By: Marie Swift
Recently, Julie Littlechild and her team at Absolute Engagement (also a 3rd Wave collaborative partner), examined the scope and impact of trust between clients and advisors through a survey of more than 1,000 clients of financial advisors across the country. The level of trust, researchers found, was very high. In fact, 90 percent of clients surveyed indicated they trust their advisor, 90 percent said they were loyal, and 89 percent said they were satisfied.
However, this level of trust does not, it turns out, extend to the financial services industry as a whole. Julie's Investor Study shows that only 7 percent of clients rate their level of trust in the industry as a 5 out of 5.
Recently, Julie Littlechild and her team at Absolute Engagement (also a 3rd Wave collaborative partner), examined the scope and impact of trust between clients and advisors through a survey of more than 1,000 clients of financial advisors across the country. The level of trust, researchers found, was very high. In fact, 90 percent of clients surveyed indicated they trust their advisor, 90 percent said they were loyal, and 89 percent said they were satisfied.
However, this level of trust does not, it turns out, extend to the financial services industry as a whole. Julie's Investor Study shows that only 7 percent of clients rate their level of trust in the industry as a 5 out of 5.
This is what we call the Madoff effect: extensive media coverage of individuals who have operated on the wrong side of the law puts a downward pressure on trust in the industry? Julie also talks about confirmation bias: this is when individuals seek out information that confirms their own preconceptions because they want to reinforce a decision they have already made?
Whatever the form of bias, if any exist at all, the facts seem clear; trust is not a problem for individual advisors, but nor is it a differentiator.
More importantly, can we move the needle when it comes to trust, and should we bother to try? The short answer is yes: building trust is, in fact, an opportunity. Moving from “moderate” to “complete” trust can pay off in more ways than one.
THE TRUST GAP
The gap between moderate and complete trust may be an issue of fact or communication:
If we assume that all good advisors are doing the right things, then it would make sense that, in order to be seen as more trustworthy by your clients, you have to communicate your actions more effectively. You would wisely “assume less” (one way to do that is to gather client feedback more often) while also being more direct in explaining to clients exactly how you take action on all of the critical dimensions.
The interpersonal relationship between the advisor and the client is as fundamental to building and maintaining a practice as are all the technical skills needed to capably serve the client.
Trust is one way to measure the quality of a relationship. And moving clients along the trust spectrum through better communication is the key to a more profitable and satisfying financial advisory business.
For communication tips, here are some great articles and a book to consider:
Courtney Pullen, author of Intentional Wealth: How Families Build Legacies of Stewardship and Financial Health, once said at an FPA Retreat (as reported by Bob Veres for his Inside Information readers): "When you strip everything else away, trust is at the heart of everything: our lives, relationships, businesses, the office team. If we cannot talk about trust, it is going to have a significant effect on our businesses, even in our profitability, even in the way we manage ourselves. We need to be willing to make it overt. If we are asking people to be in alignment, to execute, to coordinate, we need to be willing to put this on the table. We need to trust ourselves and trust the power and potential of trust. If this is at the heart of everything," he concluded, "if this is what makes everything work, then this may be our most important challenge."
Whatever the form of bias, if any exist at all, the facts seem clear; trust is not a problem for individual advisors, but nor is it a differentiator.
More importantly, can we move the needle when it comes to trust, and should we bother to try? The short answer is yes: building trust is, in fact, an opportunity. Moving from “moderate” to “complete” trust can pay off in more ways than one.
THE TRUST GAP
The gap between moderate and complete trust may be an issue of fact or communication:
- An advisor is not doing some of these things (fact)
- The client is not fully aware of what the advisor is doing (communication)
If we assume that all good advisors are doing the right things, then it would make sense that, in order to be seen as more trustworthy by your clients, you have to communicate your actions more effectively. You would wisely “assume less” (one way to do that is to gather client feedback more often) while also being more direct in explaining to clients exactly how you take action on all of the critical dimensions.
The interpersonal relationship between the advisor and the client is as fundamental to building and maintaining a practice as are all the technical skills needed to capably serve the client.
Trust is one way to measure the quality of a relationship. And moving clients along the trust spectrum through better communication is the key to a more profitable and satisfying financial advisory business.
For communication tips, here are some great articles and a book to consider:
- Building Trust Through Communication (Journal of Financial Planning, November 2015) - by Marie Swift and Julie Littlechild (3rd Wave Collaborative partners)
- Make Trust a Cornerstone of Your Business (Journal of Financial Planning, November 2015) - by Leslie C. Quick, III, co-founder and partner at Massey Quick, a $3 billion RIA in New Jersey
- How Brands Build Trust in a Digital World (Huge.com, August 2014) – by Jonathan Lee, Marissa Gluck and Ken Allard, a brand and reputation firm
- The Language of Trust (Prentice Hall Press, May 2011) – by Michael Maslansky & Associates, a consulting and research firm
Courtney Pullen, author of Intentional Wealth: How Families Build Legacies of Stewardship and Financial Health, once said at an FPA Retreat (as reported by Bob Veres for his Inside Information readers): "When you strip everything else away, trust is at the heart of everything: our lives, relationships, businesses, the office team. If we cannot talk about trust, it is going to have a significant effect on our businesses, even in our profitability, even in the way we manage ourselves. We need to be willing to make it overt. If we are asking people to be in alignment, to execute, to coordinate, we need to be willing to put this on the table. We need to trust ourselves and trust the power and potential of trust. If this is at the heart of everything," he concluded, "if this is what makes everything work, then this may be our most important challenge."
Keep on sparking!
Marie Swift
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