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The Words You Choose Matter

Frank Luntz, a political consultant, pollster to the Republican party and skilled communicator, understands the value and influence a name or description can have on audiences. He knows that two phrases meaning the same thing can result in two very different perceptions and skew research and polling results accordingly.

As an example, the term “death tax” is used versus “estate tax” to help drum up opposition to inheritance taxes. Similarly, “tax relief” may connote an easing of an unfair burden whereas “tax cut” might evoke a gift to the wealthy.

This can be extended to financial services. The Alliance for Lifetime Income (Alliance), a confederation of financial services firms (mostly insurance companies) seeks to elevate the benefits of having a protected income in retirement.

It’s how you ask the question

When people are asked if they would favor a financial solution that would guarantee them an income for life with the opportunity to participate in market gains, the response is overwhelmingly favorable. But what the Alliance is referring to is an annuity, which is not always viewed favorably by advisors.

Not surprisingly, then, the Alliance’s June 14 press release launching the initiative mentions “protected lifetime income” or “protected monthly income” more than twice as often as “annuity” or “annuities,” and even then, these latter terms are usually de-emphasized by being grouped with other terms like “pensions” and “comprehensive retirement plan.”

Our aim is not to make a judgment call on annuities or other financial products, but to illustrate the significance of language, especially as it applies to topics that are complicated and/or controversial.