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Many prospects don’t want to pay for a financial advisor even if their portfolio would grow faster with your help.

You’ll never convince these folks with pressure sales and endless phone calls. You have to opt for something more subtle. The easiest way: Analogies.

When you use analogies, you teach your leads, prospects and clients something without telling them directly.

That way, you’ll sell them on hiring you without ever feel like you’re selling something.

In this episode, you’ll find out about 7 analogies you can use with your clients so they understand, hire and pay you!

Want to close more and better clients with analogies? Listen now!

Show highlights include: 

  • Overused analogies you might be using that scare clients away (avoid them and you’ll do better) (1:23)
  • The “guide” analogy that ethically forces clients to stick around for the long term (even if their portfolio tanks)  (6:08)
  • Why your clients invest like they’re in a traffic jam (and how to use that metaphor to close more clients) (8:50)
  • Warren Buffett’s hamburger analogy that lets your clients profit from market dips (14:14)

If you’re looking for a way to set more appointments with qualified prospects, sign up for James’ brand new webinar about how financial advisors can get more clients with email marketing.

Go to https://TheAdvisorCoach.com/webinar to register today.

Go to https://TheAdvisorCoach.com/Coaching and pick up your free 90 minute download called “5 Keys to Success for Financial Advisors” when you join The James Pollard Inner Circle.

Discover how to get even better at marketing yourself with these resources:




Read Full Transcript

You're listening to Financial Advisor Marketing, the best show on the planet for financial advisers who want to get more clients without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal. James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisers grow their businesses more rapidly than ever before. Now, here is your host, James Pollard. [00:31.7]

James: This Episode idea about the analogies and all that, it came directly from an inner circle member named Mark from Indiana. Mark, thank you so much for this. I can't believe I haven't done an episode about analogies at all, like ever 150 plus episodes, and I haven't even covered the topic. Well, I regret that I really do because analogies are great for financial advisors. And just so we're clear, I looked up the definition that way we have a foundation on which to put the episode. An analogy is defined as a comparison in between two things, typically for the purpose of clarification. Some examples include finding a good financial advisor is like finding a needle in a haystack. Or investing is like a marathon, not a sprint stuff like that. You're drawing a comparison. I know that you probably already knew that, but I wanna make sure I am meticulous with of stuff. [01:22.5]

There are some analogies out there that are overused. And the first one is that bonds prices go up when interest rates go down like a Seesaw, Ugh, this is oversimplifying things. And anyone who has taken the series seven exam has seen this analogy in the study books. And the reason I don't like the Seesaw analogy is because not because it isn't an accurate analogy. Well, that depends on, you know, quantitative easing and all the other money manipulation done by the big government. But the reason I don't like it is because it sounds condescending. And truthfully not everything needs to be an analogy. You can definitely overuse these. You, you can make it seem like you're dumbing things down too much. All I need to do is tell you bond prices go up when interest rates go down, that's it. And you get it. I don't need to throw another reference in there. I don't need to treat you like you're stupid. [02:18.8]

Imagine if I was talking to you about building an email auto responder. Like I do on the show quite a bit. I talk about email auto responders because email marketing is the most effective appointment sending strategy, I've literally ever seen for financial advisors. Imagine if I said something like it sends one email after another, just like a slinky going down the stairs. You would think that I thought you were stupid. And so, there are some instances where analogies can be dangerous. Another overused one, at least in my opinion is the analogy about buckets. You talk about the bucket strategy and financial advisors talk about different buckets with like pre-tax versus after tax accounts. They also talk about buckets when they're referring to different investment strategies, themselves like conservative versus aggressive. Oh, you can have your conservative bucket here. You can have your aggressive bucket here. It's like, well, what if I don't want a bucket? What if I want a little cup? What if I want a bathtub? Can I have a conservative bathtub over here? An aggressive bathtub over here? I don't wanna spend too much time on this. So, I'm just gonna list a bunch that I think are overused. So here we go. [03:20.2]

