Just two of 60 firms analysed communicate in a way that people can understand
Finance firms are failing to inform customers about the effects of the coronavirus crisis on their money and using overly-complex and jargon-heavy language that is impossible for the average consumer to understand.
These are the findings of a new study, which analysed 5,800 web pages of content at 60 of the largest asset management firms.
Close to a third made no mention of Covid-19, leaving customers to find out for themselves the implications of the economic impact of the pandemic on their savings and investments.
Just two firms communicated in a way that an average consumer could understand: Federated Hermes and Barclays.
Fergal McGovern of VisibleThread, the communications consultancy that carried out the study, said savers were at risk of misunderstanding key information and making costly financial mistakes because the companies continued to use jargon and complex language.
Firms communicated with sentences that were five times longer than the recommended level and used complex and lengthy words in place of simple and plain English, the study found.
It said jargon such as “accrue, disseminate, incumbent upon and remuneration” could be replaced with “add, spread, must and pay” – monosyllabic words that are easy to read and understand.
Almost all firms used “passive voice” over “active voice”. Passive voice is an “evasive device” frequently used by politicians to shun responsibility, the report said.
Phrases such as “mistakes were made” in place of “we made a mistake”, or “markets will be monitored and you will be informed” instead of “we will monitor markets and inform you”, leave customers unclear on who should bear responsibility.
In Britain more than five million people have a reading age of just 11 and would struggle to understand most of the communications firms put out. The content published by the firms analysed was more difficult to read than the Harvard Law Review in more than one in 10 cases, the study found.
Wellington Management, Nomura Asset Management and Manulife were the three worst culprits, according to VisibleThread.
PGGM, Federated Hermes and Barclays Wealth Management were the best communicators.
Anthony Morrow, of advisers Open Money, said poor communication had plagued the finance industry for decades.
“Especially for the less savvy and less financially educated, if you struggle to understand what your provider is telling you or what is written in front of you it is very difficult to make informed financial decisions. The industry has a long way to go in improving clarity for consumers,” he said.
Wellington Management declined to comment. Its clients are mainly institutional and it does not market directly to consumers in Britain.
Nomura Asset Management and Manulife have been approached for comment.