Building a Trusting Relationship with Your Wealth Advisor

Do you trust your financial advisor? And what does having a trusting relationship with a financial services professional truly mean, in practical terms?

 

A recent study evaluated investors’ trust in their advisors, and found that, broadly speaking, clients tended to trust advisors based on three major criteria:

  • Functional trust (i.e., does the advisor possess core skills and technical knowledge)
  • Emotional trust (i.e., how much does the client see their advisor as an ally and advocate)
  • Ethical trust (i.e, can the advisor be trusted to live up to standards and expectations for conduct)

Among these categories, emotional trust was considered the most important factor, accounting for 53 percent of overall trust in advisors; ethical trust took second place (30 percent), with functional trust rounding out the responses in third place (17 percent).

 

These findings are in line with other prominent research on client/advisor trust. For instance, research brought to our attention by Forbes suggests that clients seek out advisors who can be trusted to act in their best interest (35 percent) and possess a commitment to ethical conduct (17 percent). In fact, according to this survey, factors like high returns and fee structures (17 percent and 7 percent, respectively), were significantly less important to the respondents than trust.

 

More research, cited by CNBC, also found that “trust-related factors” – which include referrals, reputation, experience levels, and personal relationships – account for the “leading reasons” why investors begin working with their primary financial services providers.

 

Setting numbers aside for a moment, here’s what Barbara O’Neill – a prominent British intellectual and a leading academic working on issues of trust and trustworthiness – has said about building trust within a professional relationship:

“Professionals who take the time to listen, who use plain language, who open themselves to check and challenge, who offer others opportunity to judge their honesty, competence and reliability, are more likely to be trusted.”

 

So, with all of this in mind, as you consider different financial advisors and weigh your investment options and strategies, how can evaluate if a financial services professional is trustworthy enough to deserve your business? Here are four questions to consider:

 

What Are Their Core Values?

As you begin speaking with an advisor or financial services professional, it’s worth asking questions about their core values. Do they have an investment philosophy that aligns with your own? Do they think about all stages of your financial journey, or are they more interested in making a sale in the here and now?

 

Is the advisor or firm directly focused on serving clients, without any obvious conflicts of interest? Are they a fiduciary advisor, directly committed to serving your best interests, putting your needs ahead of their own?

 

These are important matters to get a feel for, as they could shape not only your relationship with your financial services professional, but your entire financial future moving forward.

 

As writer Jon Friedman put it for Investopedia:

“Find out what your advisor’s core values are. A person of integrity should be capable of reciting his or her values to you… An advisor who believes in having a long-term relationship with you – and not merely a series of commission-generating transactions – can be considered trustworthy.”

 

Do They Put You First?

“A trustworthy advisor is one who proactively invites you to discuss your investments, review his performance, and talk through any concerns you might have,” writes Maurie Backman for financial news site The Motley Fool.

 

Backman continues:

“Your advisor’s job is to take the time to understand your personal goals and craft a financial plan that works to achieve them. If your advisor seems cognizant of these goals when making recommendations, it’s a sign that he’s not only listening, but working with your best interests in mind.”

 

This is important guidance to keep in mind. Is your financial advisor willing to work with you to truly understand your full financial picture? Investing and wealth management are not “one size fits all” propositions, and a trustworthy advisor recognizes this, putting your needs first and making sure that you’re engaged and educated at every step of the way.

 

As FourStar Wealth Advisors CEO and Founder Brian Kasal has written:

“There is no exact way. Many paths can be taken to accomplish the things we want to accomplish. The specific way turns out to be unique to each individual. Our goal is to help folks and families articulate those wants, needs, and desires to live a full and complete life. It is to this end we pledge our sacred honor.”

 

Are They Willing to Be Open, Transparent, and Educational?

How transparent is your financial services provider? Are they willing to talk about their experience and share their professional credentials and qualifications when asked? Are they open about the potential for risk in your investment strategy, and honest about the fees that they receive as service providers?

 

Is your financial services provider patient and willing to offer sound guidance and advice as you start a new process? Are they willing and able to educate you if need be, on an investment strategy, the state of the market, or the methodology and reasoning behind their financial recommendations?

 

These are all important vital questions to ask yourself, and put in front of your financial advisor. They are all indicative of whether or not an advisor is willing to truly take time to work with you and understand your needs, and prove that they’re able to conduct their business ethically and openly.  

 

How Do They Communicate?

What is the communication style of your financial services professional? This is a question with multiple aspects.

 

For instance, communication is a key factor in many of the matters we’ve discussed already – being proactive in communicating with clients, being open and transparent about risks and rewards, being willing to truly listen and get to know the needs of each and every client. Just as important as communicating a message is your service provider’s ability to make you feel heard and seen.

 

And communication goes beyond these matters as well, and encompasses the manner in which your financial services provider communicates. For instance, as more and more of our lives move into the digital realm, is your financial advisor technologically literate? Are they able to communicate via the channels that make sense to you, whether that means email, phone, or social media? Do they have educational and media resources for you to use, such as articles, videos, or podcasts?

 

About FourStar Wealth Advisors

Whether you are accumulating wealth or investing for income, solidifying your retirement plan, or devising a distribution approach that meets your lifestyle and legacy goals, FourStar Wealth Advisors can help you define what is most important to you and then formulate the strategies that are best suited for your needs.

 

Four Star Wealth Advisors is a Registered Investment Advisor firm headquartered in Chicago, an independent firm without the conflicts of the old school firms. We are directly focused on serving clients, without all the obvious conflicts of interest of the brokerage firms.

 

Have any further questions? Would you like to get in touch and see what sets our approach apart? Are you an advisor interested in exploring the freedom and flexibility that comes with independence? Please do not hesitate to give us a call or send us a message to begin the conversation.

 

General Advertising Disclaimer

This article is provided by FourStar Wealth Advisors, LLC (“FourStar” or the “Firm”) for general informational purposes only.  This information is not considered to be an offer to buy or sell any securities or other investments. Investing involves the risk of loss and investors should be prepared to bear potential losses. Investments should only be made after thorough review with your investment advisor, considering all factors including personal goals, needs and risk tolerance. FourStar is a SEC registered investment adviser that maintains a principal place of business in the State of Illinois. The Firm may only transact business in those states in which it is notice filed or qualifies for a corresponding exemption from such requirements. For information about FourStar’s registration status and business operations, please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov/