Say This, Not That

Should advisers be more careful of the phrases they use with plan participants? Most agree that lofty statements, technical terms, and jargon should be avoided.

Bonds, fixed-income investments, debt issuance… so many terms to mean the same thing. Retirement plan participants may know them as the opposite of equities or securities—something needed to keep their assets properly diversified. About two-thirds of respondents (60%) use the term “bonds”; the rest of the answers are split nearly evenly between “fixed income” (21%) and “debt issued by a government or corporation” (19%).

Annuities get the boot. Jeff Snyder, vice president and senior consultant at Cammack Retirement Group, says the word can evoke negative feelings from participants, who in fact like what annuities can do: guarantee income when they are unable to work during the retirement years. Less than one-third of survey respondents (29%) use the word annuities when they talk about this product; 71% choose a phrase such as “monthly income” or “monthly benefit.”

The participants themselves are the key to the language advisers and providers should use, Snyder believes. “They are smart people, but they don’t do finance for a living,” he points out. To engage the average American, nix the technical language and avoid making things sound more complex or mysterious than they actually are. Snyder is not a fan of “asset allocation,” used by 48% of respondents. He prefers the phrase “investment mix,” and 52% of survey respondents agree with him.

It seems that words with purely English roots (like mix) get the nod over words with Latin origins (like allocation, or practically anything ending in –tion). Some words seem less overwhelming to the average employee even though “allocation” has been used in English since the mid 17th century. (Its entry into English was about one hundred years earlier, as a legal term from the Medieval Latin, as the common first word used in writs that authorized payment.)

What is a participant? “People think of themselves as employees,” Snyder says, not plan participants. The answers were split almost evenly, though between both words: 40% use the word participant and 44% say employee when talking to retirement plan participants. Investor (11%) and saver (5%) are infrequently used.

Despite the contention of Alexandra Taussig, senior vice president for marketing and business strategy at Fidelity Investments, that women dislike lofty statements, the statement “We’ll help you achieve the retirement you’ve always dreamed about” took in more votes (53%) than the slightly quieter “We’ll help you achieve the retirement you envision” (47%).

Thanks to everyone who responded to the survey!