The stock market takes the stairs up, but the elevator down. Don't put all of your eggs in one basket. Bonds, they're like the anchor of your portfolio. And good investing should be like watching paint dry. And I must admit, I, I love this quote, but it is overused. I see a lot of financial advisors, they, they say this stuff, they put it on the website. It, it is, it is a little bit overuse. Good investing. I, I'm not gonna comment on this. Let let's get into some analogies. I like none of these analogies come from my brain. None of this is my original thinking. I did not come up with these on my own. Over the years of reading stuff and being involved in this world, I picked up a bunch of these. And when I decided to make this episode, I sat down and made a list of analogies that were bumping around in my head. I probably missed a bunch that were really, really good, but the ones that made it to the top, they bubbled to the top of my brain are the ones that made it in this episode. So, I'm going to riff on each one. [04:18.9]

The very first one that bubbled up to the top of my brain was, ‘Inflation is like blood pressure.’ And the idea with this is that you can't let inflation get out of control. You could be fine for a few years with high blood pressure, but eventually it's going to lead to irreversible harm. The idea is also that assets, which protect against inflation though, like blood pressure medicine. And, and speaking of inflation, another analogy I like is that ‘inflation is the silent tax.’ This is so true. Especially when you have politicians who claim that they won't raise taxes on the middle class but let inflation, inflation run rampant. It is a tax; it is destroying your wealth. If you have cash in there in the bank account is getting eroded. No matter how much you make, you can make $40,000 per year, you could make $400,000 per year, you could make 4 million per year. Inflation is the silent tax. I really love that analogy. When I first learned it, it was like seeing something for the first time. It was like learning another language. My eyes opened up. [05:18.3]

The average American doesn't understand this, at how much inflation robs them. I mean, really there are certain people who clamor for wage increases and they say, oh yes, we want a victory. We have our wages increase. But then they don't realize that the, the company never really pays. The companies pass the cost onto the consumer. The consumer pays more in goods in order to support the wages. So, we're back at square one. Actual real economic productivity is the key to generating wealth in a society. Meaning real benefits, real value is added, not forcing someone to pay you more and then passing the cost on to someone else. Whenever you take a dollar from a person, there are consequences, but I will leave that commentary for another day. [06:02.3]

Number two, this analogy I really, really like it's, ‘a financial advisor is a guide.’ And this comes from Carl Richards. I will give him all the credit. When I did the episode with him, if you haven't listened to that, go back and listen to the Carl Richards episode. He explained, and I really love this concept because the idea is that your financial journey is not linear. Things will happen. He talked about how, if you're out hiking and it starts raining, even though rain wasn't in the forecast, a guide is still responsible for helping you get through the rain. So, if you start your financial plan and in you have a certain income and then your income either goes up, or it goes down the guide, AKA, the financial planner is going to help you with that process. If you get married, if you get divorced, if you have children, if a parent dies, if a parent has a terminal illness or needs long term care, you have to make these decisions. If you're part of the sandwich generation, the guide is your friend. There are people who have been working with financial advisors for 20 years. They have amazing relationships with these people. They treat each other, right. They send holiday cards. They go to each other's homes. They have barbecues like I've read these stories and it, it really is heartwarming. [07:09.7]

And what happens when you have this relationship for such a long period of time is you see these changes. So, in many ways, the financial advisor has no choice, but to be a guide because just by being involved in the client's lives for that long, you're going to see these things happen. So, if you're a financial advisor out there, of course you are, because why also would you be listening to the financial advisor marketing podcast? I think it's extremely helpful to view yourself as the guide, know that these things will change. It's not necessarily all about your client or clients. Just contributing their $6,000 per year into a Roth IRA or maxing out the 401k portion or getting the match, whatever you have. It's not just a linear process. You're like, it's not like every single year. You're like, oh, did you max out your 401k? Did you max it out this year? Did you max it out this year? No things change. If the income drops, you might wanna do a conversion. Like you have to roll with the punches here. And I just absolutely love the analogy of, ‘a financial advisor being a guide.’ So, shout out to Carl Richards. Thank you so much for that. [08:14.4]

