Explaining the Nature of the Relationship (Acapulco Cliff Divers Analogy)
“Mr. and Mrs. Client, I want to give you a word of caution in the event we experience volatility and turbulence. Investing money can and often does feel counterintuitive. There will be times when I urge you to add money to your account when the market is going down. That’s not going to feel right to you even though that’s exactly the time we should be adding to your account. It’s important that you understand why I would do that. May I tell you a story?
Watch this video or read the transcript below, adapted from the video, to learn a great story and analogy to help cement the relationship with a client.
“Can you picture in your mind the guys that dive off those cliffs in Acapulco? I’m sure you’ve seen pictures of those guys. They are diving from a cliff 115 feet in the air into a pool of water called The Gulch. Depending on the waves the “Gulch” can vary from 6 to 16 feet, with an average depth of 12 feet. That’s an incredibly dangerous jump, because so much depends on the timing of the divers. They have to catch the right wave.
Let’s assume there are two divers on top of the cliff, one experienced diver and one rookie. As they look down, they see the water coming in and out. When do you think the new diver would jump, when the water was in or when the water was out?
We both know that he would jump when the water was in. But what would happen by the time he got down there? Absolutely! The water would be gone.
The veteran diver, on the other hand, would wait until the water was all the way out. Then he would jump. By knowing when to jump, he would catch the right wave.
Investing wisely is like cliff diving in Acapulco. It takes a true veteran to do it successfully.
Mr. and Mrs. Client, I am like a veteran Acapulco cliff diver. When I invest, I have to time my jumps. There will be times when I say hold my hand. We are going to jump. And the waves won’t look right to you. Where I see opportunity, you might see inflation or terrorism or an economy in trouble. That’s the counterintuitive side of investing.
When I recommend that you act, you will have to trust me that what I am recommending is right for you.
*This video episode first appeared on Don Connelly 24/7 – a learning center for Financial Advisors, designed to help you become brilliant at the basics and take your business to the next level.
