TechnologyJul 10 2020

Building client trust virtually

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Building client trust virtually

The current pandemic has influenced the planner-investor relationship in such a way that online communication platforms are now a necessity.

Financial planners therefore face the question of whether this form of interaction will have a long-term impact on the levels of trust that investors have in the advice they receive, and ultimately their decisions to work alongside a financial planner.

Challenges with online communication

For many financial planners, the transition to using online communication tools has not been a huge challenge due to the technology we have available today.

However, if not handled carefully, this separation between planner and investor has the potential to negatively impact current relationships and has been reported to affect new client business.

Key points

  • Financial planners are asking if the transition to online communication platforms will have an impact on trust
  • Building rapport can be challenging because of the absence of non-verbal cues
  • People are more likely to take advice from those they trust

Firstly, certain online communication tools may not be accessible or intuitive for some older clients. Secondly, these methods interrupt the way in which financial planners generally engage with their clients.

For example, some find it essential to make visual annotations during review sessions, while others are keen to have face-to-face contact.

In contrast, investors’ learning styles differ in a similar manner; many may require visual aids, which can be difficult to navigate using video communication tools for example, and more so by those who are being contacted without the use of video.

Learning style preferences are important to consider as clients look to their financial planner for guidance with the intention to learn from their expertise and experience.

For many financial planners, the transition to using online communication tools has not been a huge challenge due to the technology we have available today.

Although it is suggested that the majority of people (63.7 per cent) have multi-modal preferences for learning (that is, visual and audio), preferences for single modalities increase with age.

Recent data from the Vark database shows that for those under 18 years of age, 63.8 per cent have some form of multi-modality and 36.2 per cent have a single preference.

However, for those aged 55 or more, 56.8 per cent have multi-modal preferences and 43.2 per cent have a single preference (reading/writing 22.6 per cent; kinaesthetic/tactile 11.1 per cent; auditory (6.6 per cent; and visual 2.9 per cent). This increase in single preferences is particularly relevant as clients tend to be older adults, and further highlights the importance of using online communication tools effectively.

Building rapport

Many financial planners are currently turning to video forms of communication.

However, building rapport can be challenging due to difficulties in interpreting non-verbal gestures, since, for example, hand movements and seating posture cannot be seen, and maintaining eye contact is a struggle due to camera positions.

These factors can reduce levels of perceived trust and effect planner-investor relationships from both parties’ perspectives. Planners may feel less confident that they have a mutual understanding, which is vital when discussing financial matters.

Therefore, they may overcompensate regarding the level of verbal and nonverbal information they provide.

Clients’ feelings and emotions must also be understood by their financial planner; however, this can be hindered by using such tools.

From the perspective of the client, they must feel comfortable and confident in their financial planner, which may be challenging without face-to-face communication, especially if they have never met in person.

Regular contact

Today, we share personal information, communicate in groups, and provide open access to data online, therefore implying a certain level of trust. However, in order to develop this level of trust, regular communication and maintaining this communication over a sustained period is required.

Building rapport can be challenging due to difficulties in interpreting non-verbal gestures.

Although academic research has showed that video and audio forms of communication can lead to similar levels of trust as face-to-face communication, there is evidence that it takes longer for this level of trust to surface, and at this state it is more fragile than trust built through face-to-face communication.

Further research demonstrates that while richer forms of communication (that is, face-to-face) are important for initial contact, leading to greater ratings of responsiveness, closeness and liking, follow-up interactions using video tools can balance such ratings regardless of the original form of communication.

Video conversations can therefore be as effective as face-to-face once a relationship has been established, but there is a need for regular communication, particularly when interacting with new clients.

Providing support as well as advice

In any relationship, the ability to accurately empathise and provide compassionate support is essential.

Those who do so in online communities are found to be more trustworthy; presenting their personality through the information and stories they share leads to greater trust.

Emotional aspects of trust are important for the planner-client relationship and clients are more likely to take advice from those they like and who are empathetic, rather than mere experts in the field.

Trust based on these emotional factors can be more significant than a financial planner’s credentials and charges.

Financial planners are unable to maintain relationships in many of the ways that they have done in the past as there are currently no opportunities to meet with clients.

There are approaches that planners can use to build personal relationships and a sense of trust with their clients, particularly those of older age.

Arranging regular calls to enquire about their clients’ health (physical and mental) in isolation is a really important step that a planner can take. Discussing both financial and non-financial matters is essential during these times and will be beneficial to a client’s overall wellbeing, both mentally and financially.

In any relationship, the ability to accurately empathise and provide compassionate support is essential.

Issues with trust and compatibility were leading factors affecting decisions to seek professional financial advice even before the onset of Covid-19.

It is therefore now more imperative than ever that financial planners present and maintain a positive and authentic online presence and be just as accessible as they were before the lockdown period.

After having conversations with a number of financial planners, it is clear that they are seeking to get to know their clients personally in order to understand their financial needs, desires and overall well-being.

It is important that all investors are still able to experience this care and attention in the new era of virtual communication.

Louis Williams is head of psychology and behavioural insights at Dynamic Planner