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Quit Using 401(k) Financial Jargon, Once and For All

Industry Trends and Research

The damage an overreliance on financial jargon can do to participant confidence and, by extension, the advisor’s business is well-documented. Still, a new survey brings it (yet again) into stark relief.

It might make the advisor sound smart while making the client anxious and overwhelmed, and some argue it’s intentional. If they keep it complicated, consumers think they need advisors to sort it all out.

Whatever the reason, personal finance provider Unbiased claimed “the vast majority of individuals nearing retirement age in the U.S. harbor significant doubts and lack education about retirement offerings.”

When asked about what led to the lack of confidence, over a third said they “don’t know where to start,” and 34% found the financial jargon too complex.

The survey also indicated a need for more familiarity with certain financial products. Just over half of the respondents indicated a strong level of knowledge about 401(k)s, 403(b)s, and IRAs.

In a nod to how far retirement income products must go in gaining widespread adoption, only 12% felt they had a strong familiarity with annuities.

One reason for concern and confusion around retirement could be correlated to a lack of professional input, researchers offered. Nearly half of all respondents (47%) cited online searches and friends/family as their primary sources for financial advice. Yet, only 30% sought guidance from a professional financial advisor.

“The majority of Americans are not feeling confident about their retirement options,” Unbiased founder and CEO Karen Barrett said in a statement. “It also appears that many are not seeking professional help despite these concerns.”

Respondents also said their key concerns about retirement planning are driven by worries about “inflation” (59%) and “healthcare/unexpected risks” (56%), underscoring what Unbiased claimed in the unease felt by many Americans about the state of the healthcare system and how their health could affect their ability to support themselves in their later years.

Of those surveyed who did cite feeling confident about their retirement options, one in four attributed that confidence to the fact they’d engaged a financial planner.