In the advisory world, there are many different methods and tools used to convey ideas. The intention, in theory, is to help the average investor better understand some of the more complicated aspects of saving or investing. These methods might include images, stories, charts, etc… and analogies. As a matter of fact, there was just a post in a LinkedIn group I belong to (which I really should get out of) called “Analogies are a great way to make investment concepts more relatable.” Over the years, I have become very cynical about the use of analogies as tools to effectively convey ideas. It’s not because they don’t work, but because what they convey, more than anything else, are sales messages.
I was pleasantly surprised to come across this excellent post by Scott Burns. I can’t tell you how many times I have heard advisors compare their service and guidance to other professionals – even though they are very dissimilar. In addition to this ridiculous comparison of advisors to brain surgeons, I have heard other analogies, many times relating to products, that are just as inane and misleading.
Using analogies can be a very effective way to simplify concepts. But is investing such a complicated concept that most consumers cannot get it? Do they need to have it compared to something else they can relate to? How about just trying to provide information and facts in a straightforward fashion? Maybe that’s just not clever enough. It is my view that with a simplified approach and patience, investing can be easier to understand for most consumers.
So, when you hear analogies from the financial services industry, you might stop and consider what is being compared. The way these things are thrown around is like…well, something, I guess!