Consumers rarely read the essential communications sent to them by financial companies – such as pension companies, mortgage lenders and ISA providers – because those communications are too long and too full of jargon. Consumers simply don’t have the time.
These are the findings of a new survey from asset and wealth management consultancy firm, Simplify Consulting.
The survey comes as financial providers face tough new regulations around financial communications under the FCA’s Consumer Duty consultation.
The survey found that the top reasons as to why consumers are discouraged from reading financial communications are:
* Communications are too long (64.4%)
* Don’t always have the time (50.5%)
* Too much jargon (45.5%)
* There’s no immediately clear action in the communication (45.5%)
* Lack of volition: “I don’t want to read it or feel I need to” (30.7%)
* Not written in plain English (27.7%)
The survey of just over 100 investors, comprised of 58% female and 42% male from under 18s to 65 years plus. Most respondents were in the 35-44 age group, with 45-54 year olds and 25-34 year olds making up the second and third highest number of respondents respectively.
The survey found that just 14% of customers read all of the communications sent to them, compared to 16% that never read any correspondence and 30% that read very little.
Respondents cited that that was chiefly due to the fact communications were too long and they simply don’t have the time. Too much use of jargon was also a clear impediment for nearly half of the respondents.
Carl Woodward, Co-founder and Director at Simplify Consulting said: “Regulation upon regulation over the years has clearly led to a vast increase in the length of communications and the language used within them. Consumer Duty is seeking to address the latter but it might potentially be at the expense of increasing the former even more if the issue of excessive jargon is to be addressed. A large number of the respondents are in an age bracket poised to benefit from the ‘great wealth transfer’ yet the results show that the majority don’t seem to see their financial adviser face-to-face and many cannot understand the ‘jargon’ used in other forms of communication.”
Investor feedback from the research included:
“Pension communications are a good example…often being very unclear unless you have a good level of knowledge of the terminology…”
“…it is all quite difficult to understand, unless you have a background in finance… Which I don’t!”
“[Information is] Locked behind a portal or very difficult to access.”
Carl Woodward continued: “With client communication one of the key tenets of the FCA’s Consumer Duty – whereby providers will be tasked to support consumer understanding by ensuring that their communications meet the information needs of retail customers – there clearly remains a disconnect. With Consumer Duty around the corner, it seems that financial providers have a huge task ahead to ensure they are compliant with the new rules around this issue. While we’re conscious that regulatory statements are vital, the industry still needs to work towards a form of communication that is inclusive and comprehensible if we are to ensure the next generation of investors are engaged in their own financial planning. From our experience with clients, the task might seem daunting but it is not insurmountable.”
The full results of the survey can be found here: Simplify – Consumer and Financial Services Communications Survey 2023