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Building Trust in an Increasingly Skeptical World

A 2018 Pew Research Center survey found that 43 percent of Americans age 65 years or older agreed with the statement, “Most people can’t be trusted.”

When the same statement was presented to Americans aged 18-29, approximately 60 percent agreed. The survey also found that 71 percent of Americans think people are less confident in each other now than they were 20 years ago.

While this skepticism can be attributed to many sources―the 24-hour news cycle, political divisiveness, social media and generational differences, to name a few―most would agree that we are unlikely to see changes for the better in the foreseeable future. Therefore, the ability to build and maintain high levels of trust in client relationships will be an even more important skill for financial planners over the next decade and beyond.

We believe that clients’ perception of trustworthiness is dependent on three specific factors: credibility, reliability and motivation. Let’s look at each one and identify specific actions you can take.

Credibility

The first factor is credibility. It answers the question: “Does this person know what he or she is talking about?” Clients want to know that you have sufficient knowledge and expertise to competently deliver financial information and advice. They are likely to look to your educational background, degrees and certifications as evidence of that knowledge and expertise.

Credibility also relates to one’s experience and perspective―your ability to apply that knowledge and expertise. Experience is what makes the difference between book-smarts and wisdom, which is why CFP Board requires that candidates complete specific experience requirements before granting their certification. Experience and perspective are often communicated in your confidence and conviction.

Here are two specific actions you can take to improve your credibility:

  • Create and implement an ongoing education plan. Your plan can include coursework, certification programs, books and journals, interviews and online research.
  • Develop stories and case studies that demonstrate your expertise in solving complicated client planning concerns.

Reliability

Reliability is the second factor that influences trustworthiness. It can be defined as the repeated fulfillment of expectations, either directly experienced or inferred from the experience of others.

Obviously, the more you do something, the more others will trust you to do it again.

However, it’s not just repetition, but the matching of expectations to fulfillment that characterizes reliability. Trustworthy advisers and planners are careful to confirm, establish, manage and fulfill their clients’ expectations time after time, even in situations where clients may have uncertain or unstated expectations.

Here are two specific actions you can take to enhance your reliability.

  • During every client interaction, take the time to clarify next steps by reviewing who will do what and by when.
  • Develop the habit of diligently recording every commitment on your to-do list or app, following up, and ultimately communicating back to your clients upon completion.

Motivation

The third factor is motivation. The expression, “People don’t care how much you know until they know how much you care,” speaks to one’s motivation. Stated simply, motivation answers the question: “Why?”

Clients want a financial adviser or planner who is genuinely committed to putting their clients’ interests above their own, because it’s the right thing to do, not because they are required to do so.

Here are two ways to show clients and prospective clients that their success is your first priority:

  • Ask thoughtful questions. Open-ended questions that begin with “how” or “what” or “tell me…” encourage expansive answers and demonstrate curiosity and concern.
  • Listen intently. According to University of Minnesota researcher Dr. Ralph Nichols, “The most basic of all human needs is the need to understand and be understood. The best way to understand people is to listen to them.” Active listening includes establishing eye contact, providing non-verbal feedback, clarifying answers and restating responses to demonstrate your understanding.

The Path to Connection

Finally, keep in mind that as you are willing to share your own experiences, hopes, failures and dreams, you provide a path to connection. Establishing trust requires a willingness to be open and honest. Someone has to make the first move, and that someone is you.

While trust levels in general may continue to fall over the next ten years, by diligently working to enhance your credibility, improve your reliability and clarify your motivation, you can build strong, trust-based relationships with your clients.

Adam Kornegay

Adam Kornegay is a co-founder of Pathfinder Strategic Solutions. He has a background in marketing and business analytics. Coupled with his experience as a financial adviser, he helps a broad array of clients, from relatively new advisers to experienced planners, and consults with various financial services firms. He is a coach in the Messaging and Marketing Strategies FPA Coaches Corner

 

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Editor’s note: This piece originally appeared in the FPA Coaches Corner whitepaper, “Action 2020: Create Business Success for Today and Tomorrow.” Download your copy of the whitepaper here.  


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How to Build 3 Types of Trust

A financial advisory relationship has three types of trust. According to Vanguard’s Center for Investor Research’s 2017 report, “Trust and Financial Advice,” those three types are functional trust, emotional trust and ethical trust.

According to the research, in order to really trust you, clients must trust you in all three areas. Here’s what they are and how you can build trust in each area:

Functional Trust

This is the confidence clients have in your credentials and technical skills.

How to build: Get credentials and certifications in the areas in which you specialize and are interested in. Stay up-to-date with the latest news and legislation that might impact your clients and be proactive in communicating how these might impact them. Present your certifications and qualifications so clients know which ones you have.

