Apparently it’s not what you say, it’s how you say it. This is an old adage but it seems it can now be applied to financial advisers.
Of course, pushing investments is the opposite of holistic Financial Planning but I suspect this still goes on. The study suggests that some language used by advisers may be causing distrust among clients who see themselves as sales targets rather than long-term Financial Planning clients.
Greg Davies, chief behavioural scientist at Oxford Risk, said: "Too much retirement communication still starts with products rather than people. Language, framing and sequence matter far more than the industry often assumes.”
This perhaps points to a more serious problem faced by the retail financial services market - how it communicates with clients.
Like everyone with a financial product, I receive many confusing statements and updates from providers. I know a little bit about financial services but some of the stuff I receive baffles me.
Many of these communications are regulatory requirements and so there is an element of box ticking going on but I suspect a lot of advisers have to deal with clients who are simply scared by language such as “scary markets” or ‘higher risk.”
As time goes on, of course, often clients only receive written communication from providers and have either lost contact with their adviser or receive few or no ‘human’ communications from their advice.
I would hope that any true, long term Financial Planning clients would receive regular annual or half year updates from their Financial Planner allowing the planner to explain any changes in circumstance, particularly on the investment side.
Here we should probably differentiate between long-term Financial Planning clients who have a human financial adviser looking after their interests and providing regular communication and explanation of statements and so on and those people who were flogged a pension or investment plan a decade ago and have head nothing since, apart from a confusing statements.
It suggests to me that the regulator needs to do more to recognise that holistic Financial Planning is not the same as a product sale and the communication needs are completely different.
It also suggests that the FCA and providers, particularly as Targeted Support arrives, need to launch a mission to explain to the public exactly what’s happening their pensions or investments.
An online FCA-training course to help consumers understand their pensions and investments would be no bad thing and a requirement for providers to offer a hotline staffed by humans able to answer questions on communications would be a wise move.
Words are important in financial services but they need to clear, understandable and relevant to what consumers need to know.
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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Email:
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