Does Anyone Understand What They’re Saying?


Personal finance and investing often feels like a secret club designed to keep women out

A conversation of one
Are you interested in enhanced indexing or smart beta? How about liquid alts or absolute return strategies? Concerned with style drift and mean regression? Staying away from proprietary products in your quest for alpha? Then maybe you should take a look in the private equity space.

Are you still reading? Congratulations! You’ve survived an encounter with what investment professionals consider to be some of the most annoying, pretentious and overused terms in finance. It’s what we fondly call “jargon” and it should never be used with clients.
Members of a secret club
Some people actually like to throw around these complex and esoteric terms. It makes them feel like they’re members of a very elite club that only very smart people can join. Guess if you don’t understand what they’re saying, you’re too dumb to join the club, right?
That’s certainly what many women feel when they discuss investments with financial advisors. It’s often so intimidating that they avoid these conversations entirely. Unfortunately, that can get them barred from the clubhouse forever, and it’s really important for them to make their way inside so they can understand and start mastering the basics of personal finance.
We all have our fields of expertise
We all know what it’s like to be totally clueless. Try to explain to me anything about how my car works, and my eyes glaze over. My kids have explained to me over a thousand times what “offsides” means in soccer, and I still don’t get it. We all have our fields of expertise, and we’ve learned it’s better to hire experts to handle for us the things we don’t understand. We need their expertise, but at the same time, they need to explain the facts and choices to us in terms we can understand so we can make the right decisions for ourselves.
So what’s the solution?
Janet Bodnar, editor of Kiplinger’s Personal Finance magazine, says their reporting confirms that “men and women speak a different language when it comes to money.” She cites the research of Annamaria Lusardi, director of the Global Financial Literacy Excellence Center at the George Washington University School of Business, which shows that “jargon and technical terms are more off-putting to women. In teaching her own classes, Lusardi consciously starts with plain English and ‘builds the language of finance.'”
If you’re using an advisor, don’t be afraid to tell him or her to slow down and explain things more clearly. Sometimes we slip up and think the client knows more or less than she really does. You can help get us back on the right track by giving us feedback. Our goal is to make sure you completely understand your choices and decisions, so by letting us know what you’re not clear on, you’re helping us do a better job for you. A good advisor will always take time to explain and educate. If your advisor doesn’t do that, it’s time for a change.
If you need help making sense of investments, retirement and your financial choices, consider hiring a financial advisor. Many women prefer to work with women advisors, since they can better understand the issues at hand. We always recommend selecting a Certified Financial Planner (CFP), and preferably a fee-only advisor, since they can give you objective and unbiased guidance untouched by conflicts of interest.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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