Advisors Use Analogies To Demystify Complex Concepts For Clients

Advisors spend lots of time explaining financial concepts to clients. And they have a secret weapon to demystify complicated ideas: the analogy.


The ability to compare a highly technical concept to something that’s easy for laypeople to understand requires a command of the subject matter. It also involves stepping into someone else’s mind — and conjuring up an image or story that will resonate with that listener.

When advisors want to educate and elucidate, they often turn to analogies. Clients who struggle to understand financial terms appreciate working with an advisor who can translate industry jargon into comprehensible nuggets of information.

Analogies also come into play to help clients ride out wild market swings. Preaching the importance of staying the course is part of an advisor’s job, but some planners opt for more creative ways to champion the benefits of perseverance.

Brad Rosley, a certified financial planner in Glen Ellyn, Ill., prepares clients to think long-term about their investment strategy by inviting them to step back in time. He’ll tell them that 400 years ago, it would take about 50 days for a ship to travel from New York to England. To be safe, they might leave 75 days to complete the journey in case unexpected delays occur.

“Along the way, you might encounter stormy weather,” said Rosley, author of “Beyond Money.” “The captain might turn the ship and go backward or sideways to avoid the eye of the storm. This adds some days to your estimated time of arrival.”

By planning ahead and leaving a cushion of extra time for unknowns, you can take the storm in stride. Despite the setback, you know you’re still on track to get where you need to go.

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“It’s my favorite analogy,” Rosley said. “It makes the point that people with a true financial plan have more peace of mind, and those without a real plan will be most jittery as they have no idea of the impact” of market dips and other economic jolts.

Take Your Meds

Advisors who try to reach wider audiences tend to use analogies more frequently. They make a special effort to connect with all their listeners, regardless of their level of financial literacy.

Jon Ulin, a certified financial planner in Boca Raton, Fla., hosts a daily radio show called “Mastering Your Wealth.” He strives to simplify complex concepts and often uses analogies to appeal to a broad audience.

“Our analogies may include driving, cooking, swimming and even medicine,” he said.

Examples include: “Purchasing a complex financial product without reading the prospectus is like taking eye medication without reading the directions” or “How aggressive you invest can be compared to how you drive on a highway: Do you typically drive 80 miles per hour passing cars and blasting rock music — or do you go a bit under the speed limit playing classical music?”

On the radio, Ulin has learned he has limited time to drill home key concepts between breaks. Using analogies helps him convey the big picture without going overboard.

“It forces you to be succinct and cover two or three bullet points in each 10-minute segment,” he said.

Learn From Mr. Market

Like Ulin, Charles Weeks relies on analogies because they help him communicate financial concepts to a broader group than just his clients. A Philadelphia-based certified financial planner, Weeks also teaches financial planning to undergraduate and continuing-studies students at Stockton University.

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Some of his favorite analogies come from Benjamin Graham’s 1949 book, “The Intelligent Investor.” Graham presents “Mr. Market” as a character who undergoes mood swings when reacting emotionally to market moves.

“That book has many great analogies,” Weeks said. “The biggest one is: From day to day, moods change. You’ve got to ignore Mr. Market as much as possible and focus on long-term fundamentals instead.”

While standard analogies work well when addressing a mass audience, savvy advisors customize their communication to appeal to particular clients. If an individual loves horses, for instance, an advisor might compare dressage as a skilled type of riding similar to the disciplined process of investing.

“You have to adapt to your client’s style,” Ulin said.

It’s also important to realize that even if you think your analogies are clear and vivid, there’s no guarantee the client will agree. What strikes you as clever might confuse someone with a different sensibility.

“After I use an analogy, I like to confirm that I was able to get my point across,” Rosley said. “That’s especially important over the phone, when you can’t read the person’s body language. So I’ll ask, ‘Does this make sense to you?’ “


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