Becoming the Trusted Advisor

When developing a client relationship, the ultimate goal is to be seen as a “trusted advisor.” With this status, financial advisors are viewed as confidants and reliable resources who go above and beyond for their clients. Reaching this level takes time, of course, but becoming a trusted advisor has clear benefits:

Sound good? Here’s how to get there.

What Is a Trusted Advisor?

Merriam-Webster defines trust as “assured reliance on the character, ability, strength, or truth of someone or something,” as well as “one in which confidence is placed.” But the term trusted advisor has a relatively loose definition in our industry. Understandably, many advisors believe they are trusted advisors. To truly understand the meaning of trust, however, we need to look closely at the beginning of the advisor-client relationship.

In The Trusted Advisor, David Maister, Charles Green, and Robert Galford discuss four different types of client relationships:

Type 1: You’re viewed primarily as a product vendor or someone who performs one-off tasks. Usually applying at the beginning of a client relationship, this is the easiest type of relationship to master. Here, you can introduce and build upon your expertise.

Type 2: You’re seen as someone who focuses on solving general financial problems using few products and services. At this level, your clients realize that you possess capabilities beyond the technical skills required to execute the tasks they initially hired you to perform. In turn, your clients may start to view you as a reliable resource and problem solver for more in-depth financial issues.

Type 3: You’re turned to as a professional who puts issues into context and provides perspective. Here, you’re looked upon more in terms of your ability to offer advice and identify client issues. At this stage, you can more easily transition to the level of trusted advisor.

Type 4: You’re the person clients turn to first when issues arise. Once you’ve reached the level of trusted advisor, virtually all issues—personal or professional—are on the table for discussion and exploration. You’re there (or called upon) for times of great accomplishments, triumphs, defeats, and crises. This level is often the most time consuming but also the most rewarding.

The chart below shows how your relationship characteristics can be based on a broad range of business and personal issues. By focusing on these characteristics, you can further define your role as you evolve from a service-based advisor to a trusted advisor.

Relationship Characteristics
Relationship Type Focus 
On  . . .
Spent On  . . .
Receives  . . .
of Success
Service based Answers, 
expertise, input
Explaining Information Timely, high quality
Needs based Business problems Problem solving Solutions Problem resolved
Relationship based Client organization Providing insight Ideas Repeat business
Trust based Client as individual Understanding 
the client
Safe haven for 
hard issues
Varied (e.g., 
creative pricing)
Source: The Trusted Advisor, Maister, Green, and Galford

Benefits of Becoming a Trusted Advisor

To state the obvious, you benefit through repeat business, as well as referrals and introductions to your clients’ other professional advisors. When you’re the trusted advisor, you don’t need to “sell” your products or your expertise; instead, you can employ your most-prized skills—your abilities to listen, reason, imagine, and work proactively to solve client issues. Here are just a few scenarios in which being a trusted advisor can reap benefits—for you and your clients:

Protecting senior clients. Your senior clients are a prime target for financial abuse, and, as their trusted advisor, you can be their first line of defense. Keep in mind that in 10 years, 75 million people will be at least 65 years old, including many of your baby-boomer clients. The concentration of wealth in this group is tremendous. By establishing a trusting relationship now, you will be well positioned to help manage this wealth for future generations.

Keeping the human connection. When the pandemic disrupted life across the globe, clients needed to know whether they were on the right financial path or should change their goals. In such scenarios, advisors can play a role far beyond that of robo-advisors. As a trusted advisor, you offer value to your clients in ways that robo-advisors can’t. Sometimes a simple “How are you doing?” could be all that’s needed to keep the connection strong—and give clients confidence that you’re there for them. More specifically, your experience and intuition for risk profiling and financial planning solidify your trusted position.

Developing your niche. Developing a niche is a process, of course. But you may find that, over time, your reputation as a trusted advisor will not only help strengthen your credibility but also help establish you as a specialist in your chosen area.

Growing your business organically. For many advisors, building their business means acquiring another practice. But the importance of organic growth shouldn’t be overlooked. One of the best ways to grow organically while maintaining the continued health of your practice is to keep existing clients satisfied by being their most trusted resource. With happy and engaged clients, you’ll be on the path to increased assets and more referral opportunities.

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Steps to Take

First, take a look at how you allot your time and how you’d like to spend it in the future. Many business models are built around speed, efficiency, and a one-size-fits-all approach, which means the individual attention required to build trust is often lacking. As you assess your client relationships, ask yourself the following questions to determine where you spend the greatest time and effort:

  • Are you focusing on quantity of clients rather than quality? If so, consider doing just the opposite.

  • Have you created a business plan? Writing your goals down is a critical step.

  • Do you excel at building portfolios or forming strong client relationships? To find more time to focus on the latter, consider outsourcing your investment management.

  • Are you spending valuable time analyzing the cost of services instead of the value they offer your clients and your practice? Remember, expense shouldn’t be the only factor in your decision-making process.

Path to Success

How do you envision your practice? If you’d like to focus primarily on relationships and trust, it will take time, effort, and a whole lot of wisdom. But as you grow your business and seek those quality relationships, positioning yourself as a trusted advisor is a clear path to success now and in the future.

Editor’s note: This post was originally published in November 2016, but we’ve updated it to bring you more relevant and timely information.

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