Building trust takes conscious effort

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I recently shared the most relevant findings for financial advisers in the Edelman Trust Barometer 2023, in which we saw continuing challenges for the financial services industry in relation to trust. As we all know – without absolute trust in you and the services you offer, strong client relationships will never be forged.

 

I got a lot of feedback in relation to this article, thanks for all your likes and comments – much appreciated as ever. A few advisers have since asked me what they need to do in order to build trust. So here goes – my thoughts on a few ways that really help to build trust.

 

Be visible when the going gets tough

This is so relevant today, with a volatile and unpredictable economic and investment climate. Now is not the time to go to ground and hope that clients won’t ring about their investments that may be going up and down at an uncomfortable rate. Instead now is the time to be calm, show your leadership qualities to clients and remind them that their financial plan will deliver the desired outcomes over time. Yes, acknowledge the discomfort caused by volatility in the markets today, but remind clients that this will pass. Your visibility and reassurance will provide comfort to clients, and will help build their trust in you.


Communicate how you work with clients

One of the most important ways to build trust, particularly with potential clients, is by communicating really clearly how you will actually work with them. Many people only sort of know what a financial adviser does – something to do with pensions and life assurance? Let potential clients know the problems you solve and the outcomes you achieve for them. And then explain how you will work with them. You can give huge levels of comfort by walking the client through your advice process in detail, showing them what to expect and the value that you will add. This will help to remove any doubts in their mind.


Provide client testimonials

Continually seek out client testimonials, they are really important. In my book, you need to seek permission to use the client’s actual name (and logo if a company). Testimonials from “John H, Dublin” don’t really count – in fact someone might suspect they are made up… Genuine client testimonials are really powerful – who can advocate for you better than people who you’ve helped in the past, whose lives you have potentially changed?


Seek recommendations on LinkedIn

LinkedIn is a really important platform for financial advisers; it’s where many prospective clients will check you out before picking up the phone to you. After all, when they Google your name, the chances are that your LinkedIn profile will appear high up the search results. Recommendations from clients on your LinkedIn profile are a very powerful endorsement of your services, so look for these at every opportunity. They are great trust builders.

Presence in mainstream press

Some advisers have built up great profiles by regularly appearing in “Opinion” columns in national newspapers and some even building positions as regular commentators on TV and radio. These are great for building trust, as they demonstrate your industry knowledge and authenticity as a voice worth listening too.


Your qualifications

Sounds simple? If I was a CFP, I’d tell everyone at every opportunity! Why not advertise the fact that you are part of a highly qualified cohort? Prospective clients will value the fact that you are investing in yourself and are willing to keep learning in order to stay at the frontier of providing the very best financial advice. It will also help you to achieve high levels of trust among clients.

 

There are of course many more ways of building trust; advertising any awards that you win, communicating your opinions with your clients via newsletters and being active on social media. Hopefully the ideas above will give you a few pointers as to how you can continue to build trust with your clients and prospective clients.

Know your target market

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As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.

We now consider the first action identified, which is the importance of identifying and getting to know deeply your target market.

Based on the research findings and the numerous challenges faced in providing a viable and valued advice service to people of modest financial means, it is likely over the next decade that Financial Brokers will continue to mainly target the mass affluent and high net worth sections of society. Within this, individual Financial Brokers will target different segments of the market, based largely on their areas of expertise or where they can access clients easily. This is who they will target, and the positioning of their business will need to be centred around the target market. Connecting with their target group will be a primary goal and activity of the business.

Financial Brokers should consider where they can add most value. Will this be with families, assisting them in managing every aspect of a household’s finances and assisting them in achieving all their financial objectives in life? Or will their target market be business owners maybe in a specific geographic region, where the Financial Broker will be the guiding hand in all areas of wealth extraction, succession planning and achieving a successful business exit? Or will the Broker build a superior knowledge and understanding of the unique features and attributes of a particular profession and advise them – maybe sports people, entertainment professionals or people in a particular industry? Building a superior knowledge and understanding of a specific target market is a powerful positioning and will enable a Financial Broker to become the ‘go to’ person among that cohort of potential clients.

The value experienced by clients will be in the Financial Broker’s superior knowledge of a target market, the quality of advice delivered, and the products arranged to implement the advice.

That is not to say that Financial Brokers will only have clients within a narrow target market. Other clients will emerge that the Financial Broker did not actively target – some may also be high value clients, however others will be less valuable, maybe having been introduced to the business as a child of a high value client or a referred client etc. However, the marketing efforts of the business will be aimed at the desired target market – these are the people you are putting all your efforts into appealing to.

