AssetMark: The Best Metaphors About Money and Investing

(AssetMark) In the world of finance, connecting with clients and effectively communicating complex ideas is a crucial part of building meaningful relationships. As a financial advisor, you understand the importance of delivering information in a way that is engaging, clear, and easily understood by your clients. This is where the power of metaphors comes into play.

Metaphors have a unique ability to simplify complex concepts and bridge the gap (a metaphor!) between technical jargon and everyday language.

You can use metaphors to paint vivid pictures, evoke emotions, and convey abstract ideas in a relatable and tangible manner when dealing with tedious or highly technical subjects. Whether it's describing the growth of wealth as a journey or comparing diversification to a well-balanced meal, metaphors can be invaluable tools for making complex financial topics accessible and memorable to your clients.

What are Metaphors (And Why Should Financial Advisors Use Them)?

A metaphor is a comparison between two unrelated things. You can use symbolism and figurative language to help clarify a point or make it easier to understand a difficult concept.

Money metaphors are particularly useful tools for financial advisors trying to effectively engage clients who are unfamiliar with investing or anxious about the topic.

You can help ease any tensions by putting potentially complex concepts in terms clients can understand. Metaphors often break the ice (another metaphor!), leading to better client relationships and improved communication.

Using Metaphors To Improve Financial Advisor/Client Communication

The world of finance and investments can be intimidating for many people. Metaphors can help financial advisors make complex processes, trends, tools, and requirements simpler to understand. These verbal illustrations can help clients see how wealth management concepts and applications apply to them.

Sometimes, when clients ask tough questions, employing a familiar metaphor may reassure them. Explaining difficult ideas using commonly used metaphors can help you seem more relatable. Below are some examples of everyday metaphors that can be applied to the financial planning process.

Investment Diversification

“Don’t put all of your eggs in one basket.”

The very essence of diversifying your investments, this metaphor helps people realize that you shouldn’t put all your faith in one solution. A similar metaphor is, “Don’t put it all on the same horse.”

Betting your financial future on the performance of one investment type, like stocks or real estate, is dangerous to overall financial health if interest rates spike or the economy crashes. It’s like putting all your eggs in a single container and hoping the bottom doesn’t fall out of it. Clients need to spread their investments across various asset classes to help safeguard their accounts from volatility.

“Keep a balanced diet.” (Or, “Everything in moderation.”)

Most people understand the importance of a varied diet to ensure your body is receiving all the nutrients it needs. Different foods affect the body differently and provide a variety of macronutrients (proteins, carbs, fats) a person needs to remain healthy and maximize their life. If you only ate one kind of food, you would suffer the side effects of this imbalance.

For example, eating only carrots could turn your skin orange, while a diet of nothing but red meat might lead to cardiovascular disease.

Holding too many of the same investments could do the same for your portfolio. Sticking with just one stock, investing in one company, or getting just one type of security might spell disaster for your portfolio if that solution doesn’t pan out. Your clients need to understand the value of a balanced portfolio the same way they understand the value of a balanced diet. It's why financial advisors guide their clients to invest their money in multiple assets and security types to reduce their risks of losing principal.

“Slow and steady wins the race.”

Most people grew up on the story of the tortoise and hare. While the hare was a sure win, his inconsistent and rushed approach allowed the tortoise to beat him in a race. This metaphor for life in general is particularly apropos for investing.

A small amount of money invested consistently over time—like dollar-cost averaging—can help investors win at wealth management.

Rather than dive in when you think the market is low, a slow and steady approach to investing typically shows better results. Help your clients understand that budgeting investing into their lives at regular intervals is going to help them get where they want to be faster than trying to do everything all at once.

Market Performance

“Bulls take the stairs, bears take the elevator.”

The value of stocks generally rise at a gradual pace and over a longer period of time, while some downturns can be quick and dramatic. Another way to say this? “The stock market takes the stairs up but the elevator down.”

Use this metaphor to help set performance expectations and give investors a relatable visual to help understand possible outcomes. They shouldn’t be surprised if values plummet overnight and then make a steady climb back up. You can also show clients how the long climb of high-value investments often had sharp dips along the way.

“It’s a marathon, not a sprint.”

With very few exceptions, investing is not a get-rich-quick scheme. Pacing yourself and consistently making smart money and investing decisions will get investors to their ultimate destination. Investors who set unrealistic expectations of, for example, doubling their investment in a year will most likely be disappointed.

This metaphor is the perfect way to communicate that building wealth takes time. Clients need to settle in and find the long-term investment strategy that works best for them.

Best Practices

“The early bird catches the worm.”

This isn’t so much a way to encourage investors to buy into an investment before anyone else, but a way to remind them that starting to invest early is the best way to create long-term wealth.

This can be a good idiom for clients at any age, but it can be particularly meaningful to younger investors who feel they are a long way from thinking about retirement. The prize at the end of their efforts will be greater the earlier a client begins working toward their goal.

“Pay yourself first.”

It’s very easy for the daily travails of life to get in the way of an investor’s best-laid plans. Bills, splurges, emergencies, etc., will negatively impact even the best planning efforts. Clients need to understand that saving and investing shouldn’t come from whatever is “leftover” from the month.

Use this conceptual metaphor to help clients change their priorities and money mindset when it comes to spending. Helping clients create and stick to a budget where they “pay themselves first” by automatic investments or deposits into an account will help them build wealth and create good financial habits.

“Cash is king.”

Having an emergency fund (or “rainy day” fund) for cash flow is perhaps one of the most important messages a financial advisor can communicate to clients. Being unprepared is expensive. Those without a cash reserve may have to dip into a retirement fund, max out a credit card, or take out a loan if emergency expenses crop up. One major emergency expense could lead to a financial crisis for your client if they can’t catch back up.

Easy access to cash is imperative because, well, cash is king. Help your clients prepare for unexpected expenses to alleviate their stress and lower the cost of emergencies.

Don’t Become a Cliche: Create Meaningful Dialogue

A little metaphor can go a long way, and focusing on meaningful conversations with your clients can build greater trust. While metaphors may be the perfect communication tool for some clients, they may not resonate with next-gen investors looking for more technical answers to their questions. Know your audience.

There are special considerations to make when seeking to have impactful conversations with investors at different stages of their careers and lives.It’s important to gauge your audience and tailor the message in a way that elicits a response, builds relationships and encourages ongoing dialog.



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