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Do Things Right and Do the Right Things – Building Trust in Financial Services

Rebecca Fender | CFA Institute

November 21,2017

The financial services industry tries to quantify everything.

We like equations, we love algorithms, we've embraced machine learning. We;re chasing benchmarks, seeking alpha, agonizing over returns and analytical models to gain an edge. But when it comes to our own money, we're actually incredibly emotional creatures.

Money signifies status and prestige. It is the foundation of our futures. It is often the legacy we leave behind. As much as we try to stay logical, those things will always be inherently emotional. I believe we as an industry need more financial empathy. The emotional why behind our actions and motivations. As technology becomes more pervasive, it is our humanity that stands out. And our humanity is what gains and holds the trust of our clients.

According to CFA Institute's report, From Trust to Loyalty – A Global Survey of What Investors Want1, while investors in China and India lean toward robo-adviser options, investors in Canada, the United States and United Kingdom still value human interaction. Investors want advisers they trust to have their best interests at heart. They expect greater transparency and communication, especially during periods of market volatility. In fact, during downturns an increased level of care is expected. Fair weather service providers need not apply!

Yet even knowing this, building trust remains a hurdle for most advisors. Trust in financial services2 remains low relative to other industries, ranking 9th out of 12 industries. Technology, for the record, is ranked 1st. We have an oddly trusting relationship with our tech. We wholeheartedly trust online shopping transactions – we buy something (with one click), get the email (if it takes more than a few minutes I get nervous, anyone else?) and see the product dropped right on our doorstep (with a tracking code that gives us real-time updates). We hire nannies online. We find home service providers online. We even trust technology to help us find love. We simply trust that the systems and the processes will work, that they are almost infallible. But we know people aren't.

Credibility + Professionalism = Trust and Value

So what makes us trust someone, especially with something as emotional as our money? We believe trust is very much linked to value, and in the spirit of our analytical culture, we created a "trust equation."

Credibility + Professionalism = Trust and Value

Credibility includes industry reputation and a firm's performance track record. Our primary focus is on increasing professionalism, which is comprised of competency and values. Clearly, without competency there will not be trust, though investment professionals should continue to invest in their knowledge and skills—both subject matter expertise and skills like empathy and listening.

We trust people when they have the same values or principles as us because we believe we know how they would act in a given situation. So we're confident that they will make the same choice/decision we would. In work CFA Institute did with the State Street Center for Applied Research, however, we found that only 46 percent of retail investors believe that financial institutions operate in the best interest of clients.

We also trust those who are forthright, and part of this is setting realistic expectations. Financial advisers that establish measurements over relevant time horizons will help their clients understand how their financial goals will be attained, in relation to their personal financial needs.

Consequently, trust is built over time, and the most successful companies take a long-term approach. If a client believes you're only working on their behalf for immediate results, without considering the future, they have little reason to believe you'll make decisions that protect them down the road. Instead of building a relationship, those advisors are building a transaction.

We believe that trust from an end investor is the dependency on a service provider in a situation of risk over a prolonged period. So you earn their trust during the good times and the bad times—by doing things right and doing the right things.  In From Trust to Loyalty, we found that trustworthiness, ethics, communication and transparency are the top attributes that investors value, and they lead to the building of trust and long-term relationships with investment managers. Every time you meet those expectations you gain a little more of your clients' trust and faith.

1. From Trust to Loyalty. (n.d.). Retrieved November 20, 2017, from

2. Future State of the Investment Profession. (n.d.). Retrieved November 20, 2017, from


Topics: Corporate Responsibility

Rebecca Fender | CFA Institute

Rebecca Fender, CFA, is head of the Future of Finance initiative at CFA Institute, a long-term global effort to shape a trustworthy, forward-thinking investment profession that better serves society.