From the September 2009 issue of Investment Advisor • Subscribe!

September 1, 2009

The Psychology of Advice: Betrayal of Trust

Trust is the most important thing in a relationship. What can you do if it's lost?

It seems sometimes that we're living in an era of betrayal. Renowned money managers, senior elected officials, and Fortune 500 corporate leaders seem to betray our trust almost daily in the most shamelessly public ways. Then there are the little betrayals we face in everyday life from friends, intimates, bosses, or other colleagues.

When your trust is shattered, how can you make your way through the trauma to reassess the relationship? Sometimes betrayal causes a breach that may never be healed. In other cases, a rift can be repaired over time by communicating in the right way, making amends, or changing one's behavior. The following examples of betrayals may help you manage similar situations in your own practice.

Q: One of the planners in my firm discovered last month that her husband was having an affair. Her productivity has slowed drastically, and some of her colleagues are having to cover for her. Knowing that she already feels terrible, should I speak to her about her impaired work product, or give her more time to get back to normal?

A: By offering your colleague soothing consolation and perspective, you may help her return to fuller functioning in as short a time frame as is realistic.

Dennis Reina, who with his wife Michelle runs the Trust Building Institute in Stowe, Vermont, suggests asking this planner what support looks like to her. She may just need a friendly ear and help in keeping up with her workload.

Also ask the rest of your team how they feel about helping their workmate, what further support they would each be wiling to provide, and how you can help them shoulder the extra load.

Back in the 1970s, philosopher, researcher, and speaker Jean Houston gave a workshop I attended on "The Sacred Wound of Betrayal." Her premise was that everyone experiences betrayals in intimate relationships. The important thing is to learn how to work through them, communicate honestly and respectfully about them, make amends for transgressions of trust, learn to forgive, and slowly forge even stronger bonds.

Your planner may have a long road ahead of her. But in the meantime, if you and your associates can keep covering for her and help her get back on her feet personally and professionally, you'll undoubtedly be rewarded by her loyalty and hard work over time.

Q: After much thought, I decided to change my compensation structure from mixed fees and commissions to a 100% fee arrangement. When I mentioned this casually to a couple of clients, they reacted as if I'd stabbed them in the back. How can I introduce my new policy more successfully to the rest of my clients?

A: Upheaval and loss are so widespread these days that it's no surprise your clients are balking at this change. Consistency and regularity are very important during times of turmoil, so no matter how legitimate the modification seems to you, this may not be the best time to institute a new policy.

You might consider inviting some of your most experienced and insightful clients to join an advisory board that would give you feedback on ideas like these before you implement them. By slowing down the process and soliciting comments along the way, you stand a good chance of strengthening your clients' trust instead of damaging it.

Q: Our boss told us he believed in growing leadership from within, and he spent time and money helping several of us to learn leadership and management skills. However, last week he introduced us to an old buddy of his whom he has just hired as COO, and who clearly has the inside track to succeed him. We are seething and feel that he betrayed us. Should we speak out, or just start looking for other jobs?

A: Both. I think you should meet with the boss, but only one or two at a time; you don't want to make him feel that his back is against the wall. Tell him how taken aback and disappointed you feel after his hiring of a new chief operating officer, and that this makes you question whether it's still possible to advance in the firm.

Dennis Reina recommends giving your boss the benefit of the doubt. He may not be at all aware of what he did in throwing his old buddy into the succession mix. If you approach him with some compassion, it may be easier for him to acknowledge the pervasive feelings of hurt and betrayal he has caused, and to determine how he will rebuild morale in his work team. You might suggest that he hire a retreat facilitator to help his staff restore the trust in him that they have lost.

At the same time, I would look around for other work options. Any nibbles from other employers will remind you that you are not trapped and powerless but are, after all, the master of your fate. If you do eventually forgive your boss and decide to stay on, I hope it will be in an atmosphere of honest feedback and respectful communication that help you progress in your career, despite the new COO.

Q: A planner in my office, "Jim," worked with a couple for five or six years until they split up. After a nasty divorce the ex-wife moved back to her hometown, while continuing to use Jim as her advisor. When her ex-husband told her recently that he had begun working with Jim again, she hit the roof. She says she can no longer trust Jim because he failed to inform her that her ex was consulting him, too. What can he do now to appease this angry client?

A: My first reaction is that Jim should have told his female client upfront that her ex-husband had called for an appointment. They could then have discussed how comfortable she would be with Jim continuing to advise each of them individually.

This issue is so thorny, however, that I decided to consult two advisors whose ethical views I respect. Dick Vodra of Spire Investment Partners in McLean, Virginia, told me that couples who work with him agree in writing that he will share all information with both of them.If they become individual clients after a divorce or separation, each person's information becomes confidential.

In this case, Vodra believes that Jim should have informed the ex-wife and solicited her reaction before accepting her former husband as a client. If he had explored what bothered her about his potential relationship with her ex-spouse, it might have helped her release some of her concern and allowed him to keep them both as clients.

Marie DeCaprio of MCD Advisors in Briarcliff Manor, New York, had a slightly different take. Contractually, the initial client was the couple. After the divorce, this "client" no longer existed. A new contract with the ex-wife made the advisor responsible to her.

DeCaprio feels that ethically, if not legally, Jim owed it to his client to tell her that her former husband had approached him. In view of the consequences of omitting that step, he needs to evaluate how much time and effort he would be willing to take to mend the breach.

I agree with both opinions. If Jim fails to restore the ex-wife's trust, he's likely to lose her as a client. By making time to explore her feelings with her, he will be in a better position to determine whether he can work with them both, which is almost always tricky after a divorce.

Q: My administrative assistant's son was arrested on a drug charge several weeks ago. His trial and sentencing were a nightmare for her, but since then she has been functioning as her usual efficient self. Yesterday she confessed to me that amid all the turmoil, she neglected to file tax forms for several clients. After four years together, I'd come to trust her implicitly with such responsibilities. How can I keep my feelings that she betrayed my trust from affecting how I deal with this?

A: How sympathetic do you feel toward your assistant and the angst and suffering she has been through? Have your feelings about her son's wrongdoing colored your opinion of her?

Once you have assessed your own emotions, take time to share your concern for her and her family and hear her feelings about what happened. You can then tell her honestly how upset you were by her breach of responsibility. It would be appropriate for her to reimburse the firm for any late filing penalties.

I would also suggest that you have a serious discussion with her about the future. If something comes up that prevents her from doing an important part of her job on time, will she promise to inform you at once? In this conversation, it's important to remind her how much you have trusted and relied on her in the past, and to emphasize that you know that this situation is extraordinary, while insisting that safeguards must be put in place so nothing like it can happen again.

As devastating as betrayal can be, we need to realize that breaches of trust are not rare, and that we can benefit from learning to cope with and heal from them. By acknowledging these instances when they occur, taking responsibility if we are at fault, giving honest and compassionate feedback to those who betray us, and suggesting actions to mend the breach, we can succeed in strengthening impaired relationships and rebuilding trust with our all-too-human fellows.


Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Client Connection: How Advisors Can Build Bridges That Last, available through the Investment Advisor Bookstore at www.invest-store.com/investmentadvisor. She also offers money psychology teleclasses for financial advisors and for the general public. E-mail Olivia at moneyharmony@cs.com.
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