Financial terminology such as ‘stockbroker’, ‘pension’ and ‘FTSE’ causes a biological stress reaction - such as sweating and increased heart rate - in humans, a Barclays-backed study has found.
Barclays enlisted i2 media research at Goldsmiths University of London to test 60 people's emotional association with words by presenting participants with 100 colour-word combinations and comparing the response times and error rates of both neutral and financial terms.Download the document now 1.2 mb (Chrome HTML Document)
Two thirds of participants responded to the financial lingo in ways that indicated increased anxiety, while 17% reported that they broke out in a sweat, 44% reported an increased heart rate and 23% reported experiencing muscle twitches.
The experiment chimes with a Barclays survey that shows three-quarters of Brits do not feel confident enough to invest their cash on the stock market, with a quarter feeling as worried by the thought of investing as skydiving.
In fact, Brits think investing in the market is one of the most difficult skills to learn, with 44% believing it is tougher than mastering computer coding and 29% believing it harder than ballroom dancing.
Part of this is due to a lack of understanding of financial jargon: one in ten mistook a ‘blue-chip stock’ for a poker move and almost a third believed a ‘bull market’ - a market in which share prices are rising - was a place in Birmingham.
While men had stronger adverse reactions to the financial terms in the test, they have more confidence in their ability to understand finance and investments. Younger participants were more comfortable with the test than their older peers.
Ross Dalzell, head, Barclays Smart Investor, says: “This fear of investing could have a real impact on people’s future financial health as, whilst you could lose money, investing offers the potential of higher returns than traditional cash savings over the longer term.
“Our experiment has proved once again how the language we use has real impact on people’s confidence in investing. It’s clear that the industry needs to rethink the way we talk about investing and, off the back of this experiment, we’ve committed to a review of our platform to simplify the language that we use and start to break down some of the known barriers."
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