How your financial literacy impacts on your financial confidence

4th November 2022

At a glance

  • The language used in financial communications can be complicated – and promote biases and stereotypes.
  • This can lead to people feeling confused and overwhelmed and lacking confidence in this area.
  • We regularly review the language we use – both in person and in our communications – to ensure you feel knowledgeable and happy with your financial choices.

Virtually all of us engage with the financial-services industry in one form or another, often on a day-to-day basis.

Being able to do that effectively should therefore be simple, because it’s so essential to all our lives.

Yet financial products and services are often made unnecessarily complex by the language the industry uses to communicate with its customers.

The information given by some financial providers is frequently littered with jargon, technicality, acronyms, risk warnings and clauses, making important documents hard to understand.

You may even need a basic knowledge of Latin to work out some references, from ex-ante and ex-post charges disclosures (referring to expected and actual costs and charges) to the frequently used risk warning emptor (‘let the buyer beware’).

Language barrier

“Jargon turns people off”, says Chris Marais, Head of Marketing Propositions & Content at St. James's Place.

“There can be an assumption that technical language conveys expertise, knowledge and professionalism, where in reality, it just confuses people.”

Simple messages tend to get lost in the risk warnings that companies are required to include to comply with regulatory requirements”, he adds.

“That compliance is important, but it makes clear language and communications difficult. A good example is the letters you receive to confirm the investments you're making, which often jump into technical detail and don’t really help people know what to do.”

Seven in ten UK adults feel overwhelmed by jargon about money and savings, according to a Post Office survey.1 Around half said they didn’t understand personal loans, APR (annual percentage rate), interest rates, tax codes, dividends, rebates or the stock market, while 20% were put off applying for a personal loan due to confusing terminology.

The language used in communications can reinforce existing gaps and stereotypes, as well as excluding people with certain characteristics. However, a change of approach can have a powerful impact. One project is finding that women’s intentions to invest increase markedly when female-curated digital stories are used in communications aimed at women.2

What is the impact of a lack of financial literacy?

The effects of jargon and poor communications can be more wide-ranging than it might appear.

If the information provided to customers isn’t easy to understand, it will likely make it harder for them to engage with their finances. That can, in turn, impact the outcomes they get, with further knock-on effects for their confidence and wider wellbeing.

Almost nine in ten UK adults say they don’t feel confident in their financial literacy and a third say their mental health has suffered as a result.3

“It makes the industry seem inaccessible, too complicated and irrelevant, when actually things such as planning for later life and having the right insurance can be fundamental to our wellbeing,” says Chris.

What are we doing to make information more accessible?

Many firms are working on improving their communications, while the Financial Conduct Authority’s new Consumer Duty - which places an emphasis on enabling customers to make informed decisions - should accelerate that process.

Ensuring we communicate clearly and give you useful information in an accessible way is a priority for us.

“You need the audience first in mind when you write. The way we articulate what we do is now more focused on getting that right,” says Chris.

That includes knowing what different clients need and want.

“Some clients want the full detail, but others don’t want to know everything and just want the basics. You can drive better understanding and literacy if you give people something to do, with tools that help engagement such as online calculators and sliders.”

"It’s also about delivering advice to clients in clear, jargon-free language that they understand", he adds. "In all our communications with you, we aim to keep things simple, never using a long word when a short one will do. And by helping you envision the future you want and focusing on clear benefits, we aim to inspire and encourage you to take control of your finances."

“Our purpose at SJP is to help our clients create positive outcomes and financial futures, and explaining things to people in straightforward language will drive that,” says Chris.

Our goal is to give you the confidence and capability to create the future you want.


1 Financial Jargon Explained, Post Office, survey of 2,000 nationally representative UK adults, March 2022

2 Break the Bias, The Wisdom Council, March 2022

3 The Great British Financial Literacy Test, Freetrade, survey of 2,000 nationally representative UK adults, April 2021

SJP Approved: 05/08/2022

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