Words. Matter. A. Lot.
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“My words fly up, my thoughts remain below. Words without thoughts never to heaven go.” – William Shakespeare, from Hamlet.
Advisors use a lot of words that are industry jargon. That is fine because we know precisely what they mean. It is the internal language of investment and financial professionals. I’m talking words like equity, income, or fixed income. Fancy CFA® or CFP® words.
Some clients understand, but many do not. For a lot of people, income means any return on investment. They truly do not distinguish between interest, dividends, or growth. And they surely do not distinguish between the stabler growth of fixed income or the volatile growth of equities. Hand this paragraph to a client and ask them what it means!
Do they understand simpler terms like stocks or bonds? Somewhat more. Maybe not precisely, but there’s less confusion. Want to see their eyes glaze over? Run these by them:
Income, fixed income, income stocks, income REITS, income funds, income index funds.
Again, we understand, but they won’t.