First there is the ability of the adviser and whether he can get the job done. Second is behavioural evidence, third is integrity and fourth is predictability.
Mr Dietz said: “Ability is evidence of your technical competence and past performance that gives people clear indicators that you’re good at your job and can deliver.
“Behavioural is people’s motivations and its demonstrations of your concern. Integrity is how fair you are in your dealings with somebody and clear expectations of what’s going on and making people aware of the risks and pitfalls, and offering fair and sound advice.
“Predictability is how consistent you are in your behaviour.”
He said these factors were easy to apply in the field of financial advice as it is about the client finding confidence in people. He said: “We consider the evidence about a person and filter that evidence and ask how much confidence can you have in that person.
“What is the client looking for that would give them confidence to pay you the fee to advise them? Demonstrations of past performance, testimonials from other people.”
He added it was a real challenge because “what they’re advising is inherently risky, it may work and it may not”.
To keep the trust going throughout the relationship, Mr Dietz said the adviser had to be transparent in his communications, especially when an investment or financial product does not work out.
He said: “If something goes wrong and the investment doesn’t pay off then the adviser is in a repair mode but the same process is still there. You’re still demonstrating your ability and predictability but in a different way. It’s to show your concern with an apology. It is demonstrating concern about the interest of the client.
“If it does go wrong then it’s offering a credible explanation of why that happened. If the advice was sound and the market turned against the client, then you have to provide a credible explanation of that.”
He added that Ponzi scheme fraudster Bernie Madoff was a prime example of someone who knew how to manipulate others to get them to trust him, and that our response to trust was coloured by our own experiences. He said that we all sit on the trust spectrum from paranoia to thinking everyone was “lovely”.
However, he said: “I think it’s good to trust unless you’re given evidence otherwise. Assume the best in people unless there’s evidence otherwise and give them the opportunity to recover.”