When I got in the business, I struggled because I was bowling people over with knowledge. I wanted to impress them with what I knew, but they didn’t really care about that, I found out. A mentor pulled me aside and said, “You have a lot of wonderful knowledge, but you need to hold that back in reserve because what people need to see from you is the simplicity. They need to understand what’s going on; they don’t need to be confused by you.”
Clients view simplicity as a second cousin of transparency. If they understand, then it’s not obscured. There are three different categories of trust:
- Authenticity. Am I getting the real person?
- Empathy. Do they care?
- Logic. Are they competent?
When you combine authenticity and empathy, psychologists tell us, that produces a feeling of warmth in clients. As humans we are very good at detecting this. They say that in 100 milliseconds you can decide, is this someone with warmth or someone without warmth? Are they approachable or unapproachable? And, even further, someone can completely trust you in logic, but you could be deficient in authenticity and empathy.
We have to be succinct in our speech, and they have to understand it. It has an impact on compliance. We need to land those points that are important later on. If we need to recall those, the client may say, “Well, we never talked about that.” If you can’t get the client to recall that, it could be a problem.
I don’t really care to show graphs to clients. I think it’s confusing unless they are used to seeing them. I think they are going to forget about it by the time they get into their cars when they go to leave. Instead, I like to show a folding ruler to show the progression from infant to retiree. I call it “By the inch, it’s a cinch” because we do things incrementally in our business. We don’t make all of our appointments on Friday or on Monday morning. We do a little bit every day, just like our clients do.
I like to show a folding ruler to emphasize that point. This is a meter stick, 39 3/8 inches long. [visual] It’s almost 40, and we work about 40 years in our career. This is a proxy for our clients’ working life. The trouble is that most people don’t start saving for retirement when they start work in their 20s. What’s our largest single expense when we are in our 20s? Education costs. We put it off. And then in our 30s, we are building businesses, we are building families, we are building careers. The convenient time to save comes to no one. We put it off yet again. And who wants to work 40 years? People want to retire early, don’t they? In some cases, our clients want to retire a lot earlier. It’s simply not enough time for the account to grow. Clients have two choices: They can either work longer, or they can start sooner. So who can start sooner than today? No one can. All we can do is put more in the plan now to make up for those years that we didn’t put any in. And so it’s easy for the client to understand. If you want to retire early, you can’t start late.
Incrementally, we manage our businesses by making appointments, doing closings and prospecting. We do it daily. Clients will be successful in their savings by also incrementally saving toward retirement monthly. I ask the client at the end of the presentation, “How does your plan measure up? Let’s take a closer look at it.” The ruler can help in many ways, especially for groups. If it’s group retirement or employee benefits, everyone gets this. No one forgets it. Have one sitting on your desk. The client picks it up and asks you to tell the story.
What we do is long term for almost everyone we talk to. We want them in the plans to completion. They have a lifetime problem; we have a lifetime solution. It’s not anything short term, particularly when it comes to the equities that we may have them in. We want to emphasize, “Look, you need to stay in this long term.” But there are forces that work against our clients staying long term in the plans. They see that every day when they go home at night on the television: “But Dr. Siegel’s 6.7 percent return can be represented by a staircase.” If we accept that the 6.7 percent is the staircase, I like to tell my clients that the noise you see every day on the television that says this calamity or that crisis is someone walking up those stairs with a yo-yo, and that yo-yo is going up and down.
We can’t get scared away by the yo-yo; we have to stay on the staircase. This emphasizes the long-term nature of what we do and the short-term effect that adverse newscasts can have on our clients.
Everyone is talking about inflation. If you talk about inflation and you confuse them, you might not get there. I like to use stamps. Fifty years ago, in 1974, a stamp in the U.S. was 10 cents. These postage inflation numbers are consistent throughout the world, and certainly Canada has even a little more postal inflation than the U.S. Today it’s 73 cents in the U.S., an increase on July 14 from 68 cents. So on goes inflation.
People get this. It’s not a chart; it’s not a graph. They are familiar. They see them every day. You are not confusing them. They feel it’s simple. If they were ever asked, “Did you discuss the problems that could exist because of inflation?” “Well, yeah, we talked about inflation. We looked at stamps.” This is indelible. It burns into their memories. They will not forget it.
Some investments are very risky. I like to use a bottle of ketchup and a bottle of hot sauce because most people can have ketchup. It’s fairly benign. Hot sauce is a different matter. If you were to use hot sauce in the same proportion as ketchup, you would at least be in for some stomach trouble. Mutual funds take these, and they make blended funds. They mix in a little ketchup to tone down that hot sauce.
We are creating an exclusive language with our client. When they call up and say, “My brother-in-law’s got this investment idea. He wants me to sell everything and give him all the money, and we’re going to stamp out some widgets over here in a factory,” as their advisor, how do you respond to that? I go, “That’s too much hot sauce for you.” And they get it right away.
Of course, you don’t want to get too much of that hot sauce in the investment because you’ll get indigestion with your investment. I call that “investdigestion,” and I like that, so I trademarked the word. But that’s just too much hot sauce. That’s a great way to speak to clients if they call in.
