Investment Advisors and the Client Trust Equation

The CFA Society has created a Trust Equation: Credibility + Professionalism = Trust & Value.

The investment industry is changing, and competition is heating up. What should an Investment Advisor do in this environment to ensure success?

Current research shows the most important thing by far that people want from their investment advisor is to be able to trust them to act in their best interest.

In their 2018 Global Survey on the State of Investor Trust, the CFA Society reveals their findings on what people consider the most important consideration when hiring an investment advisor.


  • 18% referred by a trusted source
  • 17% want the advisor to provide high returns – demonstrated by track records


  • 35% trust that my advisor acts in my best interest as a solid fiduciary
  • 14% want assurance that their advisor works ethically
  • 8% care about the amount and structure of the fee
  • 8% compliance with industry best practices

The CFA Society has created a trust equation:

Credibility + Professionalism = Trust & Value

Credibility is supported by:

  1. Having a great brand and following through on brand promises. More than ever, this includes a philanthropic component.
  2. Making sure that you/your team members have the right professional designations and receive the right ongoing education.
  3. Monitoring your long-term track record and ensure it supports that you are competent.
  4. Following a code of conduct that displays proper ethical behaviour.

Professionalism is supported by:

  1. Proper transparency in fees, security and conflicts of interest.
  2. Evidence that your client comes first and support of their values.
  3. Ongoing professional education.

With this formula in mind, perhaps the following list summarises what you must do to be great at the relationship side of being a good investment advisor.

1. Understand Your Client’s Situation You have to pay attention to who your clients are, their situation and the alternative ways to solve their problems. You must understand their goals and their fears to serve them better and provide customised solutions. Shame on you if you suggest any product that you would not buy yourself.

You may choose to pick a niche, say dentists or doctors, and focus on offering them the best service you can; you will truly understand your client’s needs. This strategy also gives you a chance to build a book in an industry or age bracket that you are interested in or connected to thus, increasing your level of concern for your clients.

2. Be Authentic It is so important that you genuinely be yourself when seeking new clients. Your goal is to have a long-term relationship with them. You need this relationship to be smooth and easy for you to maintain. You will ensure that your clients know they are important to you, no matter how big their account. You are guiding them and growing their wealth.

Being authentic is another way to add trust to the relationship.

3. Inform and Educate The KISS principle is the best. Don’t dive into long-winded speeches about the market’s historical and annual returns vs current returns mapped against the yield curve….blah blah. Unless you KNOW your client is into all of that, you are simply losing the connection with the client at the moment. Keep things simple. Create a one-page summary, present it to them very succinctly and be prepared with gold nugget answers to their questions. It is a better way to keep them engaged. If you see their eyes glazing over, stop talking. Reel them back in. Reset your course. And while you educate them, you learn.

4. Stay Connected Just as a good friend takes the time to reach out and connect, so too must you ensure that you find ways to stay connected to your clients. You may or may not be or become a friend to your clients, but you want to ensure that you are professional in your duties towards them. Find ways to connect with them that suit them and perhaps their contacts and friends. Poor communication is one of the top reasons people leave investment advisors.

Conclusion When following these suggestions, we assume that you always behave in ways that reinforce the Trust Equation. More and more people view Investment Advisors as commodities. If you focus on the relationship side of the business and perhaps find a niche, you will have possibly identified your unique selling proposition and success at the same time.