnders. But buying the wrong pension or insurance product because you cannot understand the information they provide can have a serious impact on people’s lives.”
A Two-Fold Process
Our aim is to communicate clearly and effectively with our customers from our initial engagement; whether that’s through our website, phone, email, or face-to-face and throughout our Wealth Partnership. Our wealth management process is anchored around our personal wealth planning and reporting. We spent nearly a year reviewing, building and implementing an advanced reporting system. Our Wealth Stewardship report uses a presentation of data that is visual, with an easy-to-understand view that clearly illustrates investment positions and provides a clear snapshot that shows all holdings.
We care about our clients and our own reputation, as well as that of our industry. It’s obvious that effective communications improve the consumer experience, choice, and decision-making. First, by providing information about products and services in a manner that is comprehensible; and second, by providing information at the appropriate time and through appropriate channels.
Put plainly, financial communications should always be no-nonsense.
This article does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections.