Tips On Explaining Tough Financial Concepts To Clients

To be effective, explanations should be short and jargon-free. If you can’t explain a concept in fewer than 15 minutes, you should change your approach, taking your client’s learning style into consideration.

Most clients don’t understand how to make strategic decisions using pre- and post-tax numbers. For example, when a client in a top marginal tax bracket wants to keep considerable cash in a taxable savings account, I suggest they use some of that cash to pay down their mortgage. To get the client on board, I put the decision in its tax context: the taxable account would have to earn 6% (pre-tax figure) to be equivalent to paying down a mortgage at 3% interest (paid in post-tax dollars). Plus, paying off the mortgage can be considered a guaranteed return.