We identified a number of specific action points for Financial Brokers to carry out.

First of all, it is important to consider your available markets and the ones that offer the scale and best opportunity for you to add value and ultimately succeed. To do this, you need to build a view of the estimated population (households, businesses etc.) within your target market – there are many research resources available to help you do this. These include the CSO, government websites, local business sites etc.

Once this is completed you then decide which group(s) you will target. This will be decided based upon having confidence that the target market is viable and big enough to sustain your own business goals and ambitions, and being able to identify clear access points to this market. You need to have a good sense from the outset as to how you will reach your market.

The third point is often the one that is skipped lightly over – at a great eventual cost. It is very important to develop a deep and superior knowledge and understanding of the attributes and specific financial challenges of your target market. You need to know this market better than anyone –  the characteristics of the people, their own specific challenges, what are the concerns that keep them awake at night and what are the particular financial challenges that they face. The more you understand their own dynamics, the better you will be at empathising with them and delivering advice that is based on knowledge and expert insights. This will be truly valued advice and will enable you to stand apart from every other adviser trying to build relationships with them.

Once you have built this deep knowledge, the final step is to use it to stand apart from your competition. You do this by refining all your marketing channels and efforts to build your presence among this target market. Don’t try and talk to everyone, look to talk in a deeper way with your target market.

Rather than trying to be “all things to all people”, the first step in being a successful Financial Broker in 2030 is to identify and go after a clear target market.

 

 

What will the Financial Broker market look like in 2030?

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Last month I introduced a research project that I was fortunate to deliver for Brokers Ireland with the aim of developing a future-facing view of what the Financial Broker sector will look like in 2030. The primary purpose of the research was to inform Brokers Ireland as to how they can shape their own objectives and optimise their support services to best meet the needs of their members, and to consolidate and grow their positioning as the leading representative body for Financial Brokers in Ireland, and indeed as the voice of the sector.

In last month’s article we looked at the market today. Now we’re going to take a leap into the future and examine some of the key themes that the research revealed as to how the market will look in 2030.

The general outlook

Overall, the future demand for financial advice is expected to grow, with the future for Financial Brokers looking bright. This positive outlook is shared by Financial Brokers themselves. In a survey carried out in 2022, almost 50% of them agreed with the statement ‘The future is very bright for Brokers, I expect the market share of Brokers to increase’, with only one in five answering negatively to it.[1] Brokers currently enjoy a market share of approximately 74% and there is every expectation that this share will remain stable in the coming years.

This positive outlook in relation to the demand for advice and to the independent advice sector is shared across all global markets. As consumers make transitions throughout their lives and indeed as regulation, products and the financial backdrop within individual markets change, there is a need for expert independent advice to optimise consumer outcomes.

The biggest cloud on the horizon for Financial Brokers may come from the broader economic environment, with the outlook looking quite gloomy today. However, time and time again Brokers have demonstrated their resilience in dealing with negative external forces. The political landscape in Ireland could also experience significant change over the next decade, with some consequences for the sector.

Preventing an advice gap

The greatest challenge in relation to the demand for advice is reaching people who have never interacted with a Financial Broker and are unaware of the benefits this can bring. This challenge is one that exists in every corner of the world. As an example, it is estimated that 83% of the population of the USA have no adviser. Since the Retail Distribution Review (RDR) was introduced in the UK a decade ago, one of the major impacts has been the narrowing of the financially advised population. Similar trends have been experienced in other markets, as consumers are unaware of the value of advice and advisers cannot deliver advice in a profitable way to consumers with more limited financial resources. This has to be one of the biggest challenges for both Financial Brokers and regulators in Ireland – preventing an advice gap widening in Ireland.

In building relationships with new consumers of financial advice, the challenges of engaging the younger generations and engaging a more diverse audience were noted. These themes will be examined in more detail in future articles.

The target markets of the future

While there will be some exceptions of successful, scaled businesses with large client service machines enabling them to reach a wide group of clients, the expectation is that the Financial Broker of the future will work predominately (but not solely) in the mass affluent and high net worth segments.

The sense of most people, and lessons from other markets, is that the successful Financial Brokers of the future will be ones with deeper propositions, offered to narrower target markets – their goal will be to look after all the needs of some people. Being expert with such groups enables an advice firm to stand apart from their peers and be the ‘go to’ expert in that market. The likelihood is that Financial Brokers will seek to differentiate themselves from their peers through deeper knowledge of specific client groups or by demonstrating superior expertise in specific product areas.

