Trust is important in any relationship. In a financial planning relationship, it’s essential. Without trust it becomes impossible for the client and I to collaborate. Trust is not one sided though, it’s a two-way street. Both the client and I need to believe and trust one another so great things may be possible. When one side is offering more trust then the other, things tend to break down. Knowing this, what areas may we both work on to build and expand our trust together?
Transparency builds trust. Clients share their background including victories, frustrations, and a vision of what they want to achieve. I share who I am, what I believe, and our repeatable planning process. We both recognize life is dynamic, plans and goals often change overtime. Transparency with each other allows us to share our views and understand differences. Updates and new information keep the planning process engaging from my perspective. From the client’s perspective, this new information may create stress or anxiousness around a decision or life event. It may also create excitement with opportunities that need to be sorted out and prioritized. This is where having a strategy based on transparency makes a difference. How do you establish transparency in the planning process? I believe by asking thoughtful questions and listening. From the client’s perspective it’s opening up and sharing personal values and goals and addressing risks that may keep you from achieving what you want. Transparency leads to trust and strengthening our partnership.
Managing expectations and not investment returns builds trust. Early in my career, I decided not to pin my success on results and market outcomes outside of my control. Though many advisors continue to use this approach as a primary value proposition with their clients, I believe it’s a mistake. I encourage my clients to think in longer blocks of time as opposed to immediate market returns. This is not natural as we both absorb financial updates daily from social media and news outlets. This joint decision to view the long term focuses attention on inputs that may be controlled. Then, clients may adjust their everyday habits and choices to support what they want. It’s not about fewer trips to Starbucks or less carry out meals, that completely misses the point. Clients must spend their money today in ways that make them happy, they define happiness not me. I do believe utilizing automation allows clients to invest more overtime which will have a greater influence on their real life results. Aligning goals with investment accounts builds the foundation of a plan. Mutually agreeing to tune out the noise increases our probability of success. This eliminates the need to chase performance and react to what’s happening now. Great planners and great clients continuously act on a plan together and avoid reacting whenever possible. This goal-based approach remains front and center by managing expectations from the start. As a result, trust grows deeper overtime.
Clear and frequent communication builds trust. I’m consistently working on message clarity when blogging, responding to client’s needs, questions, and during our planning reviews. Financial and life decisions may be complex as there are lots of possibilities. Distilling all the moving parts into a simple clear message based on all that’s known (and not) takes practice. The results are providing clients with more confidence in their decisions. Our frequency of communication by email, quarterly newsletters, Zoom meetings, and eventually in person meetings again keep us moving in the right direction. Making myself available allows clients to reach out and ask any questions on their mind. This accessibility supports communication and builds trust overtime.
Being honest builds trust. Of course, speaking the truth regardless of the outcome is always best. Another example of honesty includes sharing the truth around investing. The market is simply unable to generate meaningful returns without volatility. In order to repurpose your time one day, you need to accept the costs of investing. These costs include standing still when markets react violently, both up and down. It also requires cash reserves to address short term needs. All of this is part of the planning process and is very boring but extremely relevant.
Showing empathy builds trust. Empathizing with clients who may be dealing with difficult decisions or may have conflicts they are working to resolve is important. Empathy is best demonstrated by patience, listening, and offering support in a manner that’s helpful. All of these steps together build trust.
Admitting mistakes builds trust. We all make mistakes, nobody’s perfect. When mistakes happen it’s important to address them. Fortunately, we have many systems in place to avoid mistakes when delivering work to our clients. It doesn’t mean we’re perfect, but it does allow for us to take responsibility for delays or other inconveniences should they arise.
A good sense of humor is critical to building trust with each other. I readily laugh at myself given an opportunity and gently at my client if and when appropriate. This keeps things real and in perspective. A good laugh is therapeutic on many levels for both of us.
Trust takes time, work, and effort together to achieve desired results. If you’d like to have a conversation on what this may look like, please reach out.