Most advisors would probably answer this question in the affirmative – “Of course my clients trust me.” While no one wants to admit that they aren’t viewed positively, asking yourself this question, and honestly reviewing your business practices and relationships might help lead you to a more prosperous future.
I say this after reading the results of another study showing that many investors really don’t trust their advisors and/or financial services providers. A study by Hearts and Wallets, which includes an annual study of 5,400 households, concludes that 55% of respondents are afraid that they will be ripped off by their advisor, and less than 20% fully trust their provider – down 5% since 2010.
Aside from the obvious, that you want your clients to trust you, the study also reveals that providers who are trusted enjoy an average share of wallet that is nearly double low trust relationships. These clients are also more likely to have their advisors help them in the planning process, and they are more likely to own more products and be open to new concepts, according to Hearts and Wallets.
So – the all important question is – what helps build trust?
- How well the investor understands how the advisor and the firm earn money. People aren’t as concerned with specific fees as they are with understanding how the system of incentives works.
- Investors want to feel that their provider is unbiased and puts their interests first, understands them and shares their values.
- Investors want to work with people who are responsive.
It never ceases to amaze me that it always seems to come back to explaining fees – not the fees themselves – but clearly articulating how everyone is paid. The fee discussion should be at the forefront of meetings with prospects – if the client has to ask – it’s probably too late! It also comes down to client service – being responsive, and setting up your practice to keep clients informed on their own terms.
Finally, one last statistic from the report – 33% of investors report that their main motivation to consolidate their assets is based on rewarding proven results – another key trust builder. And with an estimated $16 trillion in assets ripe for some sort of movement (rollover, consolidation), this question is worth thinking about.
