Winning the trust of clients is at the heart of a successful long-term relationship between financial adviser and client. But with increased public scrutiny, growing government regulation and demands for greater transparency amid protracted low interest rates, how can advisers bridge the trust divide?
First, the good news: most clients are currently happy with their adviser’s performance. According to State Street Global Advisors, Australian research by Investment Trends into SPDR ETF investors found 77 per cent of those who had used an adviser in the past 12 months considered them as either “good” or “very good.”
Clients ranked advisers highly on attributes considered central to a trusting relationship, including accessibility, independence and transparency. There was also evidence of unmet needs, with more than half of SPDR EFT investors desiring extra advice on ETFs and offshore investing. With current ETF investors wanting to double their fund allocation, filling the advice gap represents a sizeable opportunity.
Trust comes in threes
Similar to other service providers, the choice of adviser often comes down to whom the client trusts the most. According to State Street Global Advisors’
research, three levels of trust are at stake, comprising trust in technical competence and know-how; trust in ethical conduct and character; and trust in empathic skills and maturity.
“The starting point is meeting the minimum educational level of holding a relevant degree and the Certified Financial Planner professional designation, then proving you are a qualified expert in your chosen field, for example, by obtaining an SMSF specialist qualification. Once suitably educated and qualified, a trusted adviser should be prepared to answer a lot of complex questions,” says Tim Mackay of Quantum Financial.
According to adviser Paul Moran, the first step in building trust is putting the client in control, such as by giving multiple “drop-out” points throughout the process rather than “pushing” clients. “That sense of freedom is a huge opener in the trust relationship,” he says.
The third dimension, described as “relationship competence” is considered critical to a successful adviser-client relationship, according to psychologist Dr James Grubman.
“Essentially, this trust is built on the client’s premise that ‘if I tell you personal things about myself or my family, I need to trust that you, the adviser, will handle that well,” he says.
Clients are more comfortable and more likely to continue their relationship with advisers who can integrate the financial and personal into their practices, he suggests.
Advisers can also build trust over fees by describing them clearly, benchmarking and putting the details in writing.
By building trust, being upfront about fees and communicating the value of their expertise and service, advisers have the ability to build deeper relationships with clients through greater satisfaction. In a world where investment solutions and services are becoming increasingly commoditised, the extent to which advisers can act as trusted counsellors to clients is set to become the real measure of value.
