


					FinancialLanguage.com Improving Communication Between Consumers and Financial Advisors

Welcome to Financial Language

In a recent survey, 91.2% of investors said they had some trouble or a lot of trouble understanding their financial planners and financial advisors. What they didn't know is there are four contributing factors to this communications gap that are the root causes of their problems. Very few investors were aware of these factors so they didn't have effective solutions. Click here to access the Financial Language online financial services dictionary and finance term finder.

The first factor is a high percentage of financial advisors choose to use industry jargon when they communicate with investors. They use words financial advisors and financial planners understand versus words that investors understand. For example, instead of saying "you have a volatile portfolio" they say "you have a high beta portfolio". Investors may understand volatile, but they may not know the meaning of the word beta.

The second factor is financial advisors and financial planners use specialized terms to impress their clients. They believe the more they sound like experts the higher the probability investors will buy what they are selling. Since part of their strategy is to market themselves as experts, industry jargon serves a purpose. Financial advisors and financial planners know investors won't question their recommendations or advice if investors believe they are financial experts.

The third factor is financial advisors and financial planners use terms investors may not understand when they are at risk of being fired. For example, an investor experienced a 30% decline in the value of his or her assets. The financial advisor or financial planner decides to blame the global economy for the decline so he or she uses a lot of macro-economic and micro-economic terms in the explanation. For example, rising interest rates in Europe and a mini-recession in Japan caused the investor's portfolio to decline in value. Financial advisors and financial planners want investors to believe the decline was not the result of their bad advice. Rather, it was the result of global economic conditions that the financial advisors and financial planners had no control over. This is a diversionary tactic that's used to buy time.

The fourth factor is some financial advisors and financial planners genuinely don't know they are confusing investors with their choice of words. They use words they know and are comfortable with. It never occurred to them that their clients may not be comfortable with their choice of words and financial advisors and financial planners have created a communications gap. This type of advisor probably has poor listening skills. You will have to very explicitly tell the financial advisors and financial planners to use different words.

Financial Language is a unique website that's dedicated to defining frequently used terms that financial advisors and financial planners use when they communicate with investors. More than 500 Five Star rated financial advisors and financial planners contributed words to this dictionary and new words are added on a monthly basis. We hope you find this website to be a valuable resource that improves your communication with your financial advisor or financial planner. We suggest you save our URL as a favorite so you have easy access to the site when you need it.

The next time your financial advisor or financial planner refers to "high beta stocks" in your portfolio you'll know he or she is describing a portfolio of securities that is more volatile than the stock market. Or, if your financial advisor or financial planner uses the words "real rate of return" you'll know he or she is talking about the performance of your portfolio after inflation is deducted from the gross return.

Quality communication that fosters understanding is part of the foundation for an effective relationship between you and your financial advisor or financial planner. That's because communication provides the information you need to make decisions that impact your financial future - for example, your standard of living during your retirement years.