Number three, ‘Switching, your investing plan is like changing in a traffic jam.’ Now I think this comes from the book, ‘Story selling for financial advisors’ by Mitch, Anthony and Scott West. I am not a hundred percent sure I'm going to give them credit because I'm pretty sure that it comes from them. If you haven't read that book, please read that book because it has a ton of analogies and metaphors, and it really set the course or financial advisors using these sorts of stories. And like I said, analogies and metaphors within their businesses. This particular analogy goes like this. ‘Have you ever been stuck in a traffic jam, watching cars in the other lane, zoom by, then you decide to get in the other lane and traffic stops. Then your old lane starts moving. The one you just got out of starts moving again. It's so frustrating, right? The same thing tends to happen when you switch up investment plans. And this is also a good way to describe why diversification is important. If it were somehow possible to drive in all the lanes at once, you would want to do that and average out your trip because you would get the average every single time. [09:23.1]

You wouldn't feel forced to stay in a particular lane. You wouldn't feel the pressure to switch. You wouldn't feel the pressure to do anything really. You would just own all the lanes and you would average that out. That would be so cool. I would opt for that every time, by the way. And for example, according to data, put out by visual capitalists, REITs were the so real estate, right? Real estate investment trust, REIT’s in case you, the word REIT’s sounds weird in audio It was the worst performing market sector of 2020. However, it was the best performing sector of 2019. So that's like switching the lanes, right? It was the best of one year, worst in the next year or, or the other year. The same is true with gold. Gold was the best asset class in, well, one of the best asset classes in 2010 and 2011 yet it was one of the worst in 2013 and 2014. That's another example of switching lanes. If you were all gold, your lane was moving, you loved it. You were having a great time, but then it slowed to a crawl. [10:21.7]

Emerging, I'll give you one more. Emerging market stocks were the worst performers in 2008, but they were the best performers in 2009. It's just another example. Switching, your investing plan is like changing lanes in a traffic jam. So, if it was 2008 and you owned emerging market stocks and they crashed, and you were like the heck with this, I'm getting outta this lane. You would've missed out on all the gains that came the very next year. So, I love that one. [10:49.9]

Hey, financial advisors – if you’d like even more help building your business, I invite you to subscribe to James’ monthly paper-and-ink newsletter, The James Pollard Inner Circle.
When you join today, you’ll get more than one thousand dollars’ worth of bonuses, including exclusive interviews that aren’t available anywhere else.

Head on over to TheAdvisorCoach.com/coaching to learn more. [11:12.4]

Moving on. Number four, the average miles per hour analogy to. What this does is it illustrates why you shouldn't put off investing and it goes like this. Let's say you have to go somewhere 30 miles away and you have an hour to get there. This means if you leave right now, you must maintain an average speed of 30 miles per hour to reach your destination on time. Does that it makes sense? Somewhere is 30 miles away. You have an hour to get there. So, you must maintain a speed of 30 miles per hour. That's doable. However, if you wait 30 minutes, you must double your speed to an average of 60 miles per hour. If you only have 30 minutes to get to somewhere 30 miles away, well, you're gonna have to go 60 miles an hour, and that's much more difficult. And part of me thinks it's cheesy when I see financial advisors say stuff like a dollar invested today can be $6 trillion, 40 years from now or whatever, but it does have some truth to it. I get it. I understand. They're trying to illustrate the idea of compound interest that your contributions pale in comparison to the wealth that you have generated by starting early investing often staying in the market time in the market, beats timing the market. So on and so forth. [12:29.7]

Time is either your friend or your enemy. The, the reason I think it's too easy is because I would much rather build businesses or assets that throw off cash to invest. That's just the way I think. My thinking is a little different, it goes like this. If I have a million bucks and I follow the 4% rule, I can withdraw $40,000 per year, but I have to get to the million bucks. First, I have to get to the million bucks in order to follow the 4% rule in order to take the $40,000 out. Why not just build assets that throw off $40,000? Now, of course, the real answer is I'd like to do both. I would like to have a million dollars and I would like to have the asset that throws off $40,000. But if the goal is merely to produce $40,000 of income, then I would rather address the goal itself head on. [13:20.4]

