Who Do You Trust?
Warren S. Hersch notes in HealthLifePro, that Americans’ trust in advisors has declined. A study by Hearts & Wallets, Hingham, Mass titled “Trust-Building Practices: Updated Empirical Analysis of What Drives Trust,” gauged trust on a scale of one to ten (one signifies very little trust and ten very high trust.) The study’s findings:
- Just one in five Americans fully trusted their financial advisor in 2012 – a four-point decline since 2010.
- Those awarding their advisors 9 points declined from 18% in 2010 to 13% in 2012.
- Those awarding their advisors 8 points declined from 21% in 2010 to 17% in 2012.
The most trusted advisor practices are full-service brokerage and insurance practices versus self-service brokerages and banks:
- 74% rate insurance and full-service brokerages a 9 or a 10 (37% each.)
- Only 60% rate self-brokerages and banks a 9 or a 10.
What Drives Advisor Trust?
The top trust drivers of trust were ranked as follows:
- improving investor understanding of how the provider earns its money (by a wide margin)
- the perception that an advisor is unbiased
- clear and understandable fees
- understands and shares the client’s values
- has made money for the client
- has produced a “positive experience” for friends and family members.
Transparency, responsiveness, understanding the client’s values and putting the client’s interests above one’s own are all core to trust in an advisor.