Webinar Building trust

 (00:09): How much can I trust you? Are you good at what you do? Will you run away with my money? Will you work hard on my case? How much can I trust you? Hello, my name is Mauro and today I will be talking about building trust with clients along the research by my colleague, Dr. Thomas Mathar. When you think about it in our relationships, professional or personal, we constantly look for cues to help us understand how much we can trust this person or that organization. Our entire society is based on trust, the economy and entire financial systems. Our sense of trust is dynamic. It can change quickly. One can earn trust and then lose some, or even all of it sometimes over. Trivial things. Trust is also not binary, either I trust you or not, but has different degrees, different levels. Trust is also very highly dependent on context.

 (01:09): My wife trusts me very much to cook Italian food, but not so much for French cuisine. I am Italian by the way. Trust is very emotional and we use it to make important decisions in our lives from voting to choose a professional. So you might pick a plumber out of Google Maps and see how it goes next time you switch to another one. But in other context, the performance of a professional can affect you personally at a deeper level. Think of a lawyer or a doctor. What level of trust is needed there? You want to know, you need to know that these professionals are putting your interest first. So what about financial advising? Are your clients entrusting you with something very personal? Their finances issues, their financial wellbeing, their future? I would say so. So it's important to think about trust in a systematic way to get to the highest level possible of trust with your clients.

 (02:14): So the questions are what helps building trust and what can you do about it? To look at this today, I will be looking at three things. First, the trust issue in the world of financial services. I'll summarize a study that we did at our center for behavioral research for this. Second, I want to look at what are the essential components of trust, and for this I will use a framework of five aspects. This is coming from Dr. Henry Cloud, a clinical psychologist and leadership expert in his recent book Trust. And along with those five components that also provide some practical aspect or strategies. The key takeaway from all of this is that yes, functional skills or technical skills are of course essential

 (02:59): As a base for what to do to build trust. Yet other forces affect strongly that sense of trust from clients and those are aspects that you are in control of. There is a bit of a trust issue in the financial services industry. For this, we went into our Aegon panel, which is made of customers, non-customers with different exposure to financial advising just to represent all those different views. And we asked them this question why people don't trust financial advisors. What are the reasons? Okay? To answer that question, we gave respondents a series of options to select from the top reason the number one most selected reason to not trust a financial advisor was about conflict of interest. So this is about thinking that products say financial advisor is recommending are benefiting the advisor more than the client. Then we have a lack of transparency and this is perception that it's not quite clear to clients how much they will be paying and what are the reason for such costs.

 (04:15): The third one is industry reputation, which refers to this halo effect, the general distrust in the industry that can reflect on the area of financial advice. In this graph, you see the top three of all the reason we provided. But to give you a relevant comparison, one option was competence. And interestingly, that was the least selected only 21% of the time. In a way, these highlights are when talking about trust, the focus of people is on other issue. Then functional and technical aspect of competence. It was also interesting that on an open question, respondent talked about commissions, their provision, the advisor getting more out of it than the client themself. So not understanding what they're really paying for, all reinforcing those points of conflict of interest and lack of transparency. So I'm not saying that this is necessarily what happens, right? In reality for conflict of interest and lack of transparency.

 (05:26): But what we have here are perceptions, beliefs of how the industry works and these perceptions can guide decisions and behavior. So I think it's important to be aware of those and acknowledge them. In the same study, we have asked our panelists to rate three different ways and advisor can present themselves, right? Think of a website for example. So we wanted to see how changing, changing the focus of the description changes can affect that sense of trust. So here you see three different descriptions, variation one highlighting technical skills, variation, two, highlighting a human-centered approach and variation three, stressing ethical and ethical approach. So all participants rated all the three of the descriptions, but we showed them in random order. So what we did, we asked them how much they would trust an advisor of firm based on these descriptions that they were reading. And they rated them on a scale in a scale from not at all trustworthy, trustworthy to very trustworthy, what were the results?

 (06:43): So version two and three, focusing on human-centered approach and ethical credentials are the best performing. Nearly 60% of the ratings are for trustworthy and very trustworthy. Not much difference between variation two and three. Version one, which is focusing on competence and technical skill is rated trustworthy only by 30% of participants. In fact, for these descriptions, the majority of the scores are in the category. Neither, neither trust, neither does trust. So this is showing us when it comes to trusting those elements that go beyond the technical skills and competence, what helps clients connect on the human level and reassure of those ethical aspects, those are element that can strongly affect the sense of trust. So let's move to the question. What is trust? Surely we all have an intuition on it, right? As we experience trust and mistrust on a daily basis, we all recognize that it is an essential ingredients for good interpersonal relationships from families to friends to organizations.

 (08:01): And trust can have many phases. It's a multi-dimensional. Okay? Now I want to look at it systematically, right? With method just just before that. I think it's worth saying that building trust is not about persuasion. Talking people into trusting me. Trust is much deeper. It is a neurobiological psychological, emotional. So if we want to be trusted, if we want people to be fully invested, we need to be fully invested in them. Okay? So now let's look at this systematically. So this is based on the framework by Dr. Henry Cloud in his latest book, trust. Yes, I extensively studied the topic of trust and he provides practical strategies for life and business. It's worth a read. Let's look at the five components. They have an effect on trust, they are motive, understanding, track record, ability and character. And they're all important to the point that you can do good on all, but one of those aspects and your trust level can be negatively affected.

 (09:11): First, clients want to know your motive, what is driving you and your recommendations. Specifically it's about perception, right? They need to feel right. This is not just cognitive but also emotional. They need to feel that you got their back, that you are there for them and not your personal interest. The second point is about understanding, obviously understanding their financial needs, but then what is behind those? So this is about listening and empathy. And again, it's not just a matter of view, understanding them, but it's also about their perception. Do they feel you have a genuine interest in understanding them? Third is track records. Clients will keep a mental record of what you do, especially in comparison to what you say you will do and their expectations. So it's about consistency. Then we have ability, a fundamental as we said, is this the right person for the job?

 (10:20): So how are you showing your competence? It is about the expertise you have and the good, good judgment that you show, right? If you have good intentions but the delivery doesn't match those, then that will deteriorate. Trust. And finally, character. Really this is about who you are showing to be and who you are. It's about authenticity. Maybe clients start to trust their advisor because they seem to tick all the boxes. So now the client that has a good positive sense of them you know, the advisor seems to be honest, benevolent, then they might notice something, something that doesn't fit. For example, maybe a comment they do of how they treat their personal assistant and that creates doubts about their character and trust is quickly turned away. Okay, so these are the five elements we are considering here. There are a lot of studies and books about trust. You might also be familiar with the trust equation on the trusted advisors. These five elements cover a lot of ground to approach this topic systematically. Now I will talk through those components one by one and how you can make use of them to build trust with the prospective clients. And even with existing clients.

 (11:49): Why do you do what you do? Right? What is your motive?

 (11:54): Of course, it's a job, a job that you love and there fees that comes with it. Yet we have seen in our survey result that the top reason for not trusting financial advisors has to do with that perception that financial advisor have conflict of interest. There is a lack of transparency, and this speaks directly to motive. Clients want to know your motive, what is driving you and your recommendations. They need to feel that you got their back, that you are there for them, not just for your personal interest. Rest. There's also an element of belief that clients might have, right? Assumptions about the industry in general, for example, and people who work in finance. So when people seeing the news over and over scandals, like LIBOR, PPI mis-selling HSBC, money laundering, excessive bonuses creates belief or confirms beliefs that people have about the industry. What you see in the slide here, it's a quote coming from the FCA in their financial life serving in 2020, highlighting that there is a problem of trust in the industry specifically for advisor, a lower trust score than banks through higher than the government.

 (13:20): So perceptions are important. Maybe your intention is only in about helping their clients and doing their best interest, yet it's always a matter of perception. So all that you do is important what you communicate and how you communicate. It's about perceiving the benevolence, the will to do good. So a client perceiving that benevolent intention and, and also how can you balance that, mistrust those negative beliefs. To begin with, before we go through this slide, I want to quickly mention a cognitive effect you might have heard of before, confirmation bias. Essentially, once we have a view or a belief, once we believe something is true for us, we filter all the new information that is coming to us just in line with those beliefs, excluding all the rest. Now, this is quite a strong and common effect in many domains and it's widely studied. A way to interact this is to create some form of dissonance, some form of surprise.