A lot of times when people are planning, this is gonna sound like it's blasphemous, right to financial advisors. I promise you it's not. It's just a different way of thinking, it's an entrepreneurial way of thinking. Rather than accomplishing a goal indirectly, right? If your goal to get $40,000 per year, so you can be financially independent. And you accomplish that goal indirectly by accumulating a nest egg and then having the income from that nest egg. Why not have the income thrown off right away? I would rather address that goal because even if it takes me a few years, I'm probably going to be better off investing large amounts than trapping myself by starting small. That's gonna go over a lot of people's heads. But if you're a real entrepreneur, you'll identify with what I just told you. So, I'm gonna leave it at that. [14:04.4]

Number five. This one comes from Uncle Warren buffet, Grandaddy, Grand Papi, Warren Buffet. In 2001 Warren Buffet said the following, “To refer to a personal to of mine I'm going to buy hamburgers the rest of my life. When hamburgers go down and price, we sing the hallelujah chorus in the buffet household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying, except stocks. When stocks go down and you can get more for your money people don't like them anymore.” So , this is the hamburger analogy. When the stock market goes down. I think this is such an incredible quote and the beautiful thing about this analogy is that you can adjust it to the person in front of you without it being condescending. I mean, this kind of rides the line between being condescending and not, but I, I think it isn't. If your client likes sushi, talk about sushi prices going down. If your client likes ice cream, talk about ice cream. Personally, I love when the market goes down, like when the stock market goes on sale, I'm all over it. This is probably because I'm primarily a dividend investor. Please don't send me your emails. I know, I know, I know index funds are awesome and I should just go and chill in some index funds, but I love dividend stocks and I take risk elsewhere. [15:22.1]

So, I'm primarily a dividend investor. And when the market is on sale, I can lock in some sweet, sweet, juicy hire dividend yields. And sometimes I daydream about being able to go back in time to 2008. So, I could scoop up some of those dividend aristocrats. When we had the market crash in 2020, yo, I went hard baby. I took out a whole bunch of cash that I had. I had the cash set aside for other purposes. I know that lump sums it's mathematically statistically better. Right? But I had cash set aside for other purposes. I started pouring it into the market. That was such a great move on my part. I don't really care about prices that much, as long as the dividends keep increasing, keep getting paid every single month, every quarter, when the market goes down and those hamburgers are on sale, I'm loading up. I want some hamburgers. [16:11.8]

Number six, the money machine analogy for insurance. This is another one of my favorites because it gets people to think about their human capital. Imagine that you had a money-making machine in your house, and it produced whatever your income is. If you make $150,000 per year, that machine makes $150,000 per year for your household. However, there's a chance that at any time that machine could stop working for you and once it stops working, it stops working for good. Would you insure that machine? Would you take out some insurance in order to protect that money making machine? Yes. Well, that's how death works. Death insurance, I should say instead of life insurance. Death takes away your ability to directly produce income. And if you need to directly produce income for your family members or other loved ones, you need insurance. [17:06.5]

Getting insurance was one of the best decisions I've ever made. I know financial advisors or financial planners; they love to rag on the insurance industry. They love to hate on insurance agents, but there is a certain intangible quality that comes from the, the value of certainty. And there's even a paper called, The Economic Value of Certainty that illustrates this. It was published I think it's Les McGuire back in 2003 and I could be totally wrong. But if you Google Les, The Economic Value of Certainty paper, it should come up in the Google results. Please don't email me if you can't find it, I'm sorry, but there is this quality that comes from it. And there are so many things that you could do with life insurance, I'm not gonna go into detail with that here. But it was seriously. I, I can't stress this enough. One of the best decisions I ever made. I can't tell you how good it feels to know that if I choke on a Buffalo wild wings mango habanero wing tomorrow night and die my family will be okay. [18:02.6]

