Comment from a Financial Advisor Left Me Shaking My Head

Sometimes I shake my head at the things financial advisors say and write. Like many small businesspeople, I use social media to stay current with what my colleagues are thinking and saying. Usually, I find the conversations stimulating and helpful to our clients because I discover research and ideas I may not have been aware of. However, there are times I can only wonder what other financial advisors are thinking. For example, an advisor recently wrote this on Linked In during a conversation about portfolio diversification:

“We use semi-correlations to explicitly focus diversification to downside diversification. “

I admit I didn’t know what this means when I read it.  I know what “diversification” means. I’ve written about the benefits of portfolio diversification in other posts you’ll find on this website. And in case you want a refresher, there is a good explanation of portfolio diversification from Fidelity Investments at this LINK.

I had to dig deep to un-pack this advisor’s comments. It turns out the advisor’s use of the term “semi-correlations” comes from the study of statistics. I won’t bore you with the definition, but the term does have meaning. Thankfully. (I have no idea why he used the term on a social media site, but that’s a topic for another day.) As for the rest of the sentence, I can only guess at its meaning.

What’s the point of this post? Be wary of financial advisors who use gobbledygook (definition: language that is meaningless or is made unintelligible by excessive use of obscure technical terms; nonsense.) At JFP, we believe the role of an advisor is to communicate with you in terms you understand so you can make intelligent and well-informed decisions. If your advisor is not making sense for whatever reason, speak up and ask questions.

If you want a commonsense approach to personal financial issues, send us an email or click on the “Make An Appointment” link on this website. We’d be happy to have a conversation using words we both understand.

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