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|AARP Financial Inc. survey finds: When it comes to financial jargon, Americans are befuddled|
April 17, 2008
Most Americans find the language of Wall Street technical and confusing and may be making investing mistakes and missing opportunities as a result, according to a nationwide survey released here today by AARP Financial Inc.
More than half (52%) of 1,203 adults surveyed said they've made an investment where they had an unfavorable outcome —- like owing unexpected taxes or paying an early withdrawal penalty — because they felt "confused" by or "didn't understand" an investment.
"What we have here is a failure to communicate," said Richard "Mac" Hisey, Chief Investment Officer at AARP Financial, a taxable subsidiary of AARP. "The relatively straightforward process of saving for the future has become incredibly complicated."
"The research shows that investing has become unnecessarily complex, confusing and, in some cases, intimidating," Hisey said. "As a result, many American investors have saved too little — most with less than $50,000 for retirement — or are too intimidated to get started in the first place."
The survey of 1,203 adults age 18 or older was conducted by telephone from January 23 to February 10, 2008 by GfK Roper Public Affairs & Media, a division of GfK Custom Research North America. The margin of error for the sample of 1,203 respondents is plus or minus 3.8 percentage points.
"Many people are more likely to read the nutritional information on a cereal box than read a mutual fund prospectus before they buy," said Hisey. "The recent efforts by the SEC to simplify the prospectus are a long stride in the right direction. Investors need quality, not quantity, of information."
Less than one-third of those surveyed said they understood the terms "basis point," "expense ratio," or "index fund" well enough to explain them to a friend or co-worker. Not surprisingly, half of those surveyed described themselves as "not so" or "not at all" knowledgeable about investing, and more Americans feel confident in their ability to select the right surgeon for a major surgery than feel confident about choosing the right investments.
Financial Jargon: Costly for Many Americans
Over half—52%—of those surveyed said they've made an investment mistake because they were confused by or didn't understand an investment. Specific mistakes cited by respondents include failing to or waiting too long to invest because of confusing information (cited by 30%) and making an investment they regretted because they didn't understand it (28%).
"Financial jargon can have painful and enduring consequences," Hisey said. "Americans face enough roadblocks on the road to a financially secure retirement. Poor communication should not be one of them."
The survey found that one out of six Americans have failed to sign up for a retirement plan at their job because they didn't understand how it worked, and better than four in ten (44%) said they don't understand how an IRA account works.
Less than one in five (19%) survey respondents said they are very confident they will have enough money to live comfortably in retirement, due in part to this confusion.
|House passes bill requiring plain language in federal documents|
April 15, 2008
The House overwhelmingly approved a bill Monday that would force the government to use plain English in its public reports, letters and documents.
The bill, HR 3548, would give agencies flexibility to define “plain language” and write their own guidelines. The Securities and Exchange Commission is one agency that publishes its own Plain English Handbook.
“This week, millions of Americans are finishing a confusing and oftentimes frustrating annual ritual: filing their federal tax return,” said Rep. Bruce Braley, D-Iowa, the bill’s sponsor. “The Plain Language Act requires a simple change to business-as-usual that’ll make a big difference for anyone who’s ever … received a government document.”
A similar bill in the Senate, S 2291, passed the Senate Homeland Security and Governmental Affairs committee last week. It now heads to the full Senate for a vote.
Full Story: federaltimes.com/index.php?S=3479845
|Commentary: Unclear communication is costly, time-consuming|
March 30, 2008
Today’s world is so complex that we must rely on others, especially the government, for information to keep us safe, secure and healthy. Taxpayers pay for the government, and they deserve to understand what it’s doing and what it’s telling them to do. Unfortunately, the government often serves up information in overwritten, wordy, highly technical language like the following:
“The amount of expenses reimbursed to a claimant shall be reduced by any amount that the claimant receives from a collateral source. In cases in which a claimant receives reimbursement under this provision for expenses that also will or may be reimbursed from another source, the claimant shall subrogate the United States to the claim for payment from the collateral source up to the amount for which the claimant was reimbursed under this provision.”
