Systemising trust in client relationships – a practical approach
The ultimate outcome of greater client trust will be a deeper, more open relationship between adviser and client.
Trust is the bedrock of successful financial planning relationships. The establishment of trust between an adviser and client has been proven to facilitate more open and comprehensive communication, allowing the advice to be more tailored, more effective, and more valued. Trust has also been shown to drive greater client satisfaction, loyalty, and practice sustainability.
And yet many advisers lack a systematic approach to building trust, believing it to be more of an outcome of behaviours that are intrinsic and therefore ‘come naturally’.
While it is true that trust is to be earned rather than asked for, contact between client and adviser is generally infrequent and sporadic, meaning that advisers need to take every opportunity they can to build and reinforce trust. The most effective and efficient way to do this is to systemise trust into every aspect of your business, meaning trust is reinforced not just through adviser behaviours, but also through the processes used throughout the practice.
Why trust is so important in financial advice
There is an extensive body of research into the nature and outcomes of trust in financial advice.
Similarly, there is also research which demonstrates the extent to which the lack of trust is a barrier to the uptake of advice.
ASIC’s REP 627, published in 2019, found that distrust of financial advisers was one of the top reasons for not seeking financial advice:
By contrast, research suggests that once a client engages an adviser, they become much more positive about the value of advice, and trust is a key driver of this.
A study of US advice clients[2] found that 81% gave their adviser a high trust rating, and that trust in an adviser was positively correlated with the client’s age, wealth, and tenure with the adviser.
That same study also quantified the extent to which trust was a driver of client satisfaction, loyalty, share of wallet and likelihood to recommend:
The findings reinforced those of an earlier Australian study[3] – The Trusted Adviser – which concluded that trusted advisers:
- have higher client advocacy
- have better prospect conversion
- are more involved in their client’s personal and financial affairs
- deliver improved financial and outcomes and real value to their clients
- have higher client satisfaction
- have clients who are more accepting of, and willing to pay, advice fees
- run more profitable practices.
The drivers of trust
In order to build trust, it is important to understand what drives trust in a financial advice context. A University of Western Sydney research paper[4] published in the Financial Planning Research journal synthesised research from around the world, resulting in a framework comprising seven characteristics of trust:
Vulnerability/risk
In order for trust to exist, there must be an element of risk or vulnerability. This is clearly true in a financial advice context, where the client is placing their financial futures in the hands of someone they may never have met before. The client can be vulnerable on a number of levels:
- they may be entrusting the investment of their life savings to the adviser
- they likely lack the knowledge and experience by which to assess the competence of the adviser and the efficacy of the advice
- the need for advice may be triggered by circumstances which leave them emotionally and financially vulnerable, such as retirement, divorce, or the death of a loved one.
Feeling
Trust in personal financial planning was found to have a large affective component – described as ‘a feeling’. In other words, trustworthiness is something that we are able to detect on a deep emotional and physical level. We all give off verbal and non-verbal cues that are indicative of our trustworthiness, and given the high financial stakes involved in an advice relationship, clients will generally increase their focus on detecting and interpreting these cues.
Honesty
Honesty is clearly a major pillar of trust in a financial context. Respondents in the Cull & Sloan study explained the meaning of honesty to be:
“The integrity of a person, their honesty, their fairness, their reliance, but most importantly, above all that, they carry out that fiduciary duty”.
Transparency, around fees for example, is an important aspect of honesty, with clients preferring advisers gave them a full and honest breakdown of their remuneration as early in the engagement as possible.
Faith
For trust to exist, clients must have confidence, or faith, that their adviser can be relied upon. Relied upon to give appropriate advice, and relied upon to honour their commitments, doing what they said they would do.
An important pointer here is that investment performance that is below expectation, or even negative, can undermine faith, and therefore trust. Successful advisers have learned not to tie their value to investment performance, which is largely out of their control.
Best interests
Beyond the regulatory and FASEA requirements around best interests, findings suggest that trust cannot exist in the client-adviser relationship unless the adviser is seen to put the client’s best interests first. The client must believe the motives of the adviser are benevolent, and not driven by self-interest. The approach to remuneration was a commonly cited marker of such benevolence.
