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Point of View

The ongoing battle with financial jargon

by Lisa Lloyd, Wealth Planner

It’s safe to say that financial services companies are not known for using simple language. With indecipherable terms such as ‘bid offer spread’ and ‘pension commencement lump sum’ once used as common parlance, it continues to take a concerted effort by the entire financial services industry to use words that are accessible, and can be understood by customers.
At Sanlam, we try very hard to keep our communications as jargon-free as they can be. But there are always some industry terms that we can’t escape. Take ‘active versus passive’ investment management, for example. For some people, that phrase has no meaning at all, while others may feel very comfortable with it. Either way, language should never get in the way of customers doing the right thing when it comes to their finances.

The fear of doing the wrong thing

People who don’t understand the language of financial products can often develop a fear of doing the wrong thing, and instead do nothing. If ever there was a great example of this, it’s the lack of people shopping around for the best retirement income product for their retirement. Despite the industry’s best efforts, there remains a complete apathy among customers to understand their financial options at retirement. For many, it terrifies them.
Doing nothing is almost always worse than making an informed decision that doesn’t work out as well as you hoped. In today’s low interest rate environment, for example, if you keep your money in your bank account or under your mattress, you will lose money every single day. Over the long term, that can be extremely damaging to your future wealth.

Better the devil you know

When customers don’t fully understand what they’re buying, they open themselves up to some nasty surprises later down the line. The key is to ask questions from the outset, and regularly review the performance of your investment. If you’re not sure of something - ask.

How a financial planner can help

Unfortunately, as hard as we try, there are still some technical terms used across the investment industry. Whether we like it or not, these are products of a technical nature. As part of the financial planning process, our wealth planners will help to cut through the jargon. We don’t expect you to understand everything about the world of investments – it’s our job to explain it, and be on hand to answer your questions throughout the life of your investment.
If you think we could be doing a better job with our communications, please do get in touch by emailing letstalk@sanlam.co.uk

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.