TALKING TO POTENTIAL INVESTORS – THE IMPORTANCE OF PLAIN ENGLISH

TALKING TO POTENTIAL INVESTORS – THE IMPORTANCE OF PLAIN ENGLISH

Blockchain, ETFs, high-yield bond … what?

These are just some of the terms used by financial institutions when talking to potential investors – but most Australians struggle to understand what they mean.

A YouGov survey commissioned by Cannings found that 43 per cent of people wouldn’t be confident explaining 13 commonly used financial terms.

Among the terms those surveyed struggled with were Exchange Traded Funds (ETFs), Initial Public Offering (IPO), blockchain, price-to-earnings ratio, and environmental, social, and governance (ESG).

Knowing your Consumer Price Index from terms like EBITDA (earnings before interest, tax, depreciation, and amortisation), and negative gearing proved just as tricky.

Financial literacy plays a crucial role in everyday lives, from using Buy Now Pay Later (BNPL) schemes to opening and closing bank accounts and applying for a mortgage.

And yet out of the 1,032 people surveyed, 46 per cent said they found it nearly impossible to understand the information provided by financial institutions and others, which means it is increasingly tougher for them to make informed decisions.

Just 13 per cent said they found financial information very easy to understand.

Interestingly, more than 40 per cent said they turned to family or friends for financial advice, ahead of mainstream financial media (28 per cent) and even professional financial advisors (21 per cent).

Other common sources were online forums or social media (20 per cent) and finance influencers or “finfluencers” (14 per cent), who were almost as sought out as accountants or bankers (17 per cent).

Interestingly, more than 40 per cent said they turned to family or friends for financial advice, ahead of mainstream financial media (28 per cent) and even professional financial advisors (21 per cent). 

Other common sources were online forums or social media (20 per cent) and finance influencers or “finfluencers” (14 per cent), who were almost as sought out as accountants or bankers (17 per cent).  

The survey findings suggest that there’s a clear message for our financial institutions: Australians want clear, effective and accessible information when it comes to money matters. 

And the best ways to deliver clear financial information? 

Those surveyed suggested having financial literacy lessons at school would be one of the top three ways to help address this issue. 

But what was number one? 

Using plain English. 

It’s that simple.