People have a limited understanding of financial issues and there is pressure on advisers to check and "really explain" concepts such as retirement planning, says language expert Neil Taylor.
In an FTAdviser In Focus fireside chat, in partnership with 7IM, Taylor refers to Steven Pincker's idea of 'the curse of knowledge', which means knowledge and language become second nature to experts and they might not realise their audience does not share the same knowledge.
"So of course you know what an annuity is, you know what drawdown is, and you become fluent in that language, but other people might not be and we tend to overestimate how much non-experts get," he says.
There is an additional problem, he says, whereby "people understand less even than they think they do".
His firm Schwa did research on terms such as inflation and API and found people thought they understood the terms but then weren't able to match them with the correct definitions.
"That's why there is pressure to really explain things, it's probably higher than it was before," he says.
He says this means advisers might have to fall over themselves to explain the things their clients might never have heard of before.
He says under the consumer duty advisers will have to consider whether they give their clients the right information, and the right amount of information, at the right time, and whether they can actually check whether their clients have understood the information.
"They're asking you to go out and research some of these terms and your particular audience and check that they really do [understand]," he adds.
To hear examples of good and bad practice and how this affects written and spoken communications, click on the image above.
carmen.reichman@ft.com
