I know I’ve been harping on a bit recently about the financial planning industry being at a potential tipping point when it comes to trust, however, what the industry is experiencing is part of a global tipping point, where the significant risk and costs of dis-trust (disengaged trust) are increasingly being exposed and experienced across a range of industries and professions.
For readers who are outside of the financial planning profession, you might be wondering why this whole topic of dis-trust in the financial planning/advice world is so important to me, so let me explain briefly:
1. I’m an advocate of seeking professional financial advice – the myth that money can’t buy you happiness is being exposed through recent research from applied positive psychology… having more money can indeed buy you happiness – so long as you make informed and wise decisions about how to spend it in ways that will increase your overall life satisfaction.
2. I’ve worked with literally thousands of financial advisers over the past two decades and I am convinced that the majority genuinely help their clients discover ways to better manage their incomes, protect their assets, and get clear about what they need to do to live the life they want to live.
3. And finally, while there are genuine concerns for the clients directly and negatively impacted by poor financial advice from some advisers (and rightly so!), by contrast, we hear very little about the vast majority of financial advice clients who are very happy with their relationship and advice they’ve been given by their financial adviser and the lifestyle benefits and options that advice has provided for them.
But it’s the reactionary approach that is of most concern
However, what I’m most concerned about is that much of the current identification and management of the risk and costs associated with dis-trust within the financial advice sector, are reactionary… in other words, the catalyst is often some level of ‘negative exposure’ occurring, which forces the hand of executive leaders to take some kind of reactionary and corrective action.
It can be easily argued that recently historic, and more current well publicised issues within sections of the financial planning industry, have validated that the compliance focus of the past decade or so has not achieved all of the desired levels of results in building and delivering on an industry/professional brand promise and value that is highly trusted in the community.
The Current Problem of FOFA-Driven Inertia
The current danger for the financial planning industry is that the confusion and frustration created by on-going questions surrounding FOFA legislation (legislative changes to what are the professional, ethical, and legal obligations of financial advisers), will create an environment of inertia and ‘wait and see’.
The real issue for the financial planning industry is the longer this ‘wait and see’ attitude prevails, or at the very least, the longer that stakeholders and the broader community see only reactionary approaches to breaches of trust, the deeper the levels of dis-trust will be created.
While reactionary approaches are necessary (and enforceable), the real priority right now ought to be on proactively rolling out across every level of every business, from the executive management team, through to operational front line personnel, a practical and measurable trust delivery process that identifies and manages the risk and costs of dis-trust, by introducing individually and collectively practically actionable and measurable proactive trust-building strategies and actions.
Footnote: If you’re a financial adviser, and this resonates with you… forward this to you BDM/PDM and let’s get Trust (and managing the risk and costs of dis-trust) on your next Professional Development program.