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Sound Financial Advice Is A Matter of Trust




I was meeting with a prospective client recently, a married couple, and one of the questions that came up caught me a bit by surprise. “How do we know we can trust you?” the wife asked. I have had lots of discussions with clients about trust but had never been asked the question that directly before. My response touched on our fiduciary obligations, my credentials, professional standards and codes of conduct, but I could tell that wasn’t exactly what she was looking for. It didn’t seem like a great answer to me either and the question stuck with me until I could give it some more thought.


There is a bit of a paradox when it comes to trust: it is essential for any productive client relationship, but it is only truly established when you have had a chance to work together and develop a deeper bond. To some extent, there is a leap of faith involved at the outset of that engagement. For those who are looking to secure their financial well-being, credentials and standards are important, but there needs to be more. Here are some of the key things we do to build trust with our clients from the outset.


I touched on the fiduciary standard in my initial answer because it is so important to us as a firm. Only a small fraction of advisors in our industry act as true fiduciaries for their clients, meaning they always act in the client’s best interest. Those who do not adhere to this standard are free to recommend investments that provide higher commissions to themselves or greater revenue to the firms they work for, often to the client’s detriment. We don’t understand how this engenders trust between advisor and client.


Industry credentials are only as good as the person holding them, but they provide proof that certain educational and professional standards have been met. Our advisors have attained licenses to practice as either a Certified Financial Planner (CFP) or Certified Public Accountant (CPA), which are among the most rigorous in their coursework and testing requirements, as well as continuing education after licensure. If we are going to provide professional advice, we will only do so with the competence and expertise that come with the highest professional standards.


In addition to these “table stakes,” we have developed some firm-specific practices that are intended to promote trust with our clients. The first is our commitment to comprehensive financial planning. This process allows us to gain a full understanding of the client’s financial situation, goals and time horizon before making recommendations for their investment portfolio. Just as importantly, it enables us to work closely with the client and develop a more trusting relationship before they engage us to manage their money. For many advisors, the plan is an afterthought, if it is done at all, and used primarily as a tool to facilitate the sale of an investment or insurance product.


Our intent in this process is to educate and engage the client, so they can be more informed and involved in the decisions being made. Most investors don’t feel comfortable giving their advisor free rein with their money, but many advisors prefer to operate that way. We want our clients to not only know what we are doing, but to understand the options they have, and the reasoning behind our recommendations. This is relatively easy for us, because we do not sell complex financial products and our investing strategies are based on extensive, well documented research.


We also believe our clients deserve complete transparency on investing costs. We often find that investors don’t know how much their current investments are costing them, or how they can better manage those costs. We take the time to quantify and explain these expenses, compare them to our own fee structure, and clearly define the services provided. We believe an honest discussion about fees and our value proposition is essential to establishing trust with the client.


One final point: I have found that discussions of trust in our industry often arrive at the story of Bernie Madoff. It is a cautionary tale for sure but one that is easy for us to address. Madoff was able to deceive his clients because he had control over the financial information they received. He was both the advisor for and the custodian of his clients’ funds. Through our use of the TD Ameritrade platform, we have separated the advisory function from the custody of assets. We provide the advice; TD Ameritrade holds the assets and provides all the account statements and other information about the portfolio. TD Ameritrade requires that even a change in contact information must come directly from the client to ensure the integrity of that independent relationship.


Deciding to work with a financial advisor is a huge step, and the process of selecting an advisor is extremely important. Many factors are involved but ultimately, if that underlying foundation of trust is not there, the other factors become meaningless. If you are contemplating that leap of faith, do your best to find answers to the question of trust.


About the Author:  Kevin Fix, CPA / PFS is a fee-only fiduciary Senior Financial Advisor at Fullen Financial Group. He has worked for more than 25 years in accounting and finance, with much of his career spent in public accounting and company financial management. He has extensive experience managing finances and investments for individuals, small business owners and large corporations. Kevin earned his CPA license in 1992 and became an independent Registered Investment Advisor in 2011.

Kevin earned Bachelor’s degrees in Accounting and International Studies from Miami University, and a Master’s degree in Business Administration from the University of Chicago Booth School of Business. He is a member of the American Institute of CPAs and their Personal Financial Planning practice section. Kevin lives in Upper Arlington with his wife, Amy, and their three children, and is an active member of the business community.

Contact Kevin: This email address is being protected from spambots. You need JavaScript enabled to view it. 


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