Since the early 1960s, Americans have become less trusting of the world around them, losing confidence in government, religious institutions and the financial system itself, according to a Pew Global Attitudes Survey.

The meltdown of the financial markets, punctuated by the failure of Bear Stearns, has only exacerbated distrust of the financial system. Some financial advisors have felt this lack of trust most acutely in recent years, making it increasingly difficult to serve clients. It's a difficult challenge to help clients who are hesitant to share information, who do not trust financial projections and who are reluctant to follow prudent recommendations.

Many advisors are fighting a seemingly uphill battle as that Pew study from 2007 has found that fewer people each year agree with the statement: "Most people can be generally trusted." Americans, however, have not become totally distrustful of everyone or everything. It seems that a new source of trust has emerged from the rubble of our institutions and icons.

Studies conducted by the MIT AgeLab in 2011 indicate that people are increasingly investing their trust in other people like them. They may include personal friends or acquaintances but also include a growing number of "virtual" friends or groups.

The word "friends" has developed a new meaning with the explosion of social media. "Friends" now includes people with common interests or experiences and who converse about them on sites such as Facebook, CafeMom.com and other sites. More importantly for advisors, people tend to trust referrals from others who have bought similar products or services and then shared their assessments on consumer sites such as Angie's List or Amazon.

The reliance on referrals has important implications for advisors. It puts a premium on satisfying clients and embracing a service mind set. Being a source of expertise remains important, though, as the AgeLab found no reason to believe that consumers are valuing expertise any less than before.

What AgeLab did find is a growing importance of personalized service, product fluency and access to additional resources. Clients want to better understand the products they buy and the likely outcomes of buying them. On the scale of importance, simply providing investment recommendations is tilting lower. Engaging clients with new tools that help them visualize their future, educate them about financial issues, and apply appropriate financial solutions is trending higher.

Dr. Joe Coughlin, the founding director of AgeLab, has strongly suggested that introducing more predictability into people's lives can help reduce anxiety and build trust incrementally in the short term but solidly over the long term. This is particularly germane to retirement and income planning.

Research by AgeLab determined that the notion of retirement and the importance of planning for retirement began to fade as the traditional concept of retirement becomes more distant to many Americans.

Fewer people now believe that they will be able to retire, at least not until they are forced to stop working because of illness, physical issues or other problems associated with aging. Many people simply believe they will not be able to stop working when they reach the traditional age associated with retirement.

"A focus on the practical is the new norm," Coughlin says of the consumer attitudes as a result of the financial volatility of the past few years. "Advisors may be wise to engage consumers by discussing the many facets of longevity they may need to consider, such as independent living, chronic disease management and care giving," Coughlin says. "Respond to what the consumer is experiencing today and within the parameters of what the consumer sees as realistic," he adds.

Coughlin even suggests that it may be time to "retire" the word "retirement."

One way to introduce both predictability and practicality into the lives of clients as they age is to create sources of predictable income. Guaranteed income is better yet.

Advisors who help clients meet their basic living expenses and other needs by turning assets into streams of predictable income may see their clients' degree of trust and confidence increase if the financial recommendations deliver as proposed.

An effective way to create predictable, guaranteed income that will last as long as the client lives is through the use of annuities. There is no other product available on today's market that can generate a steady source of income that is guaranteed to never run out as long as a client lives. The income can be guaranteed for the life of a single person or jointly with a spouse.

Annuities can also be used to leave a financial legacy if the annuitant or annuitants die. The guarantees within an annuity are based on the claims-paying ability of the issuing company. As with many situations involving deferred gratification, annuities are often resisted by those who would benefit the most from them.

Studies conducted by LIMRA International in 2006 uncovered several objections to converting assets into an annuitized stream of income. The biggest objections stemmed from a lack of understanding about longevity risk: most people worried about dying too soon rather than living too long, the reverse of what has proven to be statistically true.

LIMRA recommended that advisors apply behavioral economics to help clients sort through their retirement income needs. The marketing research firm said that traditional ways of helping clients make financial decisions such as retirement planning exercises, as well as seminars and educational materials tend to be too analytical to convince them of what is, fundamentally, an emotional decision.

What may work is to try to understand what comprises a client's current or intended lifestyle and help him or her identify the costs associated with maintaining that lifestyle. Then help the client to identify predictable (trusted) income sources to pay for those things they hold most dear in retirement.

Annuities may provide a complementary solution if other sources such as Social Security or pension benefits do not provide an adequate amount of income to cover those needs. Any remaining assets can then be left in other investment vehicles for discretionary spending on trips to visit the grandchildren, charitable gifts, theater tickets and other lifestyle choices.

Advisors need to continue to educate clients about the need to invest as a long-term hedge against inflation and rising health care costs during a potentially lengthy retirement. Helping clients increase predictability and decrease stress associated with their financial lives has another important benefit: it can result in greater satisfaction with the performance of their advisor. Longer term, it will build greater trust and acceptance of your efforts to help them improve their financial lives and the quality of their lives overall.

John Diehl, CFP, is a senior vice president for The Hartford's
wealth management business. The views expressed here are those of
John Diehl and should not be construed as investment advice.
"The Hartford" is The Hartford Financial Services Group, Inc.
Annuities are issued by Hartford Life and Annuity Insurance Company
and Hartford Life Insurance Company. The Hartford
is a founding partner of the MIT AgeLab,
which is not an affiliate or subsidiary of The Hartford.