Accountability
Clients acknowledged that they trusted their advisers because they understood that
their advisers could be held to account by their employer, regulatory body and/or professional association in the event of untrustworthy conduct.
Competence
As consumers, we seek counsel from professional service providers because we lack the knowledge and skills to deal with situations ourselves. This is as true for advisers as it is for doctors, lawyers and accountants. Clients seek financial advice because they recognise that they are at risk because of their own lack of knowledge about complex financial concepts and products, which is why competence – indicated by qualifications, experience, technical skills, and behavioural attributes – is a key driver of trust.
A practical framework for trust building
Having understood what drives trust in a financial advice context, it is necessary to then view those drivers through a more practical lens, so we can then design processes which emphasise those drivers.
Helpful here is research by Morningstar[5] which refers to categories of behaviours seen by clients as markers of trustworthiness:
Systemising trust
Understanding these practical ‘markers of trust’ enables us to review every aspect of the advice value chain, and the underlying processes, to ensure that every opportunity to create and/or reinforce trust is being taken.
A useful way to conduct such a review is to follow the typical journey from prospect to new client to established client.
Building trust with prospects
Advisers have two important ways to ‘bake trust’ into engagements prospects have with a firm, even before any meetings take place. These are through a formal process of referrals and through their website.
As consumers, referrals from trusted sources – be it colleagues, friends, or other professionals we are working with – are important because they enable an efficiency of decision making. Researching what lawyer/accountant/architect to use can be an exhausting process, and the stakes can be high if you make the wrong choice. Being referred to a service provider by someone whose opinion we trust allows us to shortcut a lot of that work and also lowers the risk of making a mistake.
By ‘formal’ referral processes, we don’t mean that they have to be paid or underpinned by contracts. But rather there is a degree of systemisation around those referrals:
- a request for referral from clients is built into the agenda or script or run sheet for clients – not necessarily when advice is first given but after the first or second annual review when the client has had enough time to build genuine trust
- any external referral partners (e.g., accountants or other advisers) are equipped with materials, scripts, or other information which allows them to identify ideal clients to refer and can articulate with consistency and accuracy the details of you and your practice – in other words, it’s not an ad hoc process where the referrer has only sketchy details.
Your website is the window into your practice. Our first port of call when researching any product or service these days is almost always online, and so your website represents an easy way to build trust.
For example, if we refer to the Morningstar trustworthiness markers above, you can see how many can be reinforced through your website:
- communication (make it easy to contact you through your website and have a system to ensure messages are acknowledged and responded to promptly)
- expertise (while they shouldn’t be front and centre, your qualifications and experience in helping similar clients can be showcased, as can any industry awards)
- personalisation (testimonials from clients who are similar in their life stage and challenges)
- shared values (your website should tell a story about you, your firm, and your philosophies around advice)
Online reviews, such as Google, Trust Pilot, or even Adviser Ratings[6] are also an increasingly important tool for consumers to build trust from the outset by seeing the views of satisfied clients. Encouraging clients to post these reviews – by sending them an email link – is another process that is easy to systemise.
Other tips to reinforce trust through your website include:
- reinforcing your longevity as a business (make it clear you are no fly by night)
- taking the time to keep the content and appearance fresh and contemporary (rather than stale, with the latest blog post being two years ago)
- providing educational content, whether that be through tools or blogs.
Initial meeting
Your initial meeting with a new client provides many opportunities to build trust, and many of these can be built into processes to ensure they are repeatable. Creating scripts or run sheets for these meetings is one way this can be achieved.
Such a script might include acknowledging and demonstrating gratitude if the client has come to you via a referral source.
Such a script might also include a discussion about fees as early in the meeting as possible. This is because the cost of advice can be substantial, and the uncertainty over the quantum of that cost can be a source of anxiety for many people. Until that anxiety is removed, the client is unlikely to be giving you their full attention, which can undermine the effectiveness of that meeting. Experienced advisers recognise that, rather than talking about remuneration too early being rude, it actually helps put the client at ease.
On the topic of fees, another way to systemise trust is by ensuring your fees are transparent and consistent.
