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Financial advice and the power of language

Most advisers know the value of changing their language when switching from industry speak to client discourse, but many still fall into the trap of distancing themselves from clients by using jargon and buzzwords.

The financial services industry has a habit of overcomplicating what are generally simple concepts, which can distance product and service providers from their clients. This includes financial advisers.

A shift in rhetoric and language can be a powerful trigger for growth in any business.

Advisers are in an incredibly challenging position, daily. One of the myriad concerns they must turn themselves to often, yet rarely do, is the use of language.

  • Triggered by a conversation this week with one of Australia’s leading financial advisers, I was reminded of the need to reset the thinking within our own organisation when it comes to client communication.

    With advisers spending significant time reading financial reports, product disclosure statements and research, while regularly conversing with Chartered Financial Analysts and portfolio managers, there is a tendency to talk the same language with our clients. Yet this is generally to our detriment and that of our relationships.

    Duration, carry, correlation, active share, ESG, equities, unpacking, hard landing, soft landing, volatility…

    These are all incredibly useful terms spoken hundreds of times each week in most advice practices, but in general mean very little, if anything, to an end client. Similarly, many words that have become synonymous with financial advice and funds management actually carry significantly less credence and respect than we tend to think they do.

    In my experience, this is a key issue that is holding my own practice and likely many others back, not only from converting clients, but also building stronger relationships. This is something evidence by the success of major bloggers and ‘finfluencers’, who some are turning to in place of licensed financial advice.

    These groups have been successful in growing massive audiences because they have been able to connect with a broad range of listeners. They have brought financial literacy to the masses by uncomplicating personal financial and investing, and putting simple concepts like ETFs into simple terms.

    Attending the financial advice conference, Future Proof, in the US earlier this year, I was reminded once again of the fact that we need to think more closely about the client experience. While we tend to focus on which applications or products we are using, this conversation really needs to start at the most basic level; what words are we going to use, and how do they make our clients feel?

    This can be incredibly powerful from a high level marketing perspective, but also in terms of portfolio construction and how we describe the individual investments we are recommending to our clients.

    Ultimately, as financial advisers we are in the business of having clients leave our offices empowered, not confused.

    Drew Meredith

    Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.

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