How to Explain 11 Financial Planning Terms to Clients

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Every profession has its own jargon. It’s often similar to a foreign language. It allows one professional to recognize another while having a conversation. In social circles, the wealthy talk about travel and vacations. In business circles, lawyers talk about … legal stuff.

The financial services community has its own jargon concerning investing. This is ideal when advisors are attending a conference and a speaker wants to communicate a concept to the audience. Problems develop when financial advisors use industry jargon when explaining investing to prospects and other members of the general public.

What sort of problems?

Acting on faith. The prospect does not understand the concepts and terminology but is embarrassed to admit it. They feel they are asked to buy something they don’t understand, putting their trust in the advisor, who they might have just met.
Inability to explain to others. Prospects are often half of a couple. They often find themselves in the role of evangelists. They need to retell the advisor’s message to their spouse and secure their agreement. Often, they can’t, and they explain they agreed on the faith they were getting the right advice.

Advisors use jargon because it communicates a concept in only a few words. Wouldn’t it be great if advisors could restate the concept in simple English, using familiar examples and common sense?

Now imagine yourself in a situation where you introduce an expression we consider jargon. You tell the client, “I realize you probably understand this concept already, but I am going to take a moment to add some clarity…”

One such situation is when you must explain your services to a prospect or new client. They do not attend advisor conferences or read The Wall Street Journal every day.

Let’s walk through some terms that might be clear to you but not to them. You need to explain how you can help them in language they can understand.

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