Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Trusts and Estates > Trust Planning

Restoring Trust, One Client at a Time

Your article was successfully shared with the contacts you provided.

What a person finds humorous can be quite revealing. Former President Ronald Reagan always got big laughs when he said, tongue not quite in cheek, “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’”

Such a non-ha-ha funny statement reflects Americans’ lack of trust in (big) government and our mixed, suspicious feelings about our leaders in general. When I speak to advisors at industry gatherings, I know I’ll always get a big laugh when I preface some profound statement about advisors by saying, “Don’t worry, you can trust me: I’m a journalist!”

Since the financial crisis of 2008-2009, the issue of trust has become a big worry among thoughtful people in the financial services world. The thousands of bank failures during the Depression led many Americans to deeply distrust banks.

After the crisis, many Americans have come to distrust the big Wall Street institutions, and my personal belief is that independent advisors have been the beneficiaries of that distrust.

Maybe that’s because investors are more aware of risk. The fourth “Rebuilding Investor Trust” study, released Jan. 21 by branding firm Sullivan and Northstar Research Partners, delivered its own mixed messages about investors and trust. While 80% of the 1,800 affluent investors (at least $100,000 in investable assets) surveyed said they now strongly trust their financial firms (up from 46% in 2011 and 65% in 2012), 44% fear health care or serious illness more than they do market declines.

Several blogs posted on in January addressed the issue of how to build and restore trust in our financial institutions and ways advisors can lead clients to trust. Knut Rostad, president of The Fiduciary Institute and compliance officer at Rembert Pendleton Jackson, cited in his blog a speech by William Dudley of the New York Fed and a survey of CFAs to support his argument about restoring investor trust. This year, he wrote, “there is greater recognition that the lingering dark film of investor distrust—distrust from the continuing bad behavior witnessed on Wall Street—is important. The corollary, as it regards the advice industry: Advisors themselves are best able to clean it up.”

Mike Patton, founder of the RIA firm Integrity Wealth Management, took a practical approach in his blog about how “to help clients learn how to trust again.” His four-step process includes “assuming they had a bad experience with an advisor in the past, you should do what you can to draw this out of them. […] If you can get them to discuss the specifics (only if they want to), it can be a healing episode for them and they may come to view you as a genuine, caring individual.” But, he warned, the advisor “must be completely sincere” in validating their feelings. Mike’s approach includes being clear about what services he can provide and what the client will pay for those services. He does it for ethical reasons, but it makes good business sense as well.

The Sullivan/Northstar research discovered two other important findings. While respondents said they wanted more holistic help from their advisors, less than half said they disclosed all their wealth to their advisors, keeping an average 30% out of sight. The final bullet point: 27%—and remember, these are affluent folks—don’t know the amount they’re paying to advisors, and half of those 27% don’t know they’re paying anything at all.

Like a reputation, trust takes time to grow and can be sabotaged quickly. I suggest you read both blogs, and help restore investor trust and confidence by being trustworthy yourself, one client at a time.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.