In my blog postings over the past few weeks, we've been discussing financial planning and how clients react to it. Last week we discussed the issue of trust and how a client's personality can influence their receptiveness to financial planning. This week, we'll talk more about trust and how to tell if a client really trusts you.
Trust: Illusion or Reality?
Trust is an intangible and is not a short-term proposition; it develops over time. Trust is also influenced by a client's personality, past experiences and the degree of importance of the issue at hand. When a client makes a decision to trust or distrust it's also partly dependent on the advisor's reputation. Hence, although a good reputation will not guarantee that a particular client will trust the advisor, it is the most valuable asset an advisor can possess. Because trust is such a key issue, when a client comes to an advisor by way of a referral, there is an inherent degree of trust assumed because the client trusts the person who made the referral. This doesn't mean the advisor is automatically trustworthy. It just means the person making the referral has enough trust to do so. In all industries there are some who should not be trusted. However, since we cannot read people's minds, we must rely on behavior to reveal what's really going on inside.
For instance, some advisors are quite polished, are great salespeople and do quite well financially. For example, in larger firms where a sales culture is dominant, management prefers to hire salespeople rather than technicians. Moreover, when sales becomes the focus and especially when there isn't a strong moral and ethical compass, the advisor may easily dupe the client.
Even though the client may suffer, the fallout is much more extensive. In addition to the client suffering, the entire industry suffers. Why? Because as clients have negative experiences they become skeptical, which makes it harder for ethical advisors to gain their trust. Hence, unethical and sales-focused behavior hurts everyone.
Is trust an illusion or is it real? It's definitely real, but it depends on the client's personality, past experiences and what's in the heart of the advisor. When it comes to determining if an advisor can be trusted, unethical behavior can be like a disease which takes years to manifest. Therefore, an individual will either:
1) trust until given a reason not to; or
