White paper: trust within the adviser-client relationship

A new white paper looked into the issue of trust between financial advisers and their clients, and what engenders trust within the relationship.

One major takeaway in the paper is: “One attribute clearly rises above the rest: ‘When my adviser acts in my best interest.’ The overwhelming support for this attribute reiterates the importance of the fiduciary standard in advising.”

Trust, delegation and recommendations come from cognitive-based actions like expertise and communication over affective-based actions such as concern and integrity. A person’s willingness to trust, delegate and recommend an adviser may have the same underlying drivers since the average ranking of these attributes was similar. There is a strong correlation between communication frequency and the recommendation measure, which highlights the importance of staying top-of-mind with clients.

Another key finding is that trust is critically important in the adviser-client relationship. Clients may be coming to an adviser from a place of low trust at the industry level. Multiple studies have shown that trust is a key component of the relationship, and is a way for advisers to build their business.

The white paper was co-authored by Morningstar Investment Management’s global head of behavioural insights, Ryan Murphy.