The importance of every Financial Broker having their own business proposition that is then rolled out to their customers was a recurring theme. The future of successful Financial Brokers is unlikely to be as ‘product takers’, with their proposition simply being an additional advice layer to the product offerings of their favoured product provider. The expectation is that technology will play a far greater role in the delivery of advice by Financial Brokers. Again, these themes will be examined in more detail in future articles.

The 3 big questions

Over the next editions of newsletters, I’m going to examine each of the 12 ways that were identified as enabling Financial Brokers to prepare for 2030. Each of these will help you to answer the three most important questions for your business,

  • Who your clients of the future will be
  • What services you will offer
  • How you will deliver these services

[1] Brokers Ireland Financial Broker Survey Report 2022

Never forget the importance of building trust

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Trust. It sits at the heart of a financial broker’s business. It’s that magic ingredient that you can’t survive without, but unfortunately you can’t just go out and buy it, or even simply ask for it. It can only be earned by what you do, and by what other people say about you.

Every year, I review the very insightful Edelman Trust Barometer, an annual, highly credible review of trust that has been carried out for 23 years now and across 28 different countries. They announce the results each year at the World Economic Forum in Davos. The full results for Ireland in 2023 are available here and are well worth a look. Edelman looks at trust in each of the countries (one being Ireland) and examines trust across different sectors and industries.

Two graphs in particular caught my eye this year.

 

Economic Optimism

The first is in relation to economic optimism and whether people believe they will be better or worse off in 5 years time. Maybe after Covid, the ongoing war in Ukraine and the recent cost of living crisis, it really is no great surprise that every country (with the exceptions of Sweden and China) sees a reduction in optimism since 2019. The levels of optimism have really fallen away in the developed world, and this is seen in the results for Ireland. Only 31% of Irish people believe they will be better off in five years time and this should definitely be a concern to policymakers.

 

 

 

 

 

 

 

 

 

Low trust in financial services

As can be seen from the graph below, Financial Services is one of the least trusted industry sectors in Ireland – a fact we simply cannot ignore. What is also worrying is that trust in the financial services is declining from an already pretty low base. Of course we need to consider how broad the financial services sector is, and how every scandal in one corner of the sector tarnishes everyone.

 

 

 

 

 

 

 

 

 

But this is a very important finding for all financial brokers to consider. While the poor level of trust applies to the sector as a whole and is no way reflective specifically of financial brokers, it underlines the challenge faced by all industry participants in building trust with potential clients. The situation is likely very different with your existing clients – if they didn’t trust you, they wouldn’t stay with you.

However the challenge is about appealing to all those people out there who maybe are looking to interact with the sector for the first time, or in a different way. They are sceptical of the financial services industry, and potentially this might include financial brokers. How do you appeal to people you meet for the first time, who may often be starting out with a sense of distrust and scepticism? This cannot be ignored by you, and your first task on meeting a prospective client is to face this issue head-on and start building trust…

It all starts with having a clear and compelling client value proposition, which is a clear, concise and compelling articulation of how the factors that are important to the customer are satisfied by you.

 

What is your business proposition?

To start to build a positive picture, leading to confidence in your ability in the eyes of prospective clients and ultimately to building trust, it’s worth considering the lessons of Simon Sinek, the famous author of “Start with Why”. Yes you need to be able to clearly define initially what it is that you do, so that clients can see the outcomes that they can expect. You then need to be able to communicate this effectively to clients. However it is difficult as a financial broker to stand apart from the crowd in terms of what you do, as many of you deliver similar services.

However when you can set out in an engaging way how you work with clients, now you’re starting to get somewhere. When you are able to demonstrate the processes that you use, how you deliver advice, how you will serve your clients throughout their financial lifetimes; you are now in a strong position to start building durable trusted relationships. Potential clients will take a lot of comfort from understanding what they can expect from you, and this comfort in working with you will enhance their trust.

The real magic though in building trust is when you can clearly (and of course credibly!) communicate why you do what you do.  This will demonstrate your real reasons for being a financial broker, your passion for what you do and ultimately your desires to deliver a really top quality proposition to your clients. And when you can communicate this effectively, this will build trust like nothing else.

 

In a future article, we will look in more detail at some of the actions you can take to help you build a trusted position in the eyes of all of your current and potential clients.