In financial planning, clarity is currency. Clients who understand the strategies behind their finances stay with an advisor longer and invest more confidently. A recent study found that nearly 90% of clients consider an advisor’s engagement style when referring friends and family.

When it comes to navigating clients through a maze of technical terms, unfamiliar acronyms, and convoluted explanations, the stakes are high. The solution? Embracing simplification to help clients feel empowered and to build trust.If you’re wondering how to help clients understand financial planning, you’re not alone. In this article we outline five ways to do it, with straightforward steps to turn complex financial concepts into clear, compelling conversations. These techniques will enhance your clients’ understanding of their finances (and the principles behind them), deepen your client relationships, and set you apart in a marketplace hungry for advisors who can cut through the noise.

Step 1: Know Your Audience

Not all clients approach financial planning with the same background, financial literacy, or goals. Ask open-ended questions early in your relationship to assess individual needs, such as “How do you prefer to receive information about your finances?” or “What’s been most confusing about financial planning in the past?” Their answers will reveal whether they want high-level overviews, detailed breakdowns, or a combination.

Once you have their answers, you can then tailor your offerings accordingly. When explaining investment diversification to a young professional, for example, you might focus on long-term growth potential and risk management across asset classes. For a retiree, the same concept may shift to discussing income stability and capital preservation first and foremost. The principle remains the same, but the framing changes entirely based on life stages, priorities, and individual needs.

Step 2: Translate Jargon into Everyday Language

Terms like “alpha,” “beta,” “basis points,” and “compound annual growth rate” might be second nature to you, but they may confuse some clients. This can be fixed by translating technical language into terms anyone can grasp.

It can help to create analogies that connect abstract concepts to familiar experiences and phrases. Examples include:

• Diversification: “Don’t put all your eggs in one basket.”
• Rebalancing: “Tune up your portfolio like you’d maintain a car.”
• Dollar-cost averaging: “Groceries are different prices throughout the year—sometimes you get a deal, sometimes you don’t. By budgeting a fixed amount per week, over time your average cost balances out, smoothing out the ups and downs.”

Storytelling is equally powerful. Instead of explaining tax-loss harvesting with IRS code references, tell the story of a client who offsets gains by strategically selling underperforming positions, reducing their tax bill, and reinvesting the savings.

Step 3: Visualize the Message

The human brain processes images 60,000 times faster than text, which means the right chart or graphic can communicate in seconds what might take paragraphs to explain. Use simple charts to show how asset allocation shifts over time, infographics to illustrate the impact of fees on long-term returns, or even whiteboard sketches during meetings to map out cash flow strategies. These don’t need to be elaborate—sometimes a hand-drawn diagram creates more connection than a polished slide deck.

Consider this example: You’re explaining portfolio risk to a conservative client who’s nervous about market volatility. Rather than citing standard deviation percentages or beta coefficients, use a simple line graph that illustrates how their diversified approach smooths out the peaks and valleys. Suddenly, risk isn’t an abstract statistical measure—it’s a visible pattern they can understand and feel comfortable with.

Step 4: Use Active Listening to Reinforce Understanding

Active listening goes beyond just “hearing.” It involves paying close attention to what clients are saying and then summarizing to confirm your mutual understanding. Try phrasing things in a question format, such as: “So what I’m hearing is that you’re concerned about outliving your savings, and you want to understand how our withdrawal strategy addresses that. Is that right?”

This technique, sometimes called reflective listening, accomplishes two things: it verifies you’ve understood their concern, and it gives them a chance to clarify or elaborate.

When clients feel truly heard, they open up about fears, goals, and circumstances they might otherwise keep hidden. You might uncover that a client’s reluctance to invest more aggressively isn’t about risk tolerance, but it’s actually about a family history of financial loss they’ve never mentioned, or a bias they didn’t know they had. These insights allow you to tailor your guidance more effectively and address the real obstacles to their financial success.

Step 5: Educate, Don’t Overwhelm

There’s a fine line between thorough and overwhelming. Attempting to simplify estate planning, tax strategies, investment philosophy, and retirement projections all at once could leave clients confused and anxious rather than empowered.

Think of financial education as a series of chapters, not a single encyclopedia entry. In your first meeting, focus on understanding their goals and establishing the big-picture strategy. In follow-up conversations, drill deeper into specific components.

To drive specific concepts home, send clients helpful resources as digestible touchpoints that reinforce what you’ve discussed. Some ideas include:

• Sending a short video that reinforces the concept you’ve tried to simplify (e.g., compound growth, annuities, or charitable giving)
• Creating a simple glossary of terms you use frequently that clients can reference
• Sharing a brief newsletter or articles that explain timely topics in plain language

Education empowers clients to make informed decisions, and it also positions you as a trusted advisor rather than a salesperson. These clients can become your most loyal advocates, referring friends and family who want the same experience.

Make Simplicity Your Differentiator

In a profession built on trust, there is no greater relationship-builder than ensuring your clients genuinely understand where they stand and where they’re going. By developing simple ways to explain financial planning to clients, you create a three-fold advantage: clients who truly understand their financial position make more confident decisions, their deeper comprehension of financial concepts enables more productive conversations, and your reputation as an advisor who makes information accessible becomes a powerful differentiator in a crowded market.

Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.