Emotional Trust

This is the element in the relationship that makes clients feel positive about you.

How to build: Identify areas where you can help your clients feel a sense of relief or be their advocate. Genuinely ask how they are doing, about their family members and remember what they’ve told you. Be proactive in frequently communicating with them about both positive and negative things.

Ethical Trust

This is whether your behaviors are consistent with “correct conduct,” according to Vanguard.

“Ethical trust is like a sixth sense— clients usually know when something doesn’t feel right,” Billy Lanter, fiduciary investment adviser at Unified Trust Co. in Lexington, Kentucky said in the October 2019 Investopedia article “Trust: An Adviser’s Most Important Asset.”

How to build: Be transparent about what you charge and why. Be open and willing to answer any of the client’s questions about compensation. Remove conflicts of interest and always act in the client’s best interest.

Build all three types of trust by forging an authentic relationship with your clients where you know and understand what they need.

“The superior experience clients are willing to pay for is a personal relationship with an adviser who not only understands their goals but is managing their portfolio in accordance with those goals,” Lanter told Investopedia.

Ana TL Headshot_Cropped

Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the FPA Next Generation Planner. She also edits the FPA Practice Management Blog. Email her at alimon@onefpa.org, or connect with her on LinkedIn


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Clarity Is Key to Client Conversations

Why is clear communication so crucial to effective conversations between advisers and clients?

“The single biggest problem in communication is the illusion that it has taken place,” said George Bernard Shaw.

Most of us know what message we’re trying to communicate to our clients, but do we take into account what they want and what they hear when they talk to us?

Often, we think of the client experience as what we provide to our clients in services, touchpoints and products. This understanding fails to account for the client perspective: what the client actually hears, feels and believes they get from their adviser.

A joint study by Janus Henderson, FPA and Investopedia, “War on Stress,” found a 64 percent gap in what advisers believe they are addressing as top concerns with clients and what clients perceive to be top concerns. Providing support starts with a clear understanding of investor concerns but also involves taking the lead in addressing those concerns.

Empowering Clients through Clear Communication

We work in an industry that is loaded with terminology, language and jargon that makes it more difficult to convey our message to clients. Using those terms serves no purpose other than to obfuscate our meaning and push the client further away.

Consider the reason that most clients seek out an adviser: They themselves don’t understand the investment business. From our research, we understand that 77 percent of investors who are clear on their financial goals experience lower stress. Having greater clarity about their goals, feeling knowledgeable about investments and having a clear plan are also part of that equation. So how can the modern adviser ensure they’re taking the lead in addressing the key concerns of their clients and that this is being understood?

Consider the following:

  • How you say it matters: Use language that is plain and simple to understand and has a “so what?” component to it. The “so what?” is a clarifying statement that punctuates why something is important to the client. For example, “Estate planning is important because it ensures that when you or your spouse dies, neither of you will need to worry about having the resources to live your best ”
  • Set the stage with structure: Using agendas or checklists to frame your discussions can help ensure your audience knows what you are talking about. Send these in advance and be sure to reference them during your interactions. In doing so, you’re able to build clients’ trust and confidence with a well-executed meeting while also allowing clients to review in advance so they can share their own thoughts or questions for
  • It’s not about you, and the platinum rule: Yes, you have an agenda and an objective in meeting with your Your clients do, too—and their needs trump your own. Always include time for them to ask questions, add to the agenda and, most of all, be vulnerable. Remember that what is clear to you may be opaque to them. The platinum rule is treating others as THEY want to be treated—which means becoming a student of personality, behavior and unspoken needs.

Above all, strive to ensure that your clients walk away understanding what you intended for the meeting. To assess if your message got through, try asking questions like, “Now that I’ve described our (investment model, client service approach, estate planning, etc.), what do you want out of the process?” Or ask a closed-ended but multi-choice question to help focus the discussion: “So the investments we choose will have three phases: A, B, C – which of those do you want to be most involved in?” When it comes to understanding what your client says, try paraphrasing and asking, “Did I hear that right?” or “What I heard you say was this… What am I missing?

When you follow these steps, you increase your chances of ensuring your message gets through and that you don’t miss some obvious signs from your clients about what is important to them.

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Michael Futterman

Michael Futterman is an assistant vice president, Knowledge Labs™ Professional Development at Janus Henderson Investors. In this role, Futterman works with the Professional Development team on research and curriculum development for the professional development programs. He is a frequent speaker and coach to adviser and client audiences. Futterman leverages his experience with Outward Bound, management consulting firms and the financial services industry to bring innovative, engaging and thought-provoking content to his clients.