Just trust me

(December 2005) To call trust the most important element of a client relationship would be understating the point. It’s pretty simple: if you can’t encourage, build and nurture trust between yourself and your high-net-worth (HNW) clients, you won’t be in this business for long.

How you actually go ahead and foster that trust – well, that’s a little more complicated. Building trust is more art than science, and reading between the lines of several recent surveys and reports on the HNW population, I’m not convinced every advisor does it well.

Just to cite one example, the 2005 edition of the Merrill Lynch/Capgemini World Wealth Report makes clear some segments of the HNW population aren’t happy with their relationships with financial professionals. Many HNW individuals work with more than one professional because they haven’t yet found a trustworthy quarterback” who can capably do it all. Make no mistake: most clients don’t want to work with multiple advisors – it’s a hassle. But they feel they have to, because they haven’t found someone they can fully trust.

THE TRUST CURVE I like to think of trust as an arc or slope that rises gradually as financial scenarios become more complex. On one end, you have simple trades that require relatively little trust. On the other end of the spectrum, you have complicated investment strategies and challenging financial planning issues that require inviolable trust.

In a typical HNW relationship, the advisor starts somewhere in the middle of this trust curve. A certain level of trust is implicit in the relationship, but clients may hold back financial or personal information until they become more familiar with the advisor’s personality and business process. As the advisor gains a better understanding of the client’s personal and financial goals, the relationship moves up the trust curve. The client is more comfortable sharing private information about family, goals, and personal affairs. A synergy between client and advisor takes form.

As an advisor to the wealthy, you want to begin every client relationship as high on the trust curve as possible, and move to the top as quickly as possible. At the top of the curve, client relationships are smoother. There is less resistance to recommendations, because clients trust you to know what’s right for them. You’re invited to be a part of more complex transactions, and manage wealth not only for the client, but for the client’s business and family as well.

Are there things you can do to jump-start the trust-building process, or to move a client relationship up the trust curve more quickly? Here are some ideas.

LISTEN FIRST Learning how to listen to your clients is the first step toward long-lasting client relationships. So ask your clients questions about their financial dreams and desires. Ask them about their financial history, and about their emotional reactions to key events in that history. Listen carefully. Clarify their concerns, then summarize what they’ve shared with you (either verbally or in a pointform synopsis of your meeting) to prove that you’ve been listening. This process may take some time – perhaps several client meetings over the course of months or even years – but it will establish a solid trust-building foundation.

BEHAVE PREDICTABLY Trust can only flourish when we believe we can count on the other person – when we know what they will do, because we’ve seen them do it before. How can you do this with clients? Explain your business and investment principles, and stick to them. Apply them consistently throughout your relationship. When you’ve promised something to a client, fulfill it. Don’t make promises you can’t keep. Demonstrate how clients can count on your respect, your loyalty, and your discretion in managing their financial affairs. Demonstrate the utmost professional integrity in every interaction, and there is no limit to how far the trust will go.

EXTEND THE BOUNDARIES A business relationship will only go so far in establishing trust. For deep, lasting trust, you need to extend your client relationships beyond the walls of your office. I don’t necessarily mean literally: you can certainly develop this kind of trust without ever meeting clients in a social setting. But at the very least, you should be comfortable speaking to your clients about their personal lives, and about yours. Next time you meet with a client, go beyond the small talk and ask them about the important things in their lives. Learn about their passions, their hobbies, and their interests. Ask them about their kids. By establishing some common personal ground, you can demonstrate that you care deeply not only about their money, but about their happiness.

REBUILDING TRUST In every relationship, there may come an event that erodes or damages trust. Whether through an error, an oversight, or a simple misunderstanding, sometime in your career you will face the prospect of having to rebuild trust with a key client. What you do next is central to your ability to retain the client. Focus on: (a) taking immediate action to correct the issue that led to the erosion of trust, and (b) demonstrating your efforts to ensure such an erosion will never happen again. Your follow- through and determination to correct the issue will speak loudly to the client about your commitment to maintaining their trust. Louder, in fact, than the infraction itself.

Properly nurtured, trust can be an extremely effective competitive advantage – perhaps the only lasting advantage available to advisors.

Thane Stenner, CIM, FCSI, is a First Vice President and Investment Advisor with the T. Stenner Group of CIBC Wood Gundy. The views of the author do not necessarily reflect those of CIBC World Markets Inc. This article is for information only. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of Canadian Imperial Bank of Commerce and Member CIPF.

thane.stenner@cibc.ca