Journal of Financial Planning: November 2015
Leslie C. Quick III, is the co-founder of Massey Quick (www.MasseyQuick.com), a $3 billion RIA in Morristown, New Jersey.
We hear a lot about “trust” in the advisory business. That word gets tossed around probably more than any other in our industry. But too often it’s just a buzzword without much substance. There’s still too much duplicity, and people need to understand that.
When Stewart Massey and I started Massey Quick in 2004, we wanted to establish real client trust. We wanted integrity to be the foundation—the very core of what we did every day. This is especially important for a firm like ours as our clients have significant wealth and financial management needs. We work with ultra-high net worth clients, single-family offices, foundations, and endowments, and even other financial advisers who use our manager research and asset management platform to serve their clients at a higher level.
Last fall, The New York Times spotlighted how investors get burned when loosely termed “advisers” don’t put client needs first, but instead act as brokers for high-cost, and in some cases, wholly inappropriate (though “suitable”) products (see “Before the Advice, Check Out the Adviser,” by Tara Siegel Bernard posted Oct. 14, 2014). Clearly, investors still aren’t fully educated about hiring a fiduciary to look out for them. We need strong, persistent communication to help our clients, the public, and our industry become more informed.
I believe we, as a profession, need to make trust a cornerstone, not just a buzzword. Here are five things I’ve learned about building and maintaining client trust over my 40 years in the financial industry:
Trust Trumps Everything, Even Performance
Trust actually counts more than results. Clients will hang with you through a few tough quarters, or longer, if they trust you. And trust is a two-way street. People should know that any “adviser” who promises them a reward without risk probably shouldn’t be trusted. We explain to our clients that our goal is to protect and build their wealth, not win them the lottery. Our clients do not expect to track the S&P’s performance given their risk profile. But being on the same page with expectations creates a trusting bond with our clients that lasts much longer than the next quarterly performance report.
You’re Only as Strong as Your Reputation
My belief in the power of trust started young. My father co-founded Quick & Reilly in 1975 just as I graduated from college, when commissions first became deregulated. Along with my three younger brothers, I helped my father run the business from 1975 to 1997. (We were either going to make it work, or go broke trying; our family needed to put my six younger siblings through school, after all.)
Early on, we realized that because we were pioneers in the discount brokerage business we had to develop and maintain a high level of trust with any client coming to do business with us. We knew that we could easily mess that up by doing something wrong, regulation- or PR-wise, or by associating with the wrong people. My father drilled that into us.
Today, I still see the absolute power of trust. We do not want to ever have a client not trust us. Having the trust drives business growth, and has enabled us to build a $3 billion high net worth advisory firm over the last 11 years.
People Trust Peers, Not Sales People
Another lesson I learned from my father is the importance of immersing myself in my community and of putting myself on the same side of the table as many of my clients and prospective clients. My dad always reminded me how fortunate we were to achieve success and he encouraged me to give back. Consequently, a lot of trust has come my way through working on non-profit boards, serving on investment committees, and donating money, and doing it all not for personal benefit, but to support worthwhile causes.
In 1985, for instance, I joined the board of my alma mater, St. Bonaventure University just to give back, not for any other reason. But my community activity has given me a chance to regularly meet prospective clients who just want someone they can approach about concerns.
Another example: I’m frequently counseling people about their children’s debt or ill-advised spending situations. People value hearing from an informed peer. And because we’re viewed as peers, right-fit clients don’t see us as sales people. Every day, we walk in the shoes of the successful people we’re serving—people who’ve sold a business, or who are dealing with multi-generational wealth. We’re relatable and trusted because we’ve faced similar situations.
If you have people’s trust as a peer, they feel they can trust you as a professional. Sometimes it’s a long process. We may stay in touch with prospective clients for years before they say they’re ready to do something with us. Or we may only manage a small portion of their assets, maybe 25 to 50 percent of their total. A guy I've known a long time finally revealed he had $44 million of net worth in a company, in addition to a $36 million investment portfolio. I said, "If we managed your finances, that would be a good thing for us to know about." Highly successful people are naturally on guard. Trust—and patience—help them open up.
You’re Not as Transparent as You Think
Transparency means showing all your cards, putting your managers out there in front of your clients—warts and all. It means having an open and fair process for reviewing manager performance and not playing favorites. Some wealth management firms charge fees to managers. We don’t. Because when you’re taking money from the managers, you’re compromised. Clients know that we never receive commissions on insurance, either, and that we’re aggressively looking out for their best interest, in everything we do, with complete transparency.
Your Team Must Be Fully on Board with Client Education
We’ve created a dynamic culture at Massey Quick centered on professional and client education. We truly believe the adage, “An educated investor is our best client.” We host four educational and networking events per year around a topic we think will help our clients, using everyday language. Clients love to interact with other clients. It facilitates peer learning.
We’re also mindful of the future and how we can continue serving and educating our clients and their children, long after us old-timers ride off into the sunset. Each client works with a three-person team: one of the five partners, a client adviser, and an analyst. All our relationship managers hold CFP® designations and two are CFAs. Half our firm is under the age of 30. We feel it’s important to mentor the next generation of stakeholders, giving them a voice in the firm, and even going so far as having the founders and top executives work in cubicles with them in the middle of the office. This facilitates better “teamliness,” learning, and growth. The better our team, the better the relationships we have with our clients.
Bottom-line: trust is a process that starts at the top. It doesn’t happen by accident. Make it a priority for your firm.