View more on these topics

Investment jargon must end, IA says

The Investment Association has launched new guidance to help fund managers communicate their strategies and technical terms with consumers.

According to consumer testing carried out in partnership with The Wisdom Council, three quarters of investors struggle with technical terms, while others have difficulty understanding a range of commonly-used terms.

Less than half are able to identify income, return, growth and yield correctly, and savers also showed wide discrepancies between what savers regard as short-, medium- and long-term investment horizons.

The IA has provided a blueprint to make investments more understandable, with a series of recommendations to help fund managers address the issues investors face and provide greater clarity when communicating about their funds.

The trade body’s guidance includes a list of more than 35 frequently-used terms explained in a simpler language. It suggests a number of simple remedies, such as swapping “fixed income” to “bonds” and “equities” to “shares”.

IA chief executive Chris Cummings says: “With 75 per cent of households saving into a pension or investment fund, we need to find a better way to communicate with our savers. Our industry needs to speak to savers in the language that they understand and the IA is leading a programme of change in this area.

“Savers should be able to understand the objectives of their funds in clear and simple language, so that they can choose the products that best help them achieve their financial goals.”

The guidance paper also has terms where the IA believes a description might work better than the current term itself. An example is “absolute return”, which the IA says was a “very confusing” term for the research participants, and many felt it was linked to a return an individual receives on their investment in any type of fund, not just absolute return funds specifically.

Recommended

Budget-2018-Chancellor-Philip-Hammond
3

Budget 2018: Lifetime allowance nudges up as Hammond bucks pension tax reform rumours

The lifetime allowance for pension savings will increase slightly more than expected next year to £1,055,000, according to Budget documents published today. Initially the lifetime allowance was meant to increase in line with September’s figures for the Consumer Price Index to £1,054,800. But the government has rounded up the lifetime allowance slightly more than originally expected. […]

1

Tony Wickenden: Are clients subject to loan charge tax in April?

HMRC is clamping down on remuneration schemes designed to avoid income tax and National Insurance You may have seen a bit in the financial news lately on the loan charge tax to be levied on payments received by employees through disguised remuneration schemes used to avoid income tax and National Insurance contributions. Those involved will […]

Tapering of annual allowance – adjusted and threshold income

The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing.  Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from 6 April 2016.  Our previous article Tapering of annual allowance […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Taking something that is intrinsically complicated and removing technical terms is nigh on impossible.

    Yes, jargon needs to be removed but we shouldn’t beat ourselves up about clients not understanding yield for example.

    Likewise, I wouldn’t expect a Surgeon or Scientist to use words on one syllable when explaining something complicated in their world.

    We need to make things as engaging as possible but things like Mifid 2 etc mean that ever more reams of paper are being spewed out by the ‘industry’ resulting in less clarity.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com