The public are not confident about what many key financial terms mean, new research from YouGov Omnibus reveals.
YouGov asked 1,916 GB adults to consider whether they were confident of knowing the meaning of a range of financial words and phrases relating to areas such pensions, savings and mortgages. The research found that of the 33 terms presented, for 22 of them less than half of the population are confident about their meaning.
The public is least confident about knowing the meaning of the term ‘spread betting account’, with two thirds (67%) unsure about its connotation. This is closely followed by ‘corporate bonds’ (65%), ‘tracker funds’ (64%) and ‘self-invested personal pension’ (64%).
By contrast, the term the public is most confident about is, perhaps understandably, ‘savings account’ – which 92% understand. A little further behind is ‘cash ISA’ (78%), ‘building society’ (74%), and ‘fixed mortgage’ (72%).
There are some terms where the public is surprisingly unconfident. For example, three in ten (30%) do not understand the term ‘fixed/variable APR’, despite it being applicable to major purchases, and featuring in the small print of adverts on a regular basis.
The data also points to a divergence in understanding between different age groups. Those aged 18-24 are only confident about knowing three of the 33 terms asked about, while those who are 55 and over are confident about the meaning of 19 terms.
While almost six in ten (59%) of those who are 55 or over are confident of the meaning of ‘tracker mortgage’ this falls to just 15% of those aged 18-24. A similar pattern is seen with other house-buying terms such as ‘fixed mortgage’ (81% vs. 40%) and ‘offset mortgage’ (30% vs. 8%)
The trend is repeated among other financial terms. A case in point is ‘stocks and shares ISA’, which 64% of over-55s are confident about defining, compared to just 30% of under-25s. The only term that reverses the trend is ‘Bitcoin’ where 43% of 18-24s are confident they know what it means against only 24% of over-55s.
While adverts and those working in the financial industry use many terms as if they were well-understood, it seems as though much of the public is in the dark about some of these key words and phrases. This gap in knowledge should be a concern for many working in the sector as it is possible potential customers may be put off by what they see as impenetrable language and industry-specific jargon.
“Although the low levels of confidence among young people might be expected in a number of cases, it is still surprising that so few are confident of knowing the meaning of so many terms. With many millennials struggling to get on the housing ladder, unable or unwilling to invest in pensions and not putting away great sums into savings, the financial services sector needs to find ways of engaging with young people - this research would suggest that currently there is a language barrier.