Number seven. The last one I have here on my notes, I'll probably give you a couple more. But number seven is the, the one that goes like this.’ Your net worth is the, you are here sign. When was the last time you went to a mall? I mean, do those things even exist anymore? Well, if you've been to a mall or an amusement park or someplace like that, you've likely seen the map with the big you are here circle. That's your net worth. Another way I've heard it described is that your net worth is a snapshot of your financial position at any given moment. I like that. I also like the, you are here analogy because you could be at your destination, or you could not. If you want to go to a certain part of Disney and you check the Disney map and you're there, you're at your destination, the you are here dot the little sign will be at your destination. You may try to get from one end of the mall to another or you may just want some orange julius, and you're already there. That's up to you. Your net worth may be where you want it to be. Who knows? [19:01.2]

So those are seven. I promised you in the show title that there would be seven analogies. So, I've met my quota. However, I do like to over deliver. So, I'm going, hit you with a few more. Market volatility. It's like a man walking up a mountain with a yo-yo. I think, I think, I think I first heard that in the story selling book, I almost put it in the overused category, but I think it's such a solid analogy that I don't wanna dissuade financial advisors from using it. I, it paints such a good picture in, in the client's mind. They can see the person going up the mountain. Yes. And, and obviously the the net worth or the investment is the yoyo. Okay? So, the yoyo could go down and then it goes up and it goes down and it goes up, but you're going up the mountain the entire time. Diversification is like the food groups. You can't eat pasta for every single meal, unless you want to shorten lifespan. That would be amazing, right? For a short period of time, you could get those olive garden unlimited breadstick every single night. They're so good. But you do need leafy greens, fruits, healthy fats. You need all that stuff. You need the different foods in order to fuel your body in order to be healthy in order to have a long prosperous life. [20:09.1]

Now, another one I like is that lifestyle creep is like trying to eat one potato chip.’ Back in the 1960s, Lays potato chips came up with a marketing slogan, ‘Bet you can't eat just one.’ A lot of people think it's Pringles, it wasn't. It's not Pringles, it was actually Lays potato chips. They came up with that. And the same thing happens with lifestyle creep. There's even a name for this called Diderot effect, which states that obtaining a new possession often creates a spiral of consumption. If you didn't know that you just learned something today, I did my good deed of the day. I told you about the Diderot effect. It's spelled D I D E R O T. And it's like, if you get a new couch, then all of a sudden, your rug looks crappy, so you need a new rug. Then when you get the new rug, your old paint looks bad, so you have to repaint. Then the fresh paint doesn't look good without crown molding, so, then you add crown molding. And before you know it, your $50,000 deep, because spent three grand on a couch, that's the Diderot effect. You gotta keep consuming and consuming and consuming and consuming. And that's what happens with lifestyle creep. [21:14.8]

One more is that financial advisors are like, coaches. This is useful. If you're marketing to do it yourself, investors, because they need to understand that even world class athletes like Tiger Woods and Tom Brady, they still have coaches helping them with, with the game. Do it yourself investors can benefit from the same thing. It's a nice little analogy because it gets to gear spinning in their head to think about why does Tom Brady have a coach? Why does tiger woods have a coach? Why is it such a valuable relationship? And how can I mimic that? How can I have something similar in my financial life? They think of themselves like I'm a do-it-yourself investor. Like, they think I am a do-it-yourself investor. And they make it seem like it's a sport. It's a game. It's something that they want to do. So, this is a great analogy for them. [22:04.2]

That's it for this week. I know I have the mid role in the show, which plug newsletter, but I'd like to tell you right now that the newsletter is the best thing I offer. If you were to only get one thing from me, it should be that you don't have to make the commitment today, but you should at least check it out over at TheAdvisorCoach.com/coaching. Take some time. Read the sales letter. I know it's long, but it's important. It could be the best move you've ever made in career. Again, it's TheAdvisorCoach.com/coaching. And I'll catch you next week. [22:33.7]

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