A barrier to financial literacy is the use by some financial planners, fund managers and listed companies of unnecessarily complex language when communicating with their investors.

In the Wall Street Journal this month, personal finance columnist Brett Arends reports on a survey by a US fund manager showing once again that investors strongly dislike financial jargon and overly technical language.

And Arends quotes William Lutz, co-author of the US Securities and Exchange Commission's A Plain English Handbook for the financial industry, as saying that some members of the financial industry too often attempt to "impress, not communicate". Lutz, a long-time enthusiast of plain English, is professor emeritus at the State University of New Jersey.

The handbook includes this straightforward advice for the drafting of financial disclosure documents: No legal jargon. No highly technical business terms. (See this guide: http://www.sec.gov/pdf/handbook.pdf)

In the decade since the handbook was published, recognition of the importance of financial literacy has gathered pace.

Several years ago, ASIC published a survey of more than 1200 investors about how the regulator can better educate investors, provide investor warnings and keep investor expectations to a realistic level. (See http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rep_121_Australian_investors_at_a_glance.pdf/$file/rep_121_Australian_investors_at_a_glance.pdf)

Not surprisingly, some investors surveyed named complexity and jargon among the barriers to reading disclosure material. An inexperienced Brisbane investor in managed funds was quoted as saying about disclosure documents: "I find it very confusing, it is all jargon, not in layman's terms."

A challenge for advisers and fund managers is to communicate with their investors in a way that is not simplified to the point where meaning is lost or to the point of seeming condescension. It can be a fine line. And the use of plain English is one of the central keys to good communication.

From an investor's perspective, one of the best ways to deal with technical jargon is to become as informed as possible about investment practices and markets.