As a financial advisor, how do you develop trust with a prospective client and within your organization? We regularly survey our clients and ask: What is the most important thing that makes you stay with us? The most prevalent answer has been that they trust us to do the “right thing” for them. That covers a number of specifics, but the central theme continues to be trust.

In order to understand how to foster a strong bond of trust with clients, advisors need to dig deeper into the definition of trust and figure out what breaks trust down, what builds trust in individuals, how to increase your team’s trust-building skills and how to lead with so-called smart trust.


Trust evokes a feeling of confidence. Think for a moment about someone you really trust. It’s probably very easy to talk with that person and work together to get something done. You enjoy the relationship, and it energizes you. Trust springs from a belief, faith and confidence about the reliability, ability, truth or strength of a person.

Trustworthiness has various components. If a person is trustworthy, you can feel confident about their reliability, credibility, ability and orientation as a fiduciary.

The consultants at Trusted Advisor Associates express trustworthiness symbolically as T=(C+R+I)/S — where C = credibility, communication skills and truthfulness; R = reliability, dependability and predictability; I = intimacy, discretion and empathy; and S = self-orientation, self-focus, self-attention and personal motives.

And Jack Welch, former CEO of General Electric, said this about trust: “You know it when you feel it.”
The flip side is equally true. Distrust evokes an equally strong feeling of suspicion. When you don’t trust someone, you feel suspicious about their motives, actions, agenda and integrity.

Consider these kinds of comments: “I don’t like the politics at work. It seems like everyone is out for themselves and will do anything to get ahead.” Or, “My boss is a micromanager. He treats us all like we can’t be trusted.” Or, “My children are getting older, and they hardly listen to anything I tell them!” These comments indicate a lack of relationship trust.


By identifying the characteristics of trust and trustworthiness, we see how trust can be diminished or completely destroyed. In individuals, hot, angry, confrontational behavior or cold, bitter, noncommunicative withdrawal create instant distrust.

Blaming, accusing, name-calling, remembering mistakes and using them as a weapon, failing to deal with real issues directly, hidden agendas, guarded dispersal of information, defensive posturing and legal positioning all destroy trust.

In organizations, intense micromanagement, punitive systems, tough office politics, unhappy or dissatisfied employees and stakeholders, hidden agendas, CYA behavior, and painful bureaucratic systems and structures all lead to low or nonexistent levels of trust.

So if these actions damage trust, what builds individual trust and organizational trust?

In his book The Speed of Trust: The One Thing That Changes Everything, Stephen Covey describes several types of trust, including self-trust and relational trust with others. Self-trust develops from setting and achieving goals, and keeping commitments to strengthen credibility.

Covey identifies four elements of credibility: integrity, intent, capabilities and results. The first two deal with character, the other two with competence. You cannot have credibility without both.

For example, your coworker might be a woman of great integrity and intent. However, if she’s not a pilot, then you wouldn’t trust her to take you flying in a plane.

Integrity equates with honesty, having the courage to act in accordance with your values and beliefs. Intent has to do with motives, personal agendas and the resulting behavior. The right intentions and integrity are embodied in our fiduciary responsibility to clients. Do you exhibit that same intent and integrity with your colleagues?

Capabilities include skills and knowledge, as well as interpersonal style. Results refer to a track record, performance and getting things done correctly. Do you tell people what you’re going to do, then do it — in other words, do you walk the talk?

Imagine you’re in a meeting observing a fairly new advisor talking with prospective clients. You notice the advisor jumping in several times before the prospects even finish talking, telling them what they should do about their issues. How do you think the prospects feel? How is this meeting likely to end?

Advisors who lack credibility because of insufficient knowledge or experience often have a chronic fear of having no answer to a client question. Paradoxically, of course, “I have no answer for that” is often the best answer — at least initially.

The two biggest causes of trust breakdown, or the inability to build trust, are not listening to the other person and accelerating to the answer before the other person is done talking. John Gottman, a psychologist specializing in relationships, says, “Understanding must precede advice … You must let [the other person] know you understand and empathize before you offer a solution.”


Consider these 10 tips for increasing trust-building skills in advisors:

  1.  Cultivate an attitude of curiosity. Make sure advisors are asking questions in every meeting.
  2. Think out loud. This leads to more collaborative discussions.
  3. Listen deeply.
  4. Write the clients’ financial plan with them in the room.
  5. Be yourself. 
  6. Sell by doing, not by telling.
  7. Be of service, always.
  8. Know that, when people are angry, it usually is not about you.
  9. Quickly acknowledge the facts, however painful or costly.
  10. Talk for no more than 120 seconds at a time. Try ending with, “Enough about me/us/the firm. Let’s talk about you/your issues/your goals.”

In The Speed of Trust, Covey says, “The first job of a leader is to inspire trust. The ability to do so, in fact, is a prime differentiator between a manager and a leader.”
Covey further describes the propensity to trust and the propensity to analyze situations involving trust as indicators of how an individual will act. Depending on the inclination to trust and analyze, Covey describes four major behavior patterns in what he calls the smart trust matrix shown below.

Gullible managers tend to blissfully trust others, often to their regret. Indecisive managers are in a “no-trust zone,” tending to not trust anyone, and usually frozen by inaction. And people who are in the suspicion category tend to distrust everyone and micromanage everything, relying on their own analysis for evaluation and decision-making.

Managers in the judgment category, though, tend to use good business and people judgment. They look carefully at the opportunities and risks in terms of outcomes and their probabilities, as well as the credibility of the people involved.

Former President Ronald Reagan once described smart trust succinctly by citing a Russian proverb: “Trust, but verify.” Build trust in your organization, and the result will be a faster-growing, stronger business. 

Glenn G. Kautt, CFP, EA, AIFA, is a Financial Planning columnist and vice chairman of Savant Capital Management, based in Rockford, Ill.

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