How financial advisers can build trust with clients

Trust is at the heart of every successful financial adviser–client relationship. Clients need to feel confident that you understand their needs, have their best interests at heart and can help them achieve their financial goals. But trust isn't built overnight. It's earned through honesty, integrity, expertise and consistent action. The good news is that there are practical steps you can take to build, maintain and, when necessary, rebuild trust. Get it right and you can develop lasting client relationships that help sustain and grow your business.

Trust is measurable

Trust matters to businesses of every sort and size, from sole practitioners to multinational organisations. In financial services it is critical. A Morningstar paper on how to keep building trust with clients found that retention and new client acquisitions may depend more on the level of trust a client has in the adviser than on portfolio management and performance. Vanguard's research found that clients who trust their advisers are more likely to follow their advice, which leads to better financial outcomes for them and more referrals to family and friends.

Consider these findings from various surveys on trust and customer behaviour:

• 81% of consumers need to trust a brand before they’ll buy from them
• Loyal consumers buy around 90% more than new customers
• Increasing customer retention by just 5% can raise profits by 25% to 95%

Build trust with your clients and you will have more success. The starting point is understanding what makes clients trust you in the first place.

Trust is built by your actions and your skills

Clients trust advisers who have the required competencies and skills and show that they understand and care about them. This isn’t just common sense. Wharton University studied trust in client-financial adviser relationships and found three levels of trust that matter:

• Trust in technical competence and know-how, such as training in financial planning and products
• Trust in ethical conduct and character, referred to below as integrity
• Trust in empathetic skills and maturity, such as listening to and understanding clients

Competencies and skills

Your industry experience, qualifications and accreditations demonstrate your competence. This includes your ability to identify financial needs, recommend appropriate products and develop tailored financial plans. Together, they show that you are knowledgeable in your field and can deliver on your value proposition. Client testimonials, referrals and any online reviews also show that you are competent and trustworthy.

If you are new to the industry, let clients know of any mentoring, supervision and ongoing professional development as this demonstrates your commitment to building your expertise. If necessary, explain what the term “under supervision” actually means in practice.

Top tip: make your relevant qualifications, professional designations and areas of expertise visible on your email signature, website and professional social media profiles.

Competence also means recognising the limits of your knowledge. If a client asks a question you cannot answer confidently, acknowledge it, find the right information and follow up when promised. Clients do not expect you to know everything, they expect you to be honest and reliable.

Integrity

Honesty is critical to building trust, as is knowing the rules, following them and demonstrating that your recommendations are appropriate for each client's circumstances. Clients need to know that you have put their interests first. Integrity also includes understanding FAIS and other requirements that set the standard for ethical conduct.

The financial services industry, particularly the advice sector, has suffered reputational damage in the past when integrity has been lacking or perceived to be lacking. You can demonstrate your integrity and build trust through these everyday actions, many of which mirror TCF principles:

• Understanding client needs: conduct a thorough financial needs analysis (FNA) at the start of the relationship and revisit it when the client's circumstances, priorities or goals change. This helps ensure that your advice remains relevant and recommendations are in line with client needs and not any other factor, such as remuneration.
• Explaining recommendations: explain what you are recommending, why it is appropriate, how it meets the client's needs and what risks, costs, exclusions, limitations and terms and conditions apply. Make sure the client understands the recommendation rather than simply receiving the paperwork, as laid out in TCF principles.
• Communicating proactively: keep clients informed about material changes affecting their policies, investments or financial plans. Schedule regular reviews, confirm contact details and communicate when there is something important they need to know.
• Keeping your word: if you promise to return a call, provide a document or answer a question, do so when agreed. If a delay is unavoidable, let the client know rather than leaving them to chase you.
• Being transparent: explain fees, commissions, potential conflicts of interest, product costs and relevant risks. Help clients understand the information in their statements, policy schedules and investment reports.

Integrity is particularly important when the news is uncomfortable. For example, if an investment has underperformed or a policy does not provide the cover a client expected, explain the situation honestly and discuss the available options. Avoiding a difficult conversation may protect you from discomfort in the short term, but it can undermine trust over time.

Empathy

Clients are people first, with individual concerns, responsibilities, ambitions and financial pressures. Taking the time to understand their personal circumstances can help you build rapport and provide advice that reflects what matters to them.

A few extra minutes during a meeting, telephone call, email or WhatsApp conversation can make a meaningful difference. Ask thoughtful questions, listen without interrupting and check that you have understood what the client is telling you.

Empathy does not mean agreeing with every request. It means understanding the client's perspective, explaining your advice respectfully and helping them make informed decisions.

When trust breaks down

Even the strongest relationships can experience setbacks. A missed deadline, poor communication, an unexpected outcome or an error can damage a client's confidence. How you respond can make a significant difference.

Start by taking responsibility. Listen to the client's concerns, acknowledge what went wrong and avoid becoming defensive. Explain what happened in clear, straightforward language, outline the steps you will take to address the problem and agree on a realistic timeframe for resolving it.

Then follow through. Keep the client informed, provide updates and make sure the agreed actions are completed. If the issue arose because of a weakness in your processes, address the underlying cause to reduce the risk of it happening again.

Do you have a trust checklist?

Building trust should be an ongoing part of how you run your business, rather than something you address only when a client is unhappy. Where applicable, consider establishing a trust checklist of questions that you, your advisers, agents and representatives can use to evaluate client relationships after the first interaction and at annual reviews:

• Do I understand each client's needs, circumstances and long-term goals?
• Can my clients explain why I have recommended a particular product or strategy?
• Am I transparent about fees, risks, limitations and potential conflicts of interest?
• Do I communicate proactively and respond when I say I will?
• Do I listen carefully and adapt my approach to each client's needs?
• Do I acknowledge mistakes, take responsibility and follow through on solutions?
• Do all staff members understand their role in creating a consistent client experience?

Build trust one moment at a time

Trust is the cornerstone of every successful adviser-client relationship. It is earned one interaction at a time. By combining competence with integrity, empathy and consistent follow-through, you can give clients greater confidence in your advice, strengthen lasting relationships and build a more sustainable financial advice practice.