The Tax $mart Coach

RICHARD MEADOWS

the obfuscation of information conveyance from financial institutes to the end consumer is a paradigm best explained by specialist terminology synergising with superfluously convoluted modes of communication.

say what?

If you made it to the end of that sentence, give yourself a big pat on the back.

as anyone who has ever battled with an impenetrable wall of financial gobbledygook knows, deciphering such twaddle can often cause rising blood pressure and much tearing of hair.

By the time your bloodshot eyes glaze over and you’re reading the same sentence for the sixth time, it’s tempting to just give up.

the consequences of doing so will vary. If the instructions with your new toaster aren’t in plain English, your toast gets burnt. If the application form for your loan or insurance application isn’t in plain English, then you’re burnt toast.

“Anything that is going to affect one’s life in a very significant way – your life, your livelihood, your wellbeing – that’s where information must be absolutely clear,” says Write chief executive Lynda Harris.

she is part of a growing global movement that fights to get organisations to stop drivelling and start speaking plain English.

Unfortunately, she says, financial companies are some of the worst offenders, and for many people finance-speak is about as clear as mud.

If you thought the credit crunch was a popular brand of children’s cereal, you’re in good company. Across the ditch, a survey carried out by insurance and banking group Suncorp found thousands of Queenslanders had no idea what fundamental financial terms meant.

Eighty per cent had either never heard of or didn’t know what a loan-to-value ratio was – the amount of money loaned as a percentage of the value of the property. Some respondents reportedly thought it was “a little like shares” or something that happened when interest rates were too high.

a further 62 per cent didn’t know what the term annuity meant – regular payments made by an insurer. Guesses included “some sort of annual payment” and “something you get when someone dies”.

Here’s the kicker – these respondents were no fresh-faced babes, but baby boomers aged 50 to 65 with decades of experience in super contributions and banking.

Luckily, Harris says, such head-scratching isn’t the consumer’s fault. You shouldn’t have to sign up for night classes in economics just to read an investor statement or navigate through a loan application.

“It is the company’s responsibility to put it in such a way that an average person can understand,” says Harris.

so who is getting it right?

which financial institutes present documents in plain English, and which leave their customers to wade through a morass of mumbo-jumbo?

Each year, the Writemark Plain English Awards Trust gives bouquets to the clearest-speaking organisations, websites and documents – and brickbats to the worst.

NZX subsidiary Smartshares made the finals for this year’s “Brainstrain” award, with a wonderfully incomprehensible notice to investors. Here’s a sample paragraph:

“The Manager will not initially bilaterally lend securities held by the Fund directly to NZX Market Participants, as the Securities Act (Group Investment Index Funds) Exemption Notice 2002 (`Exemption Notice’) on which the Manager relies may only be relied upon by a fund that conducts securities lending, if that fund lends securities pursuant to the rules of a designated settlement system such as the CSS.”

For those that soldiered through, yes, that was a 65-word sentence.

Pity the shareholders – the document was four pages. It’s difficult to read, but how difficult?

the amusingly acronymed SMOG index (Simple Measure of Gobbledygook) is widely recognised as the best indicator of readability. the formula analyses the number of syllables per word and comes up with the estimated years of education required to read any given piece of text.

Feeding the entire Smartshares notice though the online calculator at WordsCount spits out a SMOG rating of 17.61 years of education – in other words, you’d need a post-grad qualification just to understand the document.

For reference, the article you are reading right now received a rating of 12.1 years – high school students could understand it.

but it’s not all bad. though financial organisations feature pretty regularly in the Brainstrain categories, they’re also picking up some plain speech prizes.

Gareth Morgan Investments (GMI) tells it like it is – its Kiwisaver scheme just picked up the People’s choice Communication award from Workplace Savings NZ.

it also made the finals in this year’s Writemark best plain English document for its annual report, irreverently titled: “Finally, an annual report written for you.”

GMI communications manager Sue Kerr, who wrote the report, says investor reaction was overwhelmingly positive.

“They loved it,” she says. “We have never had phone calls or emails from people saying `hey, wow – that was a really cool annual report’.”

though it might seem counter-intuitive, Kerr recommends using a layperson to help write financial documents. “It really helps not to have background in this stuff,” she says.

“Then you can go straight to the economists and say: `What the hell do you mean by that?”‘ but it’s not quite as easy as writing everything out in simple, readable terms, she says.

Annual reports, and many other financial forms and documents, have to comply with a whole lot of legislation.

“Writers are often very concerned about the legal implications of not including something, or that it should be worded in a particular way because they feel safe,” says Harris.

This means that these kind of documents, the unholy union of legal and financial boffins, can be propelled to new heights of jargon, incomprehensible to outsiders.

“We can’t change the core structure – that’s the problem,” says Kerr. Instead, the way GMI approached it was to provide a basic explanation of key figures in front, with the detailed data included at the back.

They’ll continue to play it straight, too – Kerr has plans to feed other documents through the plain-speak wringer in the near future.

Alan Greenspan was once quoted as saying: “Since I’ve become a central banker, I’ve learned to mumble with great incoherence.” even though the remark was tongue in cheek, it’s still a slightly disturbing sentiment from a man who headed the US Federal Reserve for nearly 20 years.

the global pervasiveness of financial jargon begs the question – is this a deliberate attempt to go straight over the plebs’ heads?

not usually, says Dr Dianne Bardsley, of Victoria University’s school of linguistics and applied language studies.

“It’s more about being up with the trend,” she says. “In some ways, people want to have some language that will impress.” the other reason jargon develops, she says, is that it is necessary to describe highly specific things. It’s only when that has to be translated to ordinary people that it goes awry.

“People forget that they’ve got to tailor the language they use to their audience.” but that’s not to say jargon isn’t used deliberately on occasion, she says.

ACCORDING to US President Barack Obama, the global financial crisis was at least partly caused by such misinformation: “For years, banks and mortgage lenders and credit card companies have often used fine print and confusing language and attractive, front-end offers to take advantage of American consumers,” Obama said in a speech last year.

when this bad business practice does occur – which isn’t often these days – it is a subtle “sleight of hand”, says Harris.

“The whole tenor of something might be giving a different impression than when you read it through properly. but we all know most people don’t read things properly.”

If you read it thoroughly but still don’t understand it, then always challenge it, says Harris. There’s no need to feel stupid or intimidated.

“We’re always saying to people: `You have a right to understand.”‘

Businesses have a big opportunity to cash in here, she says.

If they are encouraged to make their material more accessible, then that becomes a great selling point.

“There is such a commercial advantage for financial and legal firms who will use plain English,” says Harris.

so there it is, plain speaking can be a win/win.

Finance-speak has its place, but it has to be in language accessible to all people.

– © Fairfax NZ News