Trust – Once You Have Trust, Everything Else Gets Easy

When your clients trust you they will do anything you tell them to do.

There isn’t much else to say about that – it’s a simple fact. If you are an investor, and you understand what your financial advisor is saying, and you understand what their process is, and how their process is implemented you will likely remain a client even if the market corrects significantly.

When you trust your advisor and believe in their process you are more likely to reinvest when the market is on sale, considerably increasing the chance that over time you and your advisor will be very successful – assuming you measure this by profit made in the market.

If you don’t trust your advisor, you may not have bought Starbucks at $7/share a little while ago. I know, I have mentioned that in two blogs now (blog) but at $33/share the coffee actually tastes better.

This is why trust, in an industry that sells invisible products is so critically important – because without it, you’re over. Survey after survey tell us that successful advisors are trusted by their clients, and we know that trust is made up of 3 main components – Communication. Clarity. Consistency. That’s it.

Communication. Clarity. Consistency.

Here are some stats that you should consider that support just how important it is to establish systems and procedures that help to foster trust.

A 2007 survey by Alliance Bernstein of 13,000 investors suggests that over 90% of respondents indicated that their desire to work with their advisor was directly related to:

1.       How clearly the client understood the advisors process.

2.       How frequently the advisor checks in.

3.       The advisors ability to explain complex financial concepts clearly.

Bottom line is it’s really important that your clients know what you think, how you do your job, and finally for you to check in all the time to make sure everyone is on the same page.

A 2009 survey by SpectremGroup called “The Ultra High Net Worth Report” suggests that 47% of those surveyed indicated that it was a referral from a friend that ultimately helped them make their decision.

Finally a 2008 survey of 900 high net worth individuals conducted by Janus Labs/Russ Alan Prince revealed some amazing figures. When clients trust their advisor they will:

1.       Invest 8.7% more in assets.

2.       Provide four times as many referrals.

3.       Take away fewer assets.

4.       More likely to consolidate with the advisor they trust.

5.       Request non-traditional services.

All of these stats point to the importance of having a communication plan in place that is designed to explain your process, and manage your clients’ expectations – no alarms and no surprises. Your clients need to know what is expected of them in addition to what they should expect from you.

Communication – do your clients understand what you are talking to them about? Do your clients clearly understand your process, and your thoughts on complex financial matters, or do your clients feel like they are speaking to an economics professor in a class they never signed up for?

Clarity – do your clients understand what you actually do – in other words, what is a financial advisor. You might say “someone who buys and sells securities on behalf of an investor or investors – an advisor provides stewardship and oversight to a persons portfolio. They manage a person, or a family’s wealth.” That’s all fine, if this is what you do, and if this is what you want your clients to understand you do.

But is this what you do? More specifically … is this all you do? The description written above describes what every advisor says they are – but is this what your clients are looking for? Is this definition of an advisor going to fire up your clients to refer you business? I have to ask … Is this what you want to be?

Is this your value? Dennis gave me $100,000.00 and I earned him 12.2%, which is more than 9.6% (which is considered a pretty good return) and therefore I am 2.6% better than average, and over time I guess that is worth a lot of money.

There is a whole other question that needs to be asked … If in fact this was how I measured your value, by how much you beat the benchmark, then do you really want to work with me anyway? You need your clients to trust the process, not constantly measure your “value” by returns.

Consistency – do you follow a process that guarantees the experience your client receives – is it always the same? Same isn’t bad. Same is consistent – and consistent is safe.

Trust grows.

Rarely do we ever trust anyone or anything instantly unless the situation is dire – such as walking into the emergency of a hospital (and realizing you are in Canada!) If this were the case you wouldn’t ask the Dr. Standing-In-Front-Of-You what kind of experience she has patching up people – you would instantly trust her. You might put your life, or the life of someone you love in her care – instantly.

You might meet a new financial advisor and like them right away, you might enjoy being around them but that isn’t trust. Trust happens gradually, when we have enough accumulated experiences to form an opinion.

Trust is made up of both right and left brain thoughts.

Left brain thoughts are logical, reasoning, measurement – “My advisor is technically competent and has runs a very professional and organized meeting.” Right brain thoughts are “I like my advisor because she is a great listener; she understands that really I just want regular reporting so I can relax at the lake, and she shares my love for downhill skiing which tells me a lot about her as a person.” Your clients will trust you if they feel you know what you are doing – if they understand your process, your thinking and reasoning is sound, and you report to them regularly which helps you to better manage their expectations.

However a part of why your clients’ ability to trust you will rely on what they specifically value about you as a person, and what similar things you value. Perhaps it is your awareness of their personal interests, and ability to ‘life-coach’ them. To bring value, you have to know what it is they value, and more importantly what they don’t value

Trust and the Ideal Client Profile

So if trust is both right and left brain, there is only so much time – there are only so many people you can work with and if the easiest way to grow your business is via referrals (47% study), then developing an awareness of your clients’ interests is essential.

I worked with a client many years ago who was very successful and very much in control of his practice. He had a clearly established Ideal Client Profile, probably similar to your own. He had established a minimum account size. He preferred to work with business owners with retirement issues on the horizon (what to do with the family business) and Paul operated at a Personal CFO for these clients. He was truly very effective and he hosted about a dozen events per year with his clients, and they often had an outdoor theme.

He also had knock out factors, and one of them was that he wouldn’t work with anyone who didn’t like the outdoors.

His business grew via referrals and networking and he figured that if a client wasn’t every going to attend a client event then the likelihood that this particular non-outdoor loving client would refer was low so he would have to really consider if he wanted to give up one of his valued 200 spots.

Trust requires partnership

Your clients have to participate in your process – they have to attend meetings and they have to communicate. Otherwise they are hiring you for transactions and the likelihood that they will refer or remain loyal is diminished. Not to mention that you really don’t get anything out of that relationship other than getting paid – there is no value.

Measuring your happiness by how much you get paid is what people with jobs do.

Measuring your happiness by how healthy your business is, and the clients you work for is, what entrepreneurs do.

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