And what does all this mean? Simply that:
— If you get a payment from another source, the government will reduce its payment to you by the amount you get from that source.
— If you already got payments from the government and from another source for the same expenses, you must pay back what the government paid you.
Difficult, obscure writing like this is expensive, time-consuming and annoying. It puts citizens at risk and makes it difficult for federal agencies to fulfill their missions effectively and efficiently. It discourages people from complying with requirements or applying for benefits. The owner of a small business in Tulsa, Okla., asked 13 clients about their responses to difficult government communications. Of the 13, 10 said they might never respond.
When government communications are unclear, agencies have to write second documents to explain the original unclear document. They have to answer calls asking for explanations. They have to chase after people who fail to respond. They may even lose court cases because their communications violate rights to due process.
The other side of the story is equally compelling. Plain language — language the intended reader can understand and use on one reading — can save the government and the public time and money and help the government fulfill its mission better.
A Veterans Benefits Administration office rewrote one benefits letter in plain language. Calls to the office about that letter fell 90 percent. But even better, more veterans applied for benefits because they understood whether they were eligible and what they needed to do. In the end, more veterans got the help they needed because VBA rewrote this one letter.
Arizona’s Department of Revenue started a plain language effort that spread to other state offices. Here are just two of the results:
— The Department of Revenue saved $51,014 in a year from avoided phone calls after clarifying requirements.
— The Department of Weights and Measures collected an extra $144,000 a year after clarifying payment instructions.
Given such evidence, why does the government continue to use difficult language? It’s easier. Writing clearly takes hard work. And it requires clear thinking. It’s faster to pull out an old model and update it than to redo your document.
And, often, government writers don’t think much about the most important aspect of communication — the audience.
Fixing this problem will take focus and determination. Government writers will need new skills and will need to change the way they think about communication with the public. They need to recognize the huge costs imposed by poor communication and accept that it’s their job to be clear, not the job of the reader to figure out what they’re saying. Perhaps then government communication will serve citizens the way our democracy intends.
Annetta L. Cheek is chairwoman of the Center for Plain Language. She testified last month before the House Small Business subcommittee on contracting and technology on HR 3548, the Plain Language in Government Communications Act.
Full Story: federaltimes.com/index.php?S=3451004
February 06, 2008
Federal agencies have gotten better over the years at communicating clearly with the public. A quiet movement has bubbled along in pockets throughout the government for more than a decade, with advocates of plain language slowly making headway in convincing their bosses that it's more important to help people understand the government than to satisfy the general counsel offices and other protectors of bureaucratese.
The application for federal student aid, for example, is still a bit clunky but is much easier to complete now than it was in the 1990s. The Social Security Administration's benefits application process also is much smoother. A key factor in the government's improved communications skills has been the shift from paper to online. Plain language advocates took advantage of the move to the Internet by arguing that attention spans are much shorter when people are looking at a computer screen rather than at a printed booklet.
Of course, there's still much work to be done. Internal documents are written in laborious jargon, as are many regulations and Federal Register announcements. Annetta Cheek was one of the plain language advocates toiling in the bureaucracy until recently, when she left government to devote her attention to the Center for Plain Language, a nonprofit that pushes better communication both in government and in business. Cheek is helping push a bill through Congress that would call on federal agencies to write in plain language. In 2007, companion bills were introduced in both the House and the Senate. This year Cheek will be advocating for more and more lawmakers to get on board the bandwagon. It's a tough sell, in part, because it's such a mom-and-apple-pie idea. Who is against plain language? So why pass a law requiring it?
But one previous lawmaker already is on board - former California Republican congressman Christopher Cox, who is now the chairman of the Securities and Exchange Commission. Last year, he pushed businesses to write disclosures required by federal law in language that the average investor could understand. For example, major public companies must publish documents each year justifying their executives' compensation plans. The SEC is encouraging companies to simplify the explanations.
Bureaucratese is a problem in the private sector as much as in government. Indeed, Cox's agency is asking investors about the readability of all disclosure documents they come across. The agency will use the findings of their survey to help businesses write more clearly.
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