 (14:34): And that is a little bit of what happened in our test of those three descriptions that we saw earlier, the description focusing on the human-centered approach and ethical aspects where unexpected, they we focus the attention on aspect. They're not usually in the stereotype of the finance industry. So when you think that clients are holding some beliefs, they they might not be accurate about you, what you do and how you do it, that is something that you want to address as early as possible. So to change that lens that they're using to filter information. So continuing on motive, we trust people that we feel they have a motive that is not just about them. You, you want to feel right that they are there for you, looking out for you, your interest, that they're going to protect it even when you are not there at the table. So this should be reflected in what you communicate and how you communicate it. So some practical things that you can control immediately. The first, the first observation is about the website or more generally about controlling how you describe yourself, your firm in public. Public content is a first opportunity to communicate messages about your approach, your ethical standards with the idea of conveying a sense of transparency that focus on helping a client.

 (16:14): Then people get to your office physically or virtually. That first meeting is another opportunity to build trust, to give a taste of how your relationship is going to be. When we want to show that the client is important to us, that means listening and understanding. How did they get there? What is the story behind their visits? Do they have previous experiences? If with financial advisors and if yes was good, what went wrong? What are the values, their preferences, if they have any? And leaving space to client really to, to talk and prompting to ask questions. The point is that other than telling that you have a genuine interest to help, you want to show them that you have a genuine interest in them. So the first meeting can be more about listening, understanding rather than finding solutions and offers. So this creates engagement and of course showing transparency as well on how you provide financial advice and the fees, setting the expectation for this relationship effectively.

 (17:36): So ongoing communication with the, with active clients, keep going with communication. And this approach of listening a relationship evolves with time, and so clients need a perspective do as well. Even preferences might, might as well change during time. Again, overall the goal is that you want to show them that you have a genuine interest. So these are just some first ideas that depending on you and your firm surely can come up with more specific solution and strategies. So I mentioned more than a couple times now the importance of listening and understanding clients. Money is not just about money. Often it's hard to be rational about this topic. In fact, money and finances can be quite emotional. You already know that it's hard to think about money in the long term, but it's also to think broadly. More holistically, a client comes into the practice, say they want to speak about optimizing taxation or retirement planning, whatever it may be, we get that request, that face value.

 (18:46): Obviously sometimes it's the only thing that we can do, yet quite likely there are several untold reasons behind that. Emotion. Thoughts that push their client on your chair might feel worried about the future feeling they're running out of time or they want to do what their friends are doing or maybe their partner just strongly asked them to do so. So what is your story? How did you get to this point with this request? And starting from their request and asking question with the goal of bringing to the table their personal story. This is not a small talk, it's a systematically getting to know them. So you're not trying to convince someone to trust you. You want them to feel that you know them. And this goes through listening and understanding. It's, it's also important when it comes to talk about options. If a client doesn't feel being understood, what are their needs, their context goals, they will have less trust, less engagement, less likely to follow through with a plan or future engagement, especially when there are negative some initial negative beliefs about the industry.

 (19:55): The truth is that people start to listen only after they feel they'll listened to. So that's why it's important here. We are offering a bit of a systematic ness on how you can go about that. You can read some suggestion on on the slides. These are skills that are important to develop and nurture. Listening is clearly the overarching skill to develop understanding so that clients feel perceived they are not just a number that you care about them. These active listening and the reflective statements help also when talking about their option is you can explain why the reason you're proposing something to them. Okay? Track records trust is not simply given, it's earned. So this is referring to a process, right? During interactions, we are always building a map, a track records in our heads. Every experience with someone adds to the map of how we went last time.

 (21:05): Track records here can be considered in a couple of different ways. The most immediate of course thinking in terms of performance or experience, how many clients you have held before and how well, and of course this is an important aspect. That's why there is such a big market and interest in products and service review or why website include these kind of cues like their most famous clients, how long they've been in business and so on. All pieces of information they're put there to signal track records to build them up and increase the initial trust. Even a client referral is a track record. These advisors, they seems to have done well with my friends. They will do the same for me, but it doesn't stop there. A second way to consider track record has to do with consistency. A track record of a pattern of what you do. Being reliable. When we say we will do something, we set an expectation and if we don't do it or do late, the track record's not going to be as positive. If you say that you call for a check in every quarter, half a year or even when there is some worthy market situation and you don't do it once a second times, now you got a track record of not being reliable.

