How do you earn trust?

(August 2007) Is today’s client growing more skeptical about financial advice? What are their emotional hot buttons? We often think we know what clients worry about. The best way to find out, though, is by asking them.

Our firm conducted client surveys in January 2006 and again in June 2007. The objective was to gauge how clients feel about us and our ever-changing marketplace. It turns out they are confused by our mixed messages, our massive advertising campaigns and blurred industry lines. What’s more, most don’t know what to expect from a financial advisor.

We asked clients to identify the characteristics they are looking for in their primary financial advisor.

Here is a summary of their responses and their highest priorities:

1. Trust and integrity • Show me I can trust you by really listening and understanding my needs, wants and concerns. • Explain to me how you are looking after my interests first and not yours. I have major concerns about a conflict of interest. • Demonstrate to me that you have the expertise I need. 2. Communication • Your communication style and personality are major reasons for my trust in you. • Ask, listen and don’t assume that you know what I need and want. • Communicate to both of us (couples) using language we understand. • Be proactive in your communication with me; don’t just call to sell me something. • Keep me informed about how I am doing and what, if any, changes need to be made. • Give me access to my accounts online so I can review my portfolio.

3. Investment returns and choices • Show me how you balance my appetite for risk with the returns I should expect. • Don’t lose my money. Losing money is more painful than the joy of making it. • I don’t want a sales pitch on the flavour of the month. I want good solid recommendations based on individual circumstance. • Do not try to sell me on historical performance. Please give me reasonable benchmarks for comparison purposes. 4. Risk and uncertainty • Keep me informed on a “need to know” basis about what is happening in investment markets. I don’t want unnecessary information. It just confuses me. • I want comprehensive financial planning so I know how all of my risks are being addressed (investment returns, retirement income, tax, insurance, disability, estate, etc.). • Show me what my biggest risks are and how I should evaluate and manage them. This fear is a heavy burden.

More Shawn O’Brien columns:

• Walk in the shoes of your best clients • Do you have a brand? • The Puf Principle • How do you earn trust?

5. Being available • Be available when I need you by phone, e-mail or face to face. • Do not push me off to someone else. • Have someone answer the phone. I hate voice mail. • Schedule regular reviews. It gives me peace of mind.

6. Paying too much tax • I want to be educated on ways to save taxes. My time and understanding is limited. Don’t tell me about ideas that are not relevant to me. • I want coordination between my financial professionals so I know I am paying as little tax as possible. • Please take the time to understand my tax situation before you invest my money. I don’t want to pay unnecessary taxes.

7. Cost and value • Don’t assume I know how you get paid. Give me the information I need so that I can be comfortable knowing what I am receiving for the fees I pay. • I would prefer that you explain to me how you get paid rather than having to ask you myself. • Tell me all of the services you provide for the fees and costs that I pay.

8. Referrals • Don’t ask me for specific names of friends or colleagues for you to call as a referral. • I don’t mind making a referral if I am happy with your performance. Financial matters are very personal and I only feel comfortable making referrals if the opportunity arises. • I think asking for referrals undermines your value. If you do a great job you will earn my referrals. Otherwise you appear like a salesperson.

Upon review of these hot button issues, how do you think you do in the area of building and retaining trust?

Here is a list of “non-negotiable” techniques that will reduce stress for your clients and prospects.

Full disclosure In the initial stages of the relationship explain exactly what you do, how you do it, and be transparent about how you get paid.

Service standard A written service standard should be provided to your clients so that they know exactly what to expect from you.

Investment policy statement A personalized IPS will help the client identify and articulate their appetite for growth, along with their stomach for risk. This provides rationale and context for the mix of assets in their portfolio.

Comprehensive plan A plan helps you articulate and prioritize the potential risks a client faces. A retirement projection that determines an expected rate of return somewhat insulates the client who might be looking at short-term market performance. A meaningful benefit of planning is to erase any perception that you are simply a salesperson.

More Shawn O’Brien columns:

• Walk in the shoes of your best clients • Do you have a brand? • The Puf Principle • How do you earn trust?

Proactive calls Clients want to know that you are scouring the landscape for potential concerns and opportunities. A phone call demonstrates your commitment and provides a source of confidence.

Regular reviews Conducting regular client reviews reduces client worry. The review becomes a platform for sharing necessary feedback while showing clients how they are doing, relative to their personal benchmarks.

The challenge Our industry is fighting a perception problem. Your challenge is to distance yourself from this perception and develop a client-centric relationship. By doing so, your services will be highly sought-after. We have their word for it!

Shawn O’Brien is the vice-president of national sales at Investment Planning Counsel. For more information, contact Shawn at shawn.obrien@ipcc.ca or (877) 212-9799.

(08/02/07)