Advisors are beginning to wake up to the fact that their value lies not just in financial planning but in establishing trust, understanding clients’ values, and ensuring they act on advice. I call this the human side of money. If you’re seeking guidance on integrating this human element into your practice, you’re not alone. Here, I offer three practical insights on this topic.

Insight #1: Know What Actions Build and Maintain Trust

I truly believe that trust is the foundation of success, both for clients and for advisors. To be successful in this business, you have to be able to build trust—studies like this one have shown that it’s a key component in the advisor-client relationship.

As an example of how trust can be a differentiator, I’m going to use my son’s pediatrician. We’ve been going to his office for the past five years. He’s an incredible, board-certified pediatrician and knows his stuff. So, there’s the first element of trust: credibility.

The second element is reliability. Our pediatrician is reliable. When I think about one of the situations where I lose trust, it’s when someone says they’re going to do something and then they don’t. I know they’re busy. I know they have things going on. But if I can’t lay my head on the pillow tonight and trust that you’re getting something done for me, that takes away from trust.

Then there’s a third element, the human element. So recently my wife and I took my son to the pediatrician’s office, and our regular doctor wasn’t there. Instead, my son saw a different pediatrician. She does an amazing job asking me questions about what has been going on with him. Then she had to put an instrument in his ear, which he hates. She notices that, acknowledges it, and says, “Hey, do you want me to try something else? I’ll go find something else. You let me know if it hurts.” He didn’t cry one time, which was a miracle.

I immediately thought, “I want to switch pediatricians.” This new doctor was just as credible and reliable, but she spent the time to make us feel understood and cared for in a way that the other doctor never had.

There are things that are table stakes for trust, like reliability and credibility. These are important but not as much of a differentiator as the third element. Can you make someone feel heard and understood and like they’re in a safe place where they can open up and tell you things that are important? Whether it’s a doctor or financial planner, this element of trust is crucial, and it must be maintained over time.

Insight #2: Study Hostage Negotiators and Therapists

To better understand the building blocks of a trusted relationship, I’ve looked to professions that rely heavily on their ability to build trust. The two I kept coming back to were therapists and hostage negotiators. The negotiator is communicating with a stranger to get them to change their behavior, and they have to demonstrate trust and understanding under trying circumstances.

As for the therapist, they must be able to get a client to feel comfortable talking about some of the most personal, intimate details if they’re going to do their job well. They have to be able to build trust almost right out of the gate. Research shows that the number one predictor of success in a therapeutic relationship is the alliance and the connection that you have with the client.

So, in these two professions, what do they do to build trust? They ask really good questions. They demonstrate that they’re listening, and they understand where you’re coming from. A Harvard study found that just simply asking someone more questions and focusing on them led to higher levels of trust and likability. That doesn’t mean interrogating a client is the right way, because it’s not just about asking more questions. It’s knowing how to ask questions, or when to ask questions. It takes practice, but it’s worth the effort.

Insight #3: Make Room for Human Connection with Tech  

More space and time for the important discussions—that’s what technology provides us.

A recent study of households that use robo-advisors, human advisors, or both shed light on the fact that clients say they want technology to do the things that it does best: analyzing cash flow, financial planning calculations, storing documents, and keeping details from being overlooked. They want a human advisor to help them feel heard and understood, build a relationship, and have empathy for their needs.

I think financial planning technology helps to create more financial clarity: clarity around your situation, and the decisions that are on the horizon. The tech creates clarity, clarity creates confidence, and confidence creates contentment.

Leveraging technology frees you up to do what you do best, which is deliver on the human side of advice. It allows you the time and space to realize when a client isn’t implementing, and to say, “You’re not following through on this recommendation. Let’s explore that a bit. What might be getting in the way? What’s the next best step you can take?” The more you can leverage the efficiencies of technology, the more opportunities you will have to amplify the benefits of the human side of advice.

Taking It a Step Further

If you’re interested in learning more about mastering the human side of advice, I invite you to look at my resources on my website, Wired Planning. There, you’ll find articles, podcasts, and courses that can help you build a human-first planning process.

Sources:

1.       Journal of Financial Planning. “The Science of Building Trust and Commitment in Financial Planning,” December 2022.

2.       “The Alliance in Adult Psychotherapy: A Meta-Analytic Synthesis.” Psychotherapy 55 (4), 2018.

3.       “It Doesn’t Hurt to Ask: Question-Asking Increases Liking.” Journal of Personality and Social Psychology 113 (3), 2017.

4.       Kitces.com. “The 3 Domains of Financial Advisor Value,” May 2022.

 

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