Myra, Ira and the Family History of Confusion
If you have trouble keeping up with your HSAs, MLPs, ADRs, SEPs, FSAs and APRs, it might be time to brush up, because -- no exaggeration -- your future depends on it.
Yet another financial acronym, MyRA, arrived last week, and it deliberately rhymes with the retirement account known as the IRA. That might have been a good idea if, says Danny Altman, founder of branding company A Hundred Monkeys, most of MyRA's target audience had a clue about what an IRA is.
Jean Nicks, a 79-year-old retiree from Colorado Springs, Co., is one of 10 women beyond their mid-60s who meet the fourth Wednesday of every month at the local senior center to pore over their $100,000 stock portfolio. She knows all about splits, dividends and price-earnings ratios, but when it comes to financial acronyms she’s stumped. “You can’t even read through an article without losing track of what stands for what,” she says.
The MyRA and its cousin IRA are related to another savings scheme, artfully named if you find resonant poetry in the tax code: the 401(k). The introduction of the MyRA, the name of which President Barack Obama flubbed when he announced it in his State of the Union last week, conjures a question: Who is naming this stuff and, seriously, can you get paid for it?
Saving is hard enough in a post-crisis era when incomes are stagnant and rates are low. Yet everyone from the financial industry to the government seems to be compounding confusion, instead of interest. Complexity reigns, simplicity gets passed over like bruised fruit, and intelligent people are flummoxed by products named by accountants or by accident.
For most Americans, the long tradition of bewildering financial product names began with the 401(k). As Bloomberg reporters recently found, no one is more surprised by the 401(k) moniker’s ubiquity and staying power than the man who authored that provision 35 years ago. Many other savings products arrived to great fanfare and then flopped. Just ask anyone clinging to the discontinued Archer MSAs (that’s medical savings accounts). “No one knows what it is,” says Paul Hamburger, an employee benefits expert and partner at the law firm Proskauer.
All the jargon and acronyms mean the industry must work overtime to educate the public. Witness the continual, largely futile efforts to invent and reinvent financial literacy curricula that actually work. And then there are the CFPs -- that stands for certified financial planners -- who have launched a $10-million-per year, three-year ad campaign to raise awareness of who they are -- 40 years after they were created.
Not all the names are bad. Altman admires the financial industry’s new effort to re-brand “annuities,” a category notorious for its fees and fine print, as “lifetime income” products. Imagine that: A name that actually describes what a product (hopefully) does, acronym- and jargon-free.