The word “trust” is used all the time in the private wealth management world.  Firms advertise themselves as being “trusted advisors,” and families use trusts to hold and transfer wealth.  There are trustors and trustees.  Trust planners and trust lawyers.  Trust funds and Trust accounts.  It’s hard to have a discussion about estate or financial, planning without using the word “trust” more than a few times.  To be trusted is something that advisors seek to distinguish themselves; finding someone who is trustworthy is often the client’s primary goal.  Trust is the first step toward any lasting relationship; yet, it’s difficult to define what it is or know when one starts having it.  While there are numerous academic studies on the issue, I’ve found a simple rule of thumb that helps me identify someone who might be trustworthy.  A recent experience reminded me of this test. 

 

Lessons Learned from Santa

With apologies for referring to a holiday movie when winter snows should be long behind us, this test comes from the classic holiday film, “Miracle on 34th Street.”  No, I don’t ask potential clients whether they believe in Santa Claus, and I don’t ask lawyers to prove the case for or against.  Rather, the test hinges on a pivotal moment in the movie that changed not only Santa’s role, but also the business prospects for the store at the center of the action.  There’s a moment when Santa Claus begins sending customers to Macy’s competitor, Gimbels, to purchase toys that the store doesn’t sell.  Initially, management is furious that Santa is putting Macy’s sales at risk.  That is, until customers start giving feedback that they intend to shop more at Macy’s because of Santa’s advice.  Perhaps the first proponent of pure “open architecture,” or indeed a true “professional,” Santa’s actions earned the trust of the customers in the following ways:

-       Acting against (short-term) financial interest.  As the management was quick to recognize, Santa lost the immediate, short-term, sale.  However, trust is earned when one person is capable of putting another’s interest ahead of one’s own immediate needs.  And this is what Santa did.  Now, of course, this can’t go on forever, and self-preservation shouldn’t be ignored, but this ability is a core foundation of trust and the central tenet of trust law.  

-       Being objective.  Santa could step back from his role as front-line salesperson and see the larger picture.  He didn’t simply reply:  “we don't have that.”  Instead, he was aware of other alternatives and earned the customer’s trust by directing them to what they sought.   

-       Listening to the customer.  Santa knew that Macy’s didn’t offer what the customer actually wanted.  Rather than exerting his energy trying to convince small children of the errors of their desires, Santa accepted that the children knew what they wanted and found a way to make it possible for them to get it.  This turned out to be a much smoother transaction, as anyone with a small child (or determined customer) can understand.  This applies to the private wealth business as well.  Trust requires an open ear.

-       Avoiding judging the client.  Ok, maybe this is a stretch, as the children just might have wanted items that weren't in their best interest.  But Santa left it to the parents to make that decision.  It’s hard to trust someone who doesn’t allow us to be ourselves. 

           

A Broker Passes the Test

How did this test recently show up in my life?  I was looking to buy an apartment in a hot real estate market and knew that quality properties were disappearing within days of being listed.  My broker wasn’t available to see one that I had identified, so I called the listing agent’s company to see if I could set up an appointment to see the property without my broker.  I had a lovely conversation with a broker who happened to answer the phone.  We jumped into a conversation about the property and its merits so quickly that it wasn’t until some time passed that I remembered to say,  “I’m represented by a broker.”  At which point she realized that she wouldn’t get a commission on any possible sale because, as it turned out, she wasn’t the listing agent.  We both recognized the challenge immediately, and at that point, I fully expected the conversation to end.  But, instead, she took a deep breath and said,  “It’s ok, I’ll show it to you.  It sounds like you’re really interested, and you should get a chance to see it.”  Within two hours we met on the steps, and she patiently walked me through the property.  I was impressed and noted how rare this kind of gesture has become, especially in the private wealth management industry.  At the end of the visit, I thanked her and asked her for several of her business cards.  We’ve stayed in touch and my subsequent interactions have confirmed my initial gut reaction.  This is a person who’s capable of acting in a way that’s not immediately connected to her financial interests.  She could “hear” me and think objectively about my needs.  I have since referred several other potential buyers to her.

Of course, a cynic would say that she was only motivated out of self-interest, and that may be part of the story.  But, as for me, I believe.  For I know that when there’s a price tag on every transaction, miracles can’t occur, and I know they’re possible.  I’ll keep looking for them and trusting in the people who can step away from short-term interests and down the path toward a trusting relationship.