Sending clients mixed metaphors? Here are some analogies to help keep clients on track.
Storytelling and analogizing can help bring difficult financial concepts down to earth, says John Diehl, senior vice president of strategic markets for Radnor, Pa.-based Hartford Funds.
“The whole idea is to use the concepts that people find themselves surrounded by,” Diehl says. “It’s useful to incorporate the time period they’re living in and to frame the conversation they’re having in familiar terms.”
With plenty of fall days left on the calendar, Diehl suggested a few autumn metaphors to help clients understand and embrace financial advice.
Take football, for example, which Diehl says provides a good metaphor for portfolio diversification.
“I tell clients to think of your portfolio as a football team,” Diehl says. “It’s important to make sure your team isn’t just one-faceted. There are teams with great defenses but no offense – they can prevent the other team from scoring too many points, but they have no opportunity to put points on the board so they don’t win very many games. That sounds like a good metaphor for a portfolio that’s too conservative for the particular client.”
Diehl says that different asset classes or sectors can be likened to position players, with fixed income and less risky asset classes acting as a portfolio’s “defense” while certain equities and other income- and return-producing asset classes act as an “offense.”
The point being, if a client can spend time worrying about the players on their fantasy football team, or on their home team, they should also be willing to worry about what’s in their portfolios.
Diehl notes that autumn is also the season of “pumpkin spice everything” where products from candles to beer to pie to air freshener all seem to be seasoned with pumpkin spice – but “for a limited time only.”
“Those special ‘limited time’ offers often come with a price tag, and they add up over time,” Diehl says. “The prevalence of these seasonal offers can be used to remind clients that they have a budget and a plan, and they should ideally be focused on that long-term plan rather than on the near-term luxuries.”