Recognising the stress and uncertainty that come with retirement, new research by the Australian Retirement Trust (ART) has outlined four drivers for advisers to build and sustain trust with their clients.
Its research surveyed almost 230 advisers and 775 advised members.
“As people approach or start retirement, they may not only be worried about managing their finances, but also feel apprehensive about the end of a job or career, or the thought of having more time on their hands,” said ART’s acting chief of retirement, Anne Fuchs.
Based on thousands of data points collected by CoreData, the constructed four-part framework in ART’s Art of Science and Trust resource comprises trustworthy behaviours, authenticity, reliability and acting in the client’s best interests.
Fuchs added: “The findings within the report show that it’s not enough for financial advisers to simply do what they’re hired to do – provide financial advice. Advisers also need to deliver on emotional trust, ethical trust and functional trust to build long-term client relationships.”
Trustworthy behaviours
Some of the behaviours identified to build trust are: understanding the value of referrals in providing a headstart on the trust-building journey, leaning on soft skills to help put the client at ease, and demonstrating a more “human side” to build rapport.
Showing a willingness to help also goes a long way in easing a client’s anxieties, as does “speaking their language” by avoiding unnecessary jargon.
Advisers can also structure trust into their proposition by way of communication, product agnosticism, data protection, and remuneration and fees, the research found.
Richard Pillay, one of the advisers surveyed, shared: “I make it easy for clients to stop paying fees at any time – I don’t require a 12-month commitment. I’ve always thought the easier it is to leave, the more genuine loyalty you can build.
“I transparently offer one level of service, and the same fee scale, to everyone. This helps them avoid feeling anxious that other clients are being looked after better than them.”
Authenticity
The research highlights that authenticity is a strong driver of trust and likeability. In a financial advice context, authenticity can begin with an adviser’s value proposition by recognising that they can’t be all things to all people.
Then, being realistic about expectations and outcomes, and demonstrating two-way vulnerability help humanise the adviser.
“Firstly, acknowledging that you don’t know everything shows you to be vulnerable, rather than incompetent. Even absolute masters of their profession need to look things up or seek help occasionally,” the resource said.
“Outsourcing aspects of your advice that need a deep, specialised expertise (such as investment management or estate planning) helps build trust in your professionalism.”
Reliability
According to the research, advisers should be looking to build five or more reliability deposits in their “trust bank” with their client each year.
“Regular client communications – whether that be via short SMS or regular newsletters and email updates – are a way of programmatically reinforcing reliability,” it said.
“Just as expectation setting is important when demonstrating authenticity, it also underpins demonstrations of reliability, by giving clients a reference point or benchmark.”
Timeliness in responding to clients and punctuality also ranks highly.
Anthony Jones, another adviser surveyed, shared: “There are a lot of steps in the advice process and it’s important to clearly explain to your client what those steps are and the time frame for them to happen. Then obviously delivering to those time frames. A common thing we hear from clients who have had another adviser in the past is ‘we never heard from them’, and ‘we didn’t know what was happening’.”
Acting in the client’s best interests
When measuring the value an adviser brings to a client, simplicity and trust (67 per cent) along with acting in their best financial interest (82 per cent), are ranked higher than portfolio construction (26 per cent) or product advice (41 per cent), ART’s research found.
Though compliance and disclosure obligations built into the advice process are there to ensure a client’s best interests are the priority, the resource highlights that advisers can use this to build trust by explaining to clients how they are designed to protect them.
By using the advice process to educate clients, advisers are able to see greater appreciation for the value of their service, a reduction in the likelihood of knee-jerk reactions or panic from clients, and helping them feel empowered.
The resource noted: “More importantly, imparting an adviser’s training, wisdom and experience to the client as financial education can be the ultimate demonstration of putting self-interest to one side.
“Holding onto knowledge can create a dependency on you, whereas sharing your knowledge theoretically lessens the dependence on you – putting your client’s interests ahead of your own.”