As mentioned above, being seen to treat all clients equally underpins integrity, a key marker of trustworthiness. Whatever your fee approach (flat, percentage, commission), it should be clear and applied equally to all clients. If clients get a sense that fees are negotiated on an individual basis, this can immediately make them suspicious that an adviser is out to extract the highest fee they can negotiate, severely undermining trust.
The first meeting should be scripted in a way that it is clear that the adviser wants to truly understand the client as an individual. Structuring the meeting to ensure the client is doing more of the talking, and the adviser more of the listening, is key.
Another functional way to demonstrate care and build trust is to have – and be seen to have – robust privacy and data protection procedures. The nature of their role means advisers will be working with sensitive financial data from clients. Designing strong data protection processes, and explaining those processes to clients, can help build trust.
The importance of education
Building an advice process which emphasises client education (through the structure of meetings and/or the provision of educational resources) can go a long way to building trust, as can ensuring all communication (verbal and written materials) is based on simple, jargon-free language.
Most advice clients have a financial knowledge gap which creates a vulnerability and makes trust paramount. In a sense, they are at the mercy of the adviser, and maintaining an air of mystique around advice as a way of creating a client dependency is not the way to engender trust. Those advisers who are open in sharing their knowledge and who have a process designed to educate their clients will not only be more successful in building trust, but they will also find their clients better understand and better appreciate the value of their advice.
Reviews
Clients do not see an 80-page SOA as the embodiment of advice. Rather, they are paying for help and for tangible outcomes, and in that context, regular review meetings are actually where the value of advice becomes truly tangible.
Extensive research[7] has shown that discussing progress towards goals has both a positive psychological effect, and – as referenced above – helps reinforce trust in the value of the advice.
Reviews should be systemised to ensure:
- the importance of them is explained to clients
- they are always held (don’t leave it up to the client to decide)
- they are structured in a way that prioritises discussion of progress towards goals.
As previously mentioned, the review meeting can also be the ideal time to introduce a question about potential referrals.
Ongoing client care
Ongoing client care can be systemised to reinforce trust, underpinned by timely, effective communication.
So, what does systemising trust into communication look like?
Frequency of communication is clearly an important opportunity to demonstrate both the value of your advice, and your level of client care.
Aside from newsletters and statements and normal ‘regular’ communication, many successful advisers schedule time in their diaries to make personal check in calls to their clients, for no reason other than to see how they are. This can be a highly effective use of time which may otherwise be unproductive, such as when on the road, or between meetings.
Making a deliberate effort to use simple, jargon-free language, clear infographics, case studies and even the structuring of communication in a way that breaks information down into more easily understood ‘bites’ will go a long way to reinforcing trust.
Accessibility and service level agreements
It goes without saying that being accessible to your clients helps build trust. But this needn’t mean you have to be available 24/7. Systemising this through pre-defined response times and service level agreements can help reinforce trust by setting clear expectations and creating a series of opportunities to make, then honour, commitments.
Remind clients what you have done for them
Acting reliably and with integrity is obviously critical to building trust. But interactions with their financial advice are rarely top of mind for clients, making it important to remind your clients of all the individual tasks you have completed on their behalf. This helps build trust in two ways:
- it demonstrates you have kept your promises, and
- it reinforces all the work you do, and all the value they get for the fees they pay.
Systemising these reminders might include some sort of itemisation of work completed (beyond that necessary for fee agreements), which can be sent to clients at periodic intervals, or it may be as simple as scheduling calls or emails to let the client know work has been completed.
For more complex, time-consuming tasks, regular communication about progress, even if there has been none, reinforces your care and competence, in turn reinforcing trust.
Conclusion
Trust is clearly fundamental to successful adviser/client relationships and outcomes, and for most advisers, acting in with honesty, integrity, and caring for their client, is something they do intrinsically and naturally.
But the relatively low frequency with which clients and advisers engage means every opportunity to demonstrate the trustworthiness must be taken. Systemising trustworthy behaviours into advice processes throughout the entire client journey helps ensure these opportunities are always taken. It also ensures trustworthy behaviours are more repeatable, and can be delivered with more consistency by all staff within an advice practice.
The ultimate outcome of greater client trust will be a deeper, more open relationship between adviser and client, allowing advice to be more tailored, more effective, and more valued.
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