FA Center: How to trust that your financial adviser can shield you from the coronavirus fallout
4 ways for financial advisers to build and keep clients’ trust in these uncertain times
It’s easy to trust your financial adviser when markets soar. But now, with so much anxiety and uncertainty, trust matters more than ever.
Can you trust your adviser to guide you through the coronavirus recession? Building and maintaining trust requires a coordinated effort. Your adviser needs to do what he or she say they’ll do, admit their mistakes and act with integrity at all times. Just one slip, one broken promise or ethical lapse, can sow doubt or break a relationship.
Advisers are not starting from a position of strength. The public’s trust in financial planners is hardly reassuring. The CFA Institute just released a survey of about 3,500 retail investors (who each have at least $100,000 in assets), asking them to rank six professions for trustworthiness. Advisers came in fourth (with 23% of respondents ranking them highly), below doctors (77%), accountants (42%) and lawyers (29%). Advisers finished higher than mechanics (22%) and politicians (6%).
“The overall view of the industry is that advisers aren’t always being upfront and honest and may be hiding something,” said Michelle Wong, founder of Nifty Advisor Support, which provides virtual support services to advisers.
Like a bricklayer building a wall, your adviser should foster trust steadily with meticulous attention to detail. Everyday actions and communication skills play a huge role.
Here are four ways you should expect your adviser to interact with you, both during, and after, this crisis:
1. Initiate contact: Advisers who use this time to raise their profile with clients are more likely to make a positive impression. “Trust increases with the amount of exposure you have with your clients,” said James Pollard, founder of The Advisor Coach in Claymont, Del. “The more soft touches you have every week or month, the more proactive outreach, the better. So email clients often and be in front of them with social media.”
Pollard cites what psychologists call “the mere exposure effect,” in which people tend to trust others who become a familiar presence. By boosting visibility with informative messages and addressing clients’ questions and concerns, an adviser is strengthening a professional bond.
2. Express sincere emotion:. The ability to connect with others on a gut level adds a layer of humanness to an otherwise professional relationship. “We’re in a health scare, not just a financial scare,” said Brian Portnoy, a Chicago-based financial wellness expert. “People can act differently than you anticipated. So it’s important to focus on the core issue of how do you take care of the people you love. Be a friend, be empathetic and repeat back what you hear others say so that you’re affirming and validating.”
3. Demystify the financial planning role: Investors have varying degrees of awareness of what a financial planner actually does. This is a good time for your adviser to educate you and set realistic expectations. Wong, of Nifty Advisor Support, encourages advisers to clarify what benefits clients can expect, from tax and insurance planning to career coaching to household budgeting tools.
“Building trust starts at the beginning, so define exactly what you bring to the table,” she said. “Use a client services calendar to show how you’ll follow through on a client’s financial planning journey.”
4. Customized communication: You earn people’s trust when you show they matter. An adviser who gets this will personalize his message to your situation. “Be present when times are tough,” said Tom Rampulla, managing director at Vanguard Financial Advisor Services in Malvern, Pa. “Don’t avoid a call or a conversation.”