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Financial advisers told to mind their language
| Published: | 22 Nov at 6 PM |
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If there’s one thing which leads to wrong decisions by retiree investors in expat finance and pensions, it’s the language used by their advisors.
Many expat retirees are totally inexperienced as regards the terminology of money management and investment, a lack which has led a large number to lose a large chunk of their pension savings simply by believing what they were told as regards annual returns. Since the introduction of the so-called ‘pension freedoms’ last year, the problem has worsened, especially in expat retirement destinations overseas.
Back in the UK, the Association of British Insurers (ABI) has instigated a somewhat belated attempt to cut the jargon and explain in simple terms exactly what the technical language they’re hearing means to them. The respectable end of the financial industry is in favour of the information, but the guide itself is still riddled with acronyms and poorly put together.
The association’s laudable aim was to ensure that all IFAs, providers, the government and all industry groups should speak with one voice to inexperienced investors and retirees. For example, the guide gives an explanation of flexible pension freedoms using bullet points in six sentences, all of which are clear and relatively easily understood, but they’re not the whole story.
Unfortunately, other important factors such as tax relief, employer contributions and government top-up options aren’t so well expressed, with some even needing a spellcheck and grammar adjustments. According to one insurer, making certain their sales pitches are completely understood is the responsibility of everyone from IFAs through providers and the tax authorities.
Once the guide was published, an ABI consumer survey took place, based on the question ‘does pension language complexity deter me from considering my financial situation in retirement?’ A full two thirds of respondents agreed that difficulty with terminology was a serious turnoff as regards making decisions.
For those retiring overseas, making the best possible decision as regards pension freedom is even more complicated, and there’s no redress if your advisor gets it wrong, either by accident or deliberately. The vast majority of offshore advisors are not registered, regulated or even working legally, and a few are commission-hungry con-men who disappear when things go wrong.
Many expat retirees are totally inexperienced as regards the terminology of money management and investment, a lack which has led a large number to lose a large chunk of their pension savings simply by believing what they were told as regards annual returns. Since the introduction of the so-called ‘pension freedoms’ last year, the problem has worsened, especially in expat retirement destinations overseas.
Back in the UK, the Association of British Insurers (ABI) has instigated a somewhat belated attempt to cut the jargon and explain in simple terms exactly what the technical language they’re hearing means to them. The respectable end of the financial industry is in favour of the information, but the guide itself is still riddled with acronyms and poorly put together.
The association’s laudable aim was to ensure that all IFAs, providers, the government and all industry groups should speak with one voice to inexperienced investors and retirees. For example, the guide gives an explanation of flexible pension freedoms using bullet points in six sentences, all of which are clear and relatively easily understood, but they’re not the whole story.
Unfortunately, other important factors such as tax relief, employer contributions and government top-up options aren’t so well expressed, with some even needing a spellcheck and grammar adjustments. According to one insurer, making certain their sales pitches are completely understood is the responsibility of everyone from IFAs through providers and the tax authorities.
Once the guide was published, an ABI consumer survey took place, based on the question ‘does pension language complexity deter me from considering my financial situation in retirement?’ A full two thirds of respondents agreed that difficulty with terminology was a serious turnoff as regards making decisions.
For those retiring overseas, making the best possible decision as regards pension freedom is even more complicated, and there’s no redress if your advisor gets it wrong, either by accident or deliberately. The vast majority of offshore advisors are not registered, regulated or even working legally, and a few are commission-hungry con-men who disappear when things go wrong.
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