Originally published on Advisor Perspectives, August 1, 2018

At my request, Harriman House sent me a copy of The Trust Mandate, The behavioral science behind how asset managers really win and keep clients, by Herman Brodie and Klaus Harnack. I’m glad Harriman House sent it, because even the discounted version of the book on Amazon costs $71.70.

The co-authors are impressively credentialed. Brodie spent a decade in investment banking and has focused his efforts on finding “behavioral solutions to industry challenges.” Harnack has a Ph.D in social psychology and motivation. He “utilizes psychological insights and strategies to support professionals in their decision-making negotiation and conflict management.”

I thought that a book focused on how institutional asset managers build sufficient trust to attract and maintain assets should be helpful to advisors, albeit on a smaller scale.

I was correct. What I didn’t expect, though were the key traits that inspired trust.

The importance of trust

As portfolio management has become more of a commodity, the importance of personal relationships has taken center stage. Few would disagree with Rebecca Lake, who wrote a blog post entitled: Trust: An Advisor’s Most Important Asset.

Lake observed that, at the core of a personal relationship, is trust.

In The Trust Mandate, the authors conclude those who are trusted “are likely to have more satisfied clients, to have more positive interactions, and do high-value business with them.”

Clearly, earning the trust of your clients is a worthy goal.

The surprising dimensions of trust

Brodie and Harnack identify the two dimensions of trust as “warmth and competence.” They define “warmth” as “a benevolent orientation that puts others before self” and “competence” as “the ability to make desired outcomes happen.”

Both “warmth” and “competence” are judgments others make about you. They are based on emotions, not necessarily facts. Of the two traits, the perception of “warmth” is more important. When we perceive others as “warm,” we tend to believe their intentions towards us are benevolent, making us more receptive to the additional perception of “competence.”

Skewing the odds

Brodie and Harnack identified physicians as a profession that is consistently perceived as very trustworthy. They found the strongest predictors of trust in physicians was “their communication style and interpersonal skills.” Here are some factors that enhanced trust in the doctor/patient relationship:

• Talking with patients;
• Taking an active interest in their well-being;
• Laughing and sharing anecdotes;
• Using a concerned tone of voice; and
• Active listening “that encourages patients to share the kind of crucial information that allows physicians to make more accurate diagnoses.”

These findings (and others I will discuss in a future article) will be familiar to those who have learned the Solin Process.

Lecturing, educating and marshaling facts in support of a given position are not on this list. Nor is explaining about the background, experience and overall expertise of the physician.

Brodie and Harnack correctly observe warmth and competence are “skills that financial professionals can develop and employ.”

Are you willing to try?