The best time to avoid a crisis is before it pops up.

From a sales point of view, this idea is the best I’ve ever heard in terms of avoiding a future crisis. This is an idea that is aimed at people who are talking about investments to their clients. When we talk investments, we all need to have the conversation about the fact that good long-term growth comes with volatility, and however you approach that, it doesn’t matter. We all explain that there will be periods in the future where things don’t go so well. What we’re doing with this idea is elevating the fact that volatility is going to take place.

So, after I’ve explained all about their investments, I’ll say to people, “Look, John, I’m going to make two promises to you. And I’m going to put these promises down in writing.” I’ll write two promises, and then I’ll write “great years” with a little arrow up and a percentage. I’ll say, “John, I promise you that if you commit to this investment, you are going to have some great years. You’re going to look at the results of the years. You’re going to go, ‘Wow, Guy’s a genius. That was fantastic.’”

And then I’ll write down my second promise, which is “You’re going to have some bad years,” and an arrow down and a percentage. “You’re going to have some years that are really going to be bad. Your underlying investments are going to go backward. And there’s not much we can do about that because in order to get long-term growth, we are going to have some volatility. And I promise you, both of those things are going to happen. Now, in my experience, John, a lot of people remember promise No. 1, especially when things go bad, and they forget promise No. 2. So, what I want to tell you now is if you ever ring me up saying, ‘Guy, I’ve just lost a fortune. Why did you do that to me?’ what I’m going to do at that point is I’m going to pull my scan of this piece of paper out of the file. I’m going to email it back to you along with a note that says, ‘How good am I? I promised this was going to happen, and I fulfilled my promise. You had a really lousy year.’”

Now, at that point, they’re going to have to do one of two things. They are either going to have to admit that I forecast that this was going to happen. And, generally, people laugh about it and go, “Well, what do we do now?” At that point, I say, “With crises often comes opportunity. When can we sit down and have a talk about the opportunities that are now presenting themselves as a result of the fact that things have slipped backward for a while?” Turn a crisis into an opportunity, and the two promises will allow you to do that on a consistent basis. It’s also pretty good for compliance. No one can ever complain that you didn’t let them know that there was underlying volatility in the investment.

This other idea will help maintain some clients who are otherwise going to cancel a policy or reduce the sum insured in a policy. In Australia, all of our insurance is temporary insurance. It’s all term insurance. And when people get to a stage in life where they no longer need to cover, the obvious thing is, it’s getting expensive. We are going to downgrade it if we still need a little bit, or we are going to cancel it altogether. Now, insurance for someone who doesn’t need it can be a very expensive option, but there are people who should be maintaining their cover even though they might not need it because they have some underlying health issues that might make keeping it just good common sense for their families.

So, when someone rings you up and says, “I want to cancel my policy. I want to reduce my policy,” what I’d like you to do is not what you’ve been taught over the years, which is to go back and explain why they bought it in the first place or to try to get to the root of what they’re attempting to do. What I’d like you to do next time you get that phone call is just simply say, “No, I’m sorry. I can’t do that.” And then be quiet. And what are they going to do? They’re going to say, “I don’t understand. What do you mean you can’t cancel my policy?”

Say, “The reason I can’t cancel your policy yet is I don’t know what’s going on inside you. And the reality is that if there’s something bad going on inside you that you don’t know anything about, canceling it right now might prove that in six months’ time it would be, without a doubt, the worst thing you could ever do. So, the reason I said no was because what I’d like you to do is go and get a really thorough health check. If that comes back clean as a whistle, and you know you’re in good shape and are unlikely to have any sort of physical event happening to you in the next few years, then fine, I’ll cancel it. I’ll reduce it. I’ll do whatever you like. That’s cool. But if they find that there’s a problem, you might well be changing your mind about what you want to do with the cover. Does that make sense to you?”

At this point, I’d say probably 75, 80 percent of people say, “Yeah, that makes good sense. I haven’t had a checkup for a while. I’ll go and do it.” So, off they go, and I give myself a task to follow them up in a few weeks to see how they’re going. But the gist of the matter is, rather than just simply take the instruction to cancel the policy, you have to learn to say no and explain what’s going on.

Let me share the story of me and my mate, Cam. Cam was in his late 60s when he rang me up and said, “Guy, I want to reduce my trauma insurance from $750,000 to $250,000. It’s just getting unaffordable. Can’t do it anymore. Can you please manage the reduction for me?” And I said, “Cam, no, I can’t do that.” And he said, “Why?” I explained why, and he said, “That makes pretty good sense. I haven’t had a medical in a while. I’ll go off and do it. What do you want me to do?” And I said, “I want it to be a good one.”

So, a couple of weeks later on a Friday evening, I got an SMS from Cam, and it said, “Guy, I don’t have cancer. Going for a heart checkup on Tuesday. Once that gets ticked, we got to hit with the reduction,” and I messaged him back and said, “No problem at all.” Tuesday evening, I got a text: “Guy, my quadruple bypass is scheduled for Thursday evening.” So, Cam had gone to his heart specialist. They’d put him on a treadmill. He’d been on it for 45 seconds. They shut down the treadmill. They sat him down and said, “There is a problem.” And the problem was basically that he had some pretty advanced clots in his arteries, and he needed a bypass. So, he had his bypass.

We solved the premium problem because he stopped paying premiums altogether. We made a claim. We put $750,000 of tax-free money in his bank account. And a few months later, when he took me out for lunch, after we’d had quite a few glasses of nice red wine, which apparently is good for your heart, Cam admitted to me that I’d done much more for him than just reduce his premiums and get him some money. Because what he said to me was that the doctors had explained to him that if he hadn’t gone in and had that ECG, the first he would have known about his heart problems basically was when he just dropped dead. And that was going to occur sometime in the next six months in their estimate. So, saved him the premiums, put the money in the bank, saved his life. I’d say that’s a pretty good way to avoid crises on behalf of your clients.