Trust is at the heart of every successful client-advisor relationship. We begin our relationships by convincing prospective clients to trust us with their money. We maintain our relationships by proving that we are still worthy of that trust regardless of how the market is affecting our clients’ portfolios. We deepen those relationships by continuing to communicate and listen to our clients’ needs.
Trust is everything to a financial advisor. You could have a Ph.D. from an Ivy League school, a long and storied career in some of the best firms on Wall Street, and an encyclopedic knowledge of finance and investing, but you could still fail as an advisor if prospective clients don’t trust that you’ll act in their best interests.
So, the question is, how do you build trust with clients?
Asking Questions
My father used to say that everyone’s favorite topic is themselves. He wasn’t far off.
A study conducted by the Harvard Business Review (recounted in this video from a speaking event with Brandan Frazier) assembled two groups of people and instructed them to have one-on-one conversations within their respective groups. The first group was told to ask no more than four questions within a 15-minute period. The second group was told to ask at least nine questions in the same amount of time.
Feedback from the participants produced an incredibly valuable insight: The participants in the second group reported feeling significantly higher levels of trust, likeability and connection with their discussion partners.
Asking more questions—especially those that encourage people to open up—makes people like you and trust you more. In other words, you want your client meetings to feel more like conversations than presentations. Asking genuine questions and listening intently to the answers can be a difference maker for your relationships with your clients.
Acknowledging Emotions
This is something you’ve probably picked up already during your career (and in your personal life).
Humans are not rational animals. Rationality is a learned skill, a cognitive framework that we adopt out of necessity, not instinct. We are fundamentally creatures of passion, beings built from and ruled by the deep-seated impulses that kept our ancestors alive, in love, protective of our families and our tribes, and naturally avoidant of potentially lethal risks. And as much as we modern folk like to pretend otherwise, we still carry those same reason-obliterating passions within us.
Think of the last time a client called to complain about their portfolio’s performance. They were probably agitated, nervous, even scared. The financial professional in you probably leapt to the surface with a hundred different explanations and assurances. The market goes down sometimes. Everyone in the world is feeling the same pain. Your portfolio will recover soon enough. All perfectly rational, reasonable things to say to someone in their position. But let me ask you this:
Did it help?
Now, to articulate the thing you probably already know. When you’re talking to someone who’s experiencing negative emotions—especially in a professional capacity—you do not want to start with a logical explanation of why their feelings are wrong. Instead, start off by acknowledging their emotions before you try to correct them.
The Harvard Business Review analyzed this phenomenon back in 2021. The whole article is worth reading, but a few interesting points stand out.
First, acknowledging negative emotions is more impactful than acknowledging positive ones. It makes sense intuitively; people who are feeling down often want to be empathized with and are grateful for the acknowledgment, while just remarking that someone looks happy or excited doesn’t do a whole lot of anything.
Second, acknowledging emotions boosts trust more than acknowledging the situation. This one’s a bit less intuitive, but it makes sense if you unpack it. Situations are external, while emotions are internal. Acknowledging the latter is acknowledging the human being involved in the former.
Finally, most people realize that acknowledging negative emotions leads to stronger social connections, but they still often avoid doing so. Why? Simple: It has a cost. Asking someone what’s wrong may inadvertently commit you to a conversation that’s taxing on your time, energy and emotions. It’s important to be selective about how you spend your time, but when it comes to clients, the trust-building benefit of acknowledging their emotions is worth the price.
From the Heart
Building trust is an essential part of our profession. We need clients to trust us as people if we want them to trust us with their money. Building trust isn’t the hardest thing to do, but it does require us to step outside of our comfort zones and occasionally act like therapists with suits and spreadsheets. So remember to ask questions, acknowledge your clients’ humanity, and not be afraid to let your own show.
Matt Reiner is CEO and co-founder of Benjamin; partner at Wela Strategies LLC and Capital Investment Advisors.