Journal of Financial Planning; March 2020
Adam Kornegay, co-founder of Pathfinder, combines his background in marketing and business analytics with his experience as a financial adviser to help financial planners and financial services firms manage and grow strong businesses. He is a messaging and marketing strategies coach in the FPA Coaches Corner.
A 2018 pew research center survey1 found that 43 percent of Americans ages 65 or older agreed with the statement: “Most people can’t be trusted.” When the same statement was presented to Americans ages 18 to 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.
I 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.
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 planning concerns.
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 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 ways 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.
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 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. Ralph Nichols was a professor at the University of Minnesota who was known for his work in the field of listening. He is often quoted as having said: “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 10 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.
- See the Pew Research Center article, “Young Americans Are Less Trusting of Other People—and Key Institutions—than their Elders,” by John Gramlich, posted August 6, 2019 at pewresearch.org/fact-tank/2019/08/06/young-americans-are-less-trusting-of-other-people-and-key-institutions-than-their-elders.
This column was first published in the FPA Coaches Corner whitepaper, “Action 2020: Create Business Success for Today and Tomorrow.”
Learn more from the experts in the FPA Coaches Corner in the new whitepaper, “Action 2020: Create Business Success for Today and Tomorrow.”
From improving your digital presence to developing a referral plan and adopting the right mindset, the whitepaper showcases the best thinking from the eight FPA coaches. Download it today at OneFPA.org/CoachesCorner.