The importance of trust in the client relationship
31 July 2018
Building trust with clients is essential to providing the credibility that underpins long term relationships. Rathbones’ head of sales support James Goward notes that it’s increasingly hard to know what your clients can trust in an age of fake news, especially when it comes to online content. Where can they turn for good advice, and how can they be sure it’s reliable?
It was Mark Twain who said that “a lie can travel halfway around the world while the truth is putting on its shoes”. And it was Donald Trump who said in his book, The Art of The Deal, that if you tell people a lie three times, they will believe it. Or was it? The quote, which was originally posted on a Conservative political commentary website, subsequently did the rounds across social media. But it was in fact a lie about a lie – a twisting of the truth.
What Mr Trump actually said was: “…a little hyperbole never hurts. People want to believe something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration — and a very effective form of promotion.”
So there’s a lie about Mr Trump. Still, this ‘wisdom’ of his on ‘the art of the deal’ would be folly to a financial adviser, whose business is built on good long-term relationships. When it comes to trust, there’s no such thing as “truthful hyperbole”. For now, however, America appears to be roaring down the blacktop with flaming tyre tracks in its wake.
The trust crisis wracking Europe
Of course, people have always distrusted politicians – that is nothing new. In fact, many would say that the distrust felt by millions of disenfranchised Americans was the very thing that swung the election in Trump’s favour in the first place. But that cynical sentiment permeates far beyond Trump and his administration.
In Europe, the Financial Crisis unleashed a tidal wave of populism as people expressed their deep-seated lack of trust in government institutions. And while that tide may be ebbing in countries where election results saw predictions of radical left governments come to nothing, it is still surging at both ends of the political spectrum in Italy through the Five Star Movement and league, in central and Eastern Europe through a surge of authoritarian populism. And even here in the UK, the surge in populism has been amply demonstrated by the Brexit referendum and more recently the dramatic rise in popularity of the far-left Labour leader Jeremy Corbyn.
Trust is a competitive differentiator
The advisory community is no stranger to the concept of trust. In the wake of the Financial Crisis, people think twice before putting their money – and their trust – in the hands of anyone who might lose it, whether through mis-selling of products or plain old bad advice.
In June this year, a survey by the FCA of 13,000 people found that just 39% trust financial advisers to act in the best interests of their clients. And in April, a similar survey of 3,000 retail investors by the CFA Institute found that only 44% of participants felt that advisers delivered on the top factors that mattered to them: full disclosure of fees, disclosure of management conflicts of interest and outperformance of a benchmark.
Against this challenging backdrop, trust will always be a priceless commodity, and one that is hard won and easily lost. That’s why scrupulous, transparent advisers who have the ability to cultivate genuine, enduring trust hold the key to converting prospects and retaining existing clients.
Click here to view Rathbones’ regularly publication Look forward on the themes affecting the near future of our changing world.
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