The start of a new year is a good time to take stock of what has happened over the last 12 months, including reviewing any bad practices that may have started to creep in to communications.In particular, investors are long overdue some clarity in the terminology used by financial services professionals. The unclear expressions and explanations, and complicated jargon used by many in the industry only led to confusion. Some expressions even seem to have different meanings each time, and often these meaning differ from the consumers’ own understanding.The end result is, difficulty for investors to know whether the information provided is actually relevant to them, and what they need to do about it.Take, for example, an article I read a little while ago that talked about “elderly” investors. In my mind, elderly refers to those well and truly in retirement – probably in their 70s if not 80s. However, as I read on, I realised that the article was in fact talking about people in their 50s and 60s who were still working and saving for their retirement.As to what defines a “high net worth individual”, there’s a whole range of definitions. The most common reference seems to indicate people with more than $1 million in investable assets. But not always. Others say $750,000, $1.2 million, or even $1.5 million. Sometimes the definition is $US1 million in investable assets, just to add to the confusion. One definition I saw recently suggested $30 million. But perhaps these are people best described as “ultra high net worth” individuals (or UHNWI – yet another piece of terminology for investors to come to grips with). Other definitions of “high net worth” seem to take income into account, as well as assets.Obviously, it would be much less confusing for investors if everyone meant the same thing when using such expressions. And if a commonly accepted meaning isn’t available, some clarity about what meaning is being adopted, should be provided early on.And don’t get me started on the use of jargon that seems designed to make the user sound very important and to confuse investors totally. What’s the point if what the audience hears is not what is meant to be communicated?If there is room for any confusion or lack of understanding, the best approach is not to use fancy terminology or jargon at all, and simply explain what is meant. It doesn’t have to be difficult. For instance, instead of “high net worth individuals”, say “investors with more than $1 million in investable assets”. Instead of “elderly”, say “investors over 55”. It may take up more space on the page, or time to verbalise, but at least people know what you’re talking about. And isn’t that the point of the communication in the first place?Some more examples industry language that could be better defined - or even done away with entirely - are outlined below:

• Investment risk – to investors, risk almost always sounds like a bad thing. This doesn’t have to be the case
• Retail and wholesale (when used to describe investors). Investors don’t think of themselves as retail, and neither should you refer to them as such.
• Foreign ATMs. We’re not using an ATM in another country, just the ATM of another bank. Why not refer to it as such?
• Balanced portfolio. Considering some “balanced” options carry the majority of its holdings in equities, or the majority of its holdings in fixed interest, this can mean many different things to different investors.

It’s easy for financial services practitioners to forget that the language they use every day in is not readily understood by those outside the industry. But if more Australians are to be encouraged to take control of their retirement savings, gain financial literacy and seek professional advice and investment assistance, the industry must do a better job of communicating with them, in the language and style that they will understand and feel comfortable with.