'Unnecessary jargon' confusing clients: InvestSMART
The following article appeared in IFA on Monday, 3 September 2018.
InvestSMART is urging financial services businesses to stop using technical jargon when dealing with clients in a bid to improve trust in the industry.
In a statement, the business urged financial services professionals to “stop confusing Australians with unnecessary jargon and to keep things simple” in the wake of the royal commission.
“The royal commission has highlighted some questionable and unethical behavior from some well-known organisations,” said InvestSMART chief executive Ron Hodge.
“Australians have had enough of the finance industry using jargon and unccessarily complex ways of showing critical information.”
InvestSMART’s remarks come off the back of research conducted by the company that found 96 per cent of the business’ members “showed a strong preference for independent financial decision-making”.
“The qualitative survey also uncovered a wariness and, in some cases, an outright rejection of seeking financial advice, with fees and opaque commission structures among the biggest concerns,” the company said.
Mr Hodge added that the current regulatory environment will likely cause further trust issues for the financial services industry moving forward.
Earlier this year, UNSW law professor and former Queensland regional commissioner Pamela Hanrahan made similar remarks regarding regulation and trust, commenting that the most likely outcome from the royal commission will be added layers of regulation.
“The most difficult thing for politicians to do will be to reduce the amount of nonsense, counterproductive legislation we have at the moment,” she said.
“The last thing they’re going to do is come out of the royal commission to say to the general public ‘we’re going to get rid of three-quarters of this regime’, but we will never fix it until we do.”
Frequently Asked Questions about this Article…
InvestSMART is encouraging financial services to avoid jargon to improve trust in the industry. They believe that using plain language helps clients better understand financial information, which is crucial in light of recent findings from the royal commission.
Jargon can negatively impact trust because it makes financial information difficult to understand. This complexity can lead to confusion and skepticism among clients, which is why InvestSMART advocates for clearer communication.
InvestSMART's research revealed that 96% of their members prefer to make financial decisions independently. This indicates a strong desire for clear and understandable financial information without relying heavily on external advice.
Clients are concerned about the fees and opaque commission structures associated with financial advice. These concerns contribute to a wariness or outright rejection of seeking professional financial guidance.
The royal commission highlighted questionable and unethical behavior within the financial industry. This has led to increased scrutiny and a push for clearer communication and ethical practices.
The current regulatory environment, which may become more complex following the royal commission, could further erode trust. More regulation might not necessarily address the core issues of transparency and simplicity that clients seek.
Pamela Hanrahan noted that the royal commission might lead to more regulation, but reducing unnecessary legislation is crucial for rebuilding trust. She emphasized the need to simplify the regulatory framework to address the industry's core issues.
Financial services can improve client trust by using plain language, being transparent about fees and commissions, and simplifying the regulatory framework. These steps can help clients feel more confident and informed in their financial decisions.
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