Rebuilding Trust in the Post-Downturn Economy

[Marie Swift]

Yesterday, at the FPA annual conference (#FPA2010 if you want to follow the live Twitter Stream - https://twitter.com/#search?q=%23FPA2010), I had the privilege of moderating a very interesting Industry Thought Leader Round Table. Several leading lights in the financial planning profession gathered with me for a frank discussion about fiduciary responsibility and how the new fiduciary standards might impact your business. We also talked about rebuilding trust in the post-downturn economy.

The round table discussion consisted of the following individuals:

George Tamer, TD Ameritrade Institutional
George Kinder, Kinder Institute for Life Planning
H. Jude Boudreaux, CFP
Geoff Davey, FinaMetrica
Don Trone, Strategic Ethos
Ed Jacobson, Ed Jacobson and Associates
Carl Richards, Prasada Capital Management
Julie Littlechild, Advisor Impact
Roger Wellington, Kinder Institute for Life Planning
Gary Klaben, Protinus

A couple highlights:

RE: Rebuilding trust and communicating your value now, Geoff Davey said the rise of the fiduciary will be important in addressing this issue. A fiduciary standard is mandated in some places. Advisors that adhere to a fiduciary standard will be a point of difference for the consumer moving forward, but only if the fiduciary standard is enforced.

George Kinder said that advisors need think of their practices 10 or 15 years in the future and take steps now to position themselves as the advisor of choice. He noted that if the new fiduciary standards are imposed that "fiduciary" will no longer be a differentiator. If everyone has a white hat on, how will you stand out? What will it look like? Advisors who have a well-articulated life planning process for clients will have a competitive edge.

Don Trone reminded us of five areas of mistrust as defined by Stephen Covey. To rebuild trust an advisor needs to understand and deal with these areas of mistrust: (1) Self (2) Relationships (3) Organizations (4) Markets (5) Society. Trone said there is little we can do about a mistrust of self and society; however, we can deal with a mistrust of relationships, organizations and markets. We have to know where mistrust comes from before we can effectively deal with it as professionals.

Ed Jacobson said that rebuiding trust entails hinges on the advisor saying - and then demonstrating - that they will be with the client every step of the way. Saying something like this might help: “We will be with you.” We can’t guarantee that the life plan will be achieved, but we can guarantee that we will be with you every step of the way.

Jude Boudreaux said that trust at the advisor level is ruined by the little things so doing what you say you’re going to do is important.

George Tamer said that having well defined processes that can be articulated and delivered as promised is a must. In addition, advisors must explain the difference between brokers and advisors. Articulate the potential conflict of interest and why the advisor model is better.

Carl Richards said that it’s a confusing issue for clients. He sees it as a "secret society" because there is no area in the yellow pages for “real” financial advisors so it’s an incredibly complex challenge but an opportunity to differentiate and grow your practice. The most viable solution for making the "secret society" less secret is one conversation at a time.

Roger Wellington said the term “fiduciary” is inside jargon. Clients don’t know that term. But how do we have a meaningful, insightful conversation not using that term?

Don Trone said that leadership, trust, loyalty and an effective decision making process are essential. He suggests that advisors skip over the word “fiduciary” and get to these softer qualities.

Julie Littlechild said that having a way to measure client satisfaction is important. Her studies show that "engaged clients" not only stay with you but refer other clients to you.

Gary Klaben uses the Mind Mapping process to differentiate himself and create a well defined and valuable process.

What do YOU say?

[Thomas Kane]

I agree wholeheartedly with George Tamer's comments. In fact, I have a blog www.kanecarlton.com/blog dedicated to "how to" on the topic.

Ours is an intangible business, however, by using process to manage a consistent positive experience, we can remove much of the uncertainty which unnecessarily creeps in. We can tell clients what to expect and then deliver on the promise.

In three short years we have gone from Revered to Reviled as an industry, and for most, business as usual will likely not cut it for the future.

Clients are voting with their feet and their wallets and it will be those advisors who can create competitive distinction through managing the client experience at all levels and controlling the narrative, through effective communication of a governing philosophy that will prevail.

[Bradly T.]

I agree with half of Tamer's observation at least - it is our "defined process" that drives new-client comfort. The fiduciary angle is absurd.....the public doesn't know the difference and soon there won't be one in our post-harmonization era to come. The public has heard of Madoff and the dozens of other "fiduciary thieves" out here - what is "better" about the advisory model?? Costs more and chicanary is no less frequent. But I agree a financial planning process PRIOR to portfolio recommendations and gee whiz illustrations fully engages our clients in identifying cash reserve, cash flow, debt, taxation, ownership and beneficiary arrangements, benefit elections and in-force risk management policies, etc. as the preliminary step to recommendations. By the time strategies are explained, the clients has a more comfortable posture, asks important questions and feels heard, understood, and fully engaged.


It is the "planning and consulting" process that has always made clients feel trusting....not hypos. And it is the same process that delivers relationship value above account/market performance, increasing loyalty and referrals. The rest of it is just window dressing.

[Marie Swift]

Good observations and commentary, gentlemen. Thanks for sharing your thoughts!

Marie Swift
Marketing Communications Coach
For Financial-Planning.com

[Bradly T.]

Not to pick a fight with Mr. Kane - but after 23 years in the biz, I personally don't recall our industry ever being "revered" by anyone outside our industry. We know the saints and sinners but the public is consistantly bombarded with only the sinners and their nefarious crimes. We know there are still many, maybe even most, of us who cherish both professional ethics and expertise on the retail side. But we also know of the power and effects of unbridled greed and have all met Mr. Gordon Gecko in more than one venue. We know that to some only production and profit matter and to others, they still matter - they are just muted by our desire to provide good client outcomes while being productive and profitable.


It is sad to say but I can't name a single institution that has not become more reviled than revered - government, religion, law, medicine, media, professional sports, finance, even accounting after Enron and Worldcom....(maybe engineering and gaming software developers are up or stable??). The institutional and broad mistrust many feel is well deserved. I do want to express my complete support for Mr. Kane's "solution" which is an egagement process and result that recognizes the value of the client and their experience and the results. This is a time when the unbranded independent can make a difference to the client and to the industry.

[Marcel VS]

Wow, sounds like the U.S are in similar pre GFC state of where Australia was 3-4 years ago with sediment of mistrust within the industry and the public, and new regulations tightening the grip around what is deemed as 'giving advice'!!

In the industry over 25 years, and having been an adviser more then 20 years ago but now working within an eMarketing capacity, the days of client engagement and gaining consumer trust has totally changed.

Downunder, I have noticed that this engagement process takes time, and in most instances multiple touch points using multiple channels is what is driving the demand for reingagement. And yes, consumers, ordinary mums and dads are demanding this.

You need to seriously think of using these channels (most of them are electronic) as a means to add value in your business.

Here in Australia, clients are now demanding we keep them in the loop. My view is that this keeps the relationships up to date and more importantly, you start to be seen as a subject expert and gain client trust.

Unfortunately, this is time consuming and has a lag time but the end results, particularly Downunder, is getting some amazing results over the past 18 months.