Why Trust is a Financial Advisor’s Most Important Asset

financial advisory business

A Client’s Confidence in Your Relationship is Just as Important as Financial Performance


Now more than ever, a financial advisor’s most important asset is trust. In a shifting advisory space where relationship management matters, you cannot attract or retain clients in your financial advisory business without the ability to build trust with the individuals and families you serve. No matter what kind of advisory firm you’re in, the client who will stick with an advisor throughout the years is one who is satisfied with the relationship. Needless to say, a foundation of trust is paramount.

Clients are willing to pay for a financial advisor’s services when the advisor can show a genuine understanding of their goals and can manage their portfolio in accordance with those goals, while also building and maintaining a personal relationship with them. For advisors, this means showcasing your value outside of traditional portfolio management. Taking an approach like this, where client relationships are valued alongside portfolio management, requires a strong foundation of trust between you and your client. So, let’s talk about how you get there.

Why You Should Focus on Building Trust

It’s no secret that referrals are critical for financial advisory business success. A report done by Vanguard showed that 94% of investors were likely to make a referral when they “highly trusted” their advisor. That same study also showed that clients who had a high level of trust in their advisors were more than twice as likely to offer a referral than those who reported having only a moderate amount of trust in their advisors.

So, how can advisors earn their client’s trust? Vanguard reported that clients trusted their advisors when their functional, emotional, and ethical needs were being met. Specifically, when an advisor did what they said they were going to do, consistently acted in their client’s best interests, and made decisions that helped minimize the stress of the client – that’s when the highest degree of trust is present.

Why Clients Hire You in the First Place

When a client hires you, they’re entrusting you with their hard-earned money and their financial future. Financial matters can be stressful, and they need guidance they can trust. It’s to be expected that there will be times when the client’s anxieties and emotions get the best of them, and it’s imperative that you’re there for them to turn to during those times. Taking the time to build rapport with your clients and making a commitment to being proactive during times of economic uncertainty or market volatility can be tremendously impactful in building trust. When a client knows that you understand their goals, are able to manage their portfolio in a way that supports their goals and can show them that they’re on track to achieve those goals, they’ll be less inclined to worry over their finances. And that peace of mind can go a long way toward customer satisfaction in a financial advisory business.

How to Cultivate Trust with Your Clients

As an advisor, it’s critical that you understand the foundation on which trust is built if you want to nurture and deepen your client relationships in a genuine way. To do this, you’ll want to focus on three things:

1.     Educating Your Clients

Finances are complicated, and often the jargon used can be difficult to understand for lay people. Research shows that, even though about half of Americans feel they have a strong understanding of financial literacy basics, far fewer have the same level of understanding when it comes to more complex matters such as investing. Taking the time to educate your clients on money matters can go a long way toward empowering them to have faith in themselves and in you as their advisor. And, education can take many forms: blogs, email newsletters, seminars (virtual or in person), podcasts, video content, and so much more.

2.     Clear and Effective Communication

Good communication in any relationship requires more listening than talking – and this is especially true for an advisor and client relationship. Advisors who are effective listeners will have an easier time identifying their client’s goals and concerns and will therefore be able to develop planning and investment solutions that are uniquely tailored to each client. When clients realize that you’re tuned in to what they need and want, they’ll be more eager to listen to what you’re saying and follow your advice. Remember, clear communication isn’t just for the beginning of the relationship either. An unanswered phone call or email can do significant damage to your relationship, so be sure that you’re consistent in your communication with your client. They need to know that they can depend on you and your financial advisory business to be there for them. A lack of clarity or transparency will prevent clients from ever fully trusting that you have their best interests in mind.

3.     Time Management

It may seem like it has nothing to do with building trust, but finding ways to manage your time more efficiently can go a long way in strengthening your relationships with your clients. When you’re busy spending time researching and doing administrative tasks, you’re not focusing on creating more value-added client opportunities. Instead, focus on the tasks that are most important to achieving your client’s goals and to shoring up relationships. Advisors can strengthen their clients’ trust in them when they’re able to translate an understanding of that client’s goals and objectives into a comprehensive financial plan and focus their time on the tasks required to achieve those plans.

How to Attract and Keep Clients

As with hiring any kind of professional, clients find advisors by researching their options. They may ask friends and family for recommendations, they may look into your credentials or Google you, and they will most likely interview several advisors before they make a decision. This is why it’s so important that you have trust with your existing clients (making them more likely to refer you) as well as why it’s so important to listen closely to prospective clients during the initial conversation meeting.

When meeting with a prospective client, be sure to practice active listening. Let them know that you’re truly listening by responding thoughtfully about how the services you provide can help them reach their goals. You want to make them feel comfortable talking to you about the current situation and what they want for their future. Once a client chooses to hire you, that’s when it’s time to get to work making their goals a reality.

Final Thoughts on a Financial Advisor’s Most Important Asset

Cultivating client trust requires you to invest a significant amount of your time and emotional energy upfront. However, that investment can reap substantial returns when it leads to higher client satisfaction, retention, and referral rates. The key lies in consistency; you have to continuously work to deliver what you’ve promised to your clients if you want to earn the privilege of their trust.

At TriCapital, we offer the practice management our advisors need so that they can focus on cultivating genuine relationships with their clients and growing their books. If you’d like to start a conversation about becoming an independent advisor with us, please contact us today.

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