Building Trust into Your Succession Plan
DEAR ADVISORS,
There is one thing that is common to every succession plan, merger, or emergency exit plan. If not present, it will destroy even the most successful advisory firm during a transition. However, if developed, it can create unparalleled success in both your business and personal life. This one thing is TRUST. In simple terms, trust is confidence, and the opposite of trust is suspicion. An advisory firm can have an excellent transition strategy, with the right team in place to execute the strategy, but the end result can be torpedoed by a low-trust tax, or multiplied by a high-trust dividend.
Trust affects two outcomes: speed and cost. When trust goes up, so does your ability to complete your business transition on schedule, and at a lower cost. Trust can be both created and destroyed. Though difficult, in most cases lost trust can be restored. Trust can also be taught and learned. Trusting people may sound risky, but not trusting people is a greater risk. So, how do we create trust? It starts by working from the inside out, meaning it starts with you!
Self-Trust - The fastest way to build trust is to grow our own character and credibility. This is done by understanding our 4 core values. This is a crucial foundation to navigate your business transition well.
Integrity - True integrity means honesty, humility, courage, and sticking to your word. The best way to do this is to make and keep commitments to yourself, stand for something, and be open.
Intent - Intent includes your motive, your agenda, and your behavior. Be sure to examine and redefine your motives, because behavior is the manifestation of motive and agenda.
Capabilities - Your capabilities come from your strengths, worldview, skills, knowledge, and personality. Run with your strengths, keep yourself relevant, and know where you’re going.
Results - Results are the tangible, measurable fruits of your integrity, intent, and capabilities. Results build credibility, which creates trust. Take responsibility for your results.
Relationship Trust - Building trust with clients and employees during a business transition is all about consistent behavior. Examples of behaviors that flow from your integrity include talking straight, righting wrongs, and showing loyalty. Behaviors that flow from your capabilities include things like delivering results, continuously improving, clarifying expectations, and practicing accountability. Behaviors that flow from character and competence include things like listening first and extending trust.
Organizational Trust - An advisory firm with high trust will find that their employees are willing to get vulnerable by tolerating and even encouraging mistakes as a way to grow and learn, sharing credit abundantly, and sharing information openly. An advisory firm with low trust will find that their employees are operating in an environment of shame, where mistakes are covered up, new ideas are resisted, facts are manipulated, and information is withheld. I consulted with an advisory firm who was looking to merge with a larger firm as part of a succession plan, but ended up merging with another firm because the larger firm had a low-trust culture. A culture of low trust impacts both finding and executing a succession plan well. For more ways to improve your firm’s culture, check out our previous blog post, Your Strategy for a Drama-Free Succession Plan.
Market Trust - Market Trust is about brand, or reputation. This is where most people clearly see the relationship between trust, speed, and cost. That’s because your reputation as an advisor and business owner is actually the way you make people feel. If you feel you don’t have the reputation or brand you desire, use the 4 core values as a diagnostic tool to pinpoint the reason why, and where investment will bring the greatest return. Next, alter your behaviors to create new habits to build trust. Building or restoring trust is not impossible; it simply takes consistent new behaviors over time.
Societal Trust - High societal trust is about your contribution. It’s the intent to create value instead of destroy it; to give back instead of take. It’s often said that the advisory industry has a reputation of low trust because advisors are in business to take advantage of people. A few well-known Ponzi schemes come to mind… That’s part of the reason many advisors won’t even consider succession planning; they struggle to trust any advisors other than themselves. Changing how we advisors perceive ourselves and each other will trickle down into societal trust for our industry as a whole. It will allow more advisors to find value in merging, partnering, and working on succession planning together, which is also in the best interest of our clients.
You may be hesitant or fearful when it comes to extending trust. A safe way to start is to start by trusting yourself and your own credibility, and then behave in trust-building ways with clients and other advisors. Only when you are actually in a front-line situation, will you see how the speed of trust and the profits of the economics of trust pay dividends, which enhance the quality of every relationship, whether transitioning client relationships or going through a succession plan.
For more information on this topic, I loved the book Daring Greatly by Brené Brown. This blog post is based on the book The Speed of Trust by Stephen Covey. I hope this gives you a place to start researching how to secure the future of your family and financial advisory firm!
Warm regards,
Brooklyn
P.S.
At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Check out our services here, our new products page here, or get to know me on my bio here!