Finance and wealth management do not need to be hard to deal with or difficult to understand. Here’s why.
What is stopping you from maximizing your finances?
For many people, it is a fear of not understanding what they are getting involved in. Financial language can be confusing. The truth is, it doesn’t have to be this way, and it may even be detrimental to your investments and your future.
But what is clear, and what is confusing? Actually, the financial industry has a definition for “understandability”. Granted, this standard refers to the accounting side of a business, but it is worth considering in the context of simple banking and finance as well.
According to the definition, understandability requires financial information to be presented in a way that is easy to comprehend. Easy is defined as complete, concise, clear, and organized. What is crucial is that the idea is not limited to accountants, who would be expected to have expert knowledge when it comes to reading financial information.
Instead, the concept assumes that the readers would only have a reasonable amount of knowledge of accounting, general economic activities, and the business they are looking at. They are not accounting or finance experts.
Applying this concept to financial planning for you as an individual or your family, the same principles apply. Offering complete information about a financial product, presenting it clearly, concisely, and in a well-organized manner should be the standard.
Reality can look a little different. Complicated terms and conditions, often running to dozens of pages, are simply off-putting. Many customers lose confidence in the financial product they are considering. They may even lose trust in their financial advisor because of it, or they may simply decide to put off investing until a later date.