Smart financial advisers are dropping ROI, NAV and QCD for plain English when talking to clients

By Morey Stettner

Not everyone is familiar with the ABCs of financial planning

Financial advisers need to translate complex, and sometimes even basic, terms common in financial planning.

The most credentialed financial advisers undergo years of intensive training and by the time they're ready to work with clients, their brains are overstuffed.

Financial advisers learn the intricacies of portfolio design, risk management and tax planning. They analyze investment vehicles, track market moves and run simulations based on wide-ranging scenarios. They master the latest financial technologies.

The right advisers can be assets to people looking to be financially secure now and in the future - if the clients can understand what the financial advisers are talking about, that is.

Many Americans lack financial literacy, so it's important now more than ever for advisers to double as effective educators. Financial news is often front and center, especially as AI-driven tech giants - and their volatile stock swings - affect our daily lives.

Financial advisers may want to flaunt what they've learned after years of study, leaving clients trying to decode what feels like a new language.

"It's easy for advisers to get in a bubble and forget what others don't know," said Cliff Robb, a professor of finance at Belmont University's Jack C. Massey College of Business. "It's also a way for them to prove they belong in the space and prove they're knowledgeable. But that won't help them build trust."

Talk about money

Many advisers casually cite acronyms and other terms that vex clients, such as ETF (exchange-traded fund), NAV (net asset value) and ROI (return on investment). To wean themselves off this habit, they should practice talking shop with outsiders.

"I encourage my [financial planning] students to talk about money with friends in a way that's not intimidating," Robb said. "It's how to take technical deep dives into strategies and tell those stories in a neat, accessible way that's relatable."

To build rapport, advisers might start a conversation by asking the client, "What's your comfort level with this topic?" or "Do you understand what I mean when I say 'bond ladder' or 'reinvestment risk?'"

But that well-intentioned approach can backfire. Individuals often hesitate to admit what they don't know. Instead, they'll nod and soon regret it as the adviser races ahead, talking in detail about those topics with technical lingo.

A better strategy is for clients to jump in and ask for clarification - now, not later. As soon as confusion sets in, speak up. To do that, advisers must say from the outset that their goal is to speak clearly - and avoid jargon. They should also tell clients to interrupt them if there's something they're unfamiliar with.

Being human

Advisers don't have to pretend they know it all. Instead of overdosing on wonky stuff, they can come across as more human by speaking plainly about what they know - and don't know, "Advisers need to be straightforward and admit areas they're working to improve," Robb said. "Showing vulnerability and openness is better than [implying] 'I have all this training so listen to me.'"

Seasoned advisers don't just talk to people. They also observe them. By watching a client's nonverbal cues, advisers can tell to what extent they're making themselves understood.

Matt Coursen, a certified financial planner in Ann Arbor, Mich., has learned over his 11 years in practice to check in frequently.

"It's not taking a client's head nod as '100% I get it,'" he said. "So I ask questions to confirm their understanding."

He also conducts what he calls a "self-audit" to rid himself of acronyms such as RMD, which stands for required minimum distribution, and QCD for qualified charitable distribution. Before sending emails, he rereads them and removes any jargon.

"I'll ask for feedback from my colleagues," he said. "I might have them read a draft of a long email I wrote or ask them after a meeting if I kept things simple and clear."

Some common terms are particularly thorny. Take Social Security: Coursen proceeds with care when discussing it with clients. It's a highly charged topic because many pre-retirees worry their benefits are at risk as the program faces an uncertain future.

When Coursen refers to the Social Security trust fund, he finds that many people equate it with a private trust fund. He explains that Social Security is managed by the federal government and funded by payroll taxes while private trust funds are estate-planning tools in which trustees manage assets for beneficiaries.

"Social Security is an incredibly complicated subject," he said.

Start with the basics

Even what feels basic to an adviser can seem mystifying to clients, experts said.

Robb cites examples such as "basis points," "volatility" and "equities." These terms might be the foundation of financial planning in their own respect, but it isn't everyday language for the average person.

Advisers would be more helpful to clients if they helped translate these words and explained these concepts, such as expressing rates in dollars instead of basis points, describing market swings instead of calling it volatility or referring to stocks instead of equities. "For advisers, speaking with authority and confidence takes work," Robb said.

-Morey Stettner

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10-23-26 0830ET