THOUSANDS of Sunshine Coast and Gold Coast residents are still confused about the meaning of some of the most fundamental financial terms, a Suncorp survey has found.
Despite the survey respondents aged 50 to 65 having decades of experience dealing with banks and making super contributions, the majority admitted defeat when it came to knowing what particular terms meant.
In addition, some who claimed to know the meaning of a term were completely incorrect in their descriptions.
Suncorp' Sunshine Coast general manager James McLellan said the results were a red-flag for the financial services industry.
"As a result of recent market volatility, many Sunshine Coast and Gold Coast residents are more eager than ever to ensure they're in control of their financial futures and it's the responsibility of the superannuation and banking industry to help them by discarding jargon and using plain English," Mr McLellan said.
Key findings of the Speak Simply survey of Sunshine Coast and Gold Coast baby boomers were:
• 72% had either never heard or didn't understand the meaning of the term concessional contributions - a super contribution that attracts special tax treatment. Some Queenslanders thought it meant 'when everything was safe in your bank account' or 'when your income didn't match your super'.
• 80% had either never heard or didn't know the meaning of the popular banking phrase loan to value ratio (LVR) - put simply it is the loan amount divided by the value of the property or asset, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in an LVR of 80%. Some Queenslanders thought it was 'a little like shares' or something that happened 'when interest rates were too high'.
• 62% had either never heard or didn't know the meaning of the term annuity - a retirement insurance policy that provides a regular income in exchange for a lump sum. Some Queenslanders thought it was 'something you get when someone dies' or 'some sort of annual payment'.
• Just 62% had heard of the term offset account and had an idea what it meant. An offset account is a savings account linked to a loan that can help to reduce your interest repayments. Some Queenslanders thought it was a 'scheme to lower or dodge tax' or something 'a bit like an offshore account'.
Mr McLellan said while great strides had been made in recent years towards simplifying financial speak, it was clear the industry still had some work to do.
"Interestingly, the results indicated that the understanding of financial terms increased as incomes rose," Mr McLellan said.
"However, if the majority of Sunshine Coast and Gold Coast baby boomers are overwhelmed by financial 'gobble-de-gook' they risk missing out on opportunities to build wealth or save money."
Mr McLellan said that when it came to seeking advice there was a popular misconception that financial advisors were only for the wealthy.
"The reality is that anyone with money can benefit from the pearls of wisdom an expert has to share. Their advice can prove invaluable however much you earn," he said.
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