Welcome to first edition of our newsletter, and my weekly discourse on industry matters, as well as tips, lessons, and ideas to help your business grow and prosper.

To get us started, I thought I’d take a moment to discuss a very interesting topic that popped up again this week (interesting how it tends to come up on a regular basis) in an article from Money Management – link here.

If you have a read of the article, you’ll see that it is about trust – trust in financial planners. And once again, financial planners haven’t rated well at all. Indeed, once again, financial planners rate behind pharmacists, doctors, dentists, and the humble accountant.

My team and I do a lot of work around the area of Fee-For-Service. In my opinion, however, the whole issue of trust goes hand-in-hand with fee-for-service, and this is why it disappoints me when I see planners approaching fee-for-service as purely a matter of administration – how to collect service fees from the client. It misses the point of why the entire fee-for-service argument came up in the first place.

But how does fee-for-service relate to trust?

Let’s consider this for a moment. Many financial planners would say that their clients “trust” them. But is the type of trust they are referring to a personal level of trust based on likeability and personality, or a professional level of trust based on the qualification, reputation, and quality of the planner?

Of course, I’m sure most planners would say that it should be about professionalism, reputation, quality, and the other factors that make someone a “professional”.

Clearly, however, an immediate conflict between trust and commissions appears – and this is why fee-for-service is such a critical issue for the industry to resolve. After all, how can you completely trust a professional, if you aren’t 100% sure that they are working 1) for you, and 2) in your best interests?

An example.I have an insurance / risk adviser that handles my personal and business insurance. Nice guy. Calls me once a year to fill out the forms and send them in again for renew. And each year, he tells me the same thing, “Well, I’m going to keep you with the same provider, because they’re the cheapest.”

Now, that may be true, but how can I be absolutely sure? He says it is, but I know that he is receiving commissions on the backend for it. As a business, I need to have this cover. But how do I know that it really is the best deal for me and that it hasn’t been chosen because it happens to pay more commissions back to the adviser? So, I might LIKE my planner, but I might not necessarily TRUST them professionally speaking.

Of course, this isn’t to say that I don’t trust my adviser (don’t take it personally if you’re reading this). It just highlights very quickly why the mere existence of commissions damages, not personal trust, but more critically, professional trust. Yet, professional trust is the very foundation for the beginning and continuation of every client relationship that your business will ever have.

It even extends out to the next level of trust – Industry trust – trust in financial planners in general. It is, from a marketing perspective, very little surprise that the Industry Funds’ campaign against financial planners and commissions has been so successful. It’s like the “used car salesman” theme. It might be a broad generalisation, but it only needs to be potentially true, enough to put doubts in people’s minds, to reduce the community’s trust in that industry.

Which brings us to the question of the week – What can you do today to create a better sense of professional trust from your clients in your business?

Until next week!

Lap-Tin