 (22:34): Okay, here we have some application to consider about track records. When you have a a website that is quite a obvious space to begin with. You can include customer reviews, quotes and other cues about your track records. Probably you're already doing this. You can also develop and share case studies that helps showcasing expertise but also make it more concrete how you help clients. You can bring it up during face-to-face interactions, little references to similar cases or cases in the same industry as the clients or how you help those other people. So give this cue but without overdoing it, after all, it's, it's about that client, not about your other clients that you had. It's good to remember that we all like to feel unique in a sense. And let's talk about social proof, right? That is, that is in a way showing what other think of you. So again, using reviews from from Google Maps, Trustpilot vouch for and those can be included in other places under than the website, say a newsletter if you have one. Or even sometimes in emails talking about ongoing communication, that is very important. It shows that we care continuously about our clients.

 (24:01): And on top of what is in page, as I said earlier, track records is about consistency, meeting the expectations, doing what we say we'll do. So showing that you listen and care about the person at every interaction. So again, these are aspect that you are in control of and that you can strategize on. Okay, ability. So here I'm making a strong contrast calling on the Dalai Lama. Maybe a bit unfair here, but what I'm, what I'm saying is that the Dalai Lama a strong and charismatic guide. You would trust his help and guidance in dealing with emotion instincts, life goals, what is important to us and our happiness. Did Dai Lama get your trust there, right? But you'll not trust that Dai Lama doing a financial plan for you. This is just not his ability, nor it is expected. You would though be positively surprised.

 (25:11): Okay? So abilities. The point I'm trying to make here about abilities, that is a wellbeing. Maximizer, technical skills are the base almost take it for granted. And technical skills are often obscure to your clients. Here are some example and that this is definitely your comfort zone. So you need the high level of trust that is expected by an advisor. And the technical abilities are just one aspect contributing to trust. I hope it's clear that the argument, the argument here is not about becoming some sort of therapies but that working on soft skills, communication, listening can help build that sense of trust. The leads to more engaged and happier clients.

 (26:05): Okay, finally, character. So this is about who you are and who you show you are. It's about authenticity, right? Our clients experiencing the real you. When people feel they're not getting access to the real you, to what you know, think and feel, then you probably have an authenticity mismatch. Here. I just brought Johnson as an example just for a easy common story. It's totally related to the industry, of course it is always been a controversial figure coming to character and probably he was trying to characterize himself as to say, this is me sitting at home pub or parliament. But really it was too much when the stories about lockdown parties broke, talking about what we all should do, but that not applying it to his own office. It was obviously a mismatch between what he was seen in public and those, all those episodes pointed to the fact that his thinking was different at closed door or at least that was the perception. As you say, perception matters a lot. Okay, to finish on characters on this slide, you can read some traits to reflect on that can hinder trust that can get on the way. Although other character traits like perseverance, self-control, kindness, honesty, those can amplify the sense of trust. So the stress here is about thinking strategically on how you are presenting yourself, your character, those good traits. Are they showing in all that you do with clients colleague, your practices?

 (27:54): If you focus on transparency, are you being transparent? In all occasions? Do clients perceive it? If you say your motive is to really help others being benevolent, how are you showing this straight? Is it, is it felt by client but also with other around you? So again, character, it's about giving this sense of authenticity. Okay? Just to recap very quickly, I spoke about five components that affect trust. I spoke about motive, having good motives, showing benevolence, developing, understanding, listening, thinking about track records, consistency, abilities, the technical skills as well as so-called software skills and character authenticity in how to relate with clients. So this is a framework that you can use to self-reflect first and think systematically. How to adapt these ideas to your own case and clients as a premise at the beginning. I've also talked about the trust issue we see in the industry showed how conflict of interest and lack of transparency are vivid perception about advisor undermining trust. The main message is about reflecting on how to build trust. Technical abilities are important, necessary, but also not sufficient. There is much more to consider when thinking about how we can build trust with clients. Trust is fundamental to your relationship with clients and to help them prosper.

 (29:42): And that's it. I hope you found that useful. Please don't hesitate to get in touch if you have any question or want further details. We are here to help. Bye-Bye.