The Language of Trust: Selling Ideas in a World of Skeptics
By Michael Maslanksy with Scott West, Gary DeMoss, and David Saylor
Book Review by Steve
Let’s not kid ourselves. When it comes to money, emotions run deep. The authors describe the era after 2008 as “Post-Trust Era” charging much of the trust of the financial industry lost during that year’s worst financial crisis since the Great Depression. How do American institutions and the financial industry, in particular, earn trust again?
The book’s primary audience is professionals who make their living selling ideas, products, information or services to consumers. They cover different businesses, improving and changing the way professionals communicate with consumers as an approach to earning and preserving trust, whether corporations, small businesses or sales.
This book was an excellent introduction to an important and complex topic. The authors claim, rightly so, that we are now a country of skeptics because many people lost their life savings. Several trillion dollars languished in money market accounts for the last eight years. People are naturally afraid of the stock market. Emotions about losing are much stronger than feeling good about investments increasing in value. Regretfully, they missed out in billions of positive stock market returns from 2009-2015. People feel that their advisers should have protected them before the crash. I would be just as angry if I witnessed from the sidelines with piss-poor returns in money market accounts those robust stock returns after the crash. Like it or not, it might appear people feel the financial profession failed them twice, while Wall Street walks away with billions in government bailouts and the bonuses still awarded. People are not stupid, they are angry.
The solution. The authors believe financial information must use language that people understand in the form of a story. The authors claim that an engaging language with a personal narrative style will earn the public’s trust once again. From their research on focus groups, the participants made it clear there are words that build trust and words that no longer work. Quoting the words:
- Positive not risk. Risk is negative.
- Maximizing gains not minimizing losses. Losses is an offensive word, for good reason—2008!
- Voluntary not default or auto-enrollment. People want to feel like they are in control.
- Costs and charges are preferred over fees. People do not like the word fees. They feel that they pay more fees everywhere they go, national parks, toll roads, etc.
- Financial security, not financial freedom. Freedom is too vague.
- A portion of is superior to all or nothing. People want choices and control.
- Straightforward not transparent or clear. Transparent and clear might be too vague.
The authors continue with their suggestions that advisers must talk about “long-term, investment strategies,” which are focused on the client’s current situation. They need to talk less about what you (adviser) and your firm can do for clients. Clients are looking for knowledgeable and competent advisers who understand each client’s unique investment needs and wants.
One of the most important messages of the book: The process of selling products, services, and ideas has moved in a totally different direction, from the one-sided approach of the salesperson to [being] the customer’s advocate and educational resource of the trusted communicator. I agree! But the authors did not finish the job of providing a picture of this evolutionary relationship on how being an “advocate” and a “resource” for the client would look like.
I think the Vanguard Group is an excellent trustworthy model. John Bogle has been an advocate and an educator with his books, speeches, and television interviews for over 40 years. Most importantly, he founded Vanguard to followed up with actions, not just talk. All advisers have to do is to align themselves with the same investment philosophy of Mr. Bogle and the trust from clients will go through the roof. Furthermore, the National Association of Personal Financial Advisers and Garrett Planning Network have hundreds of advisers across the country who agree to abide by fiduciary standards set by these two wonderful professional organizations.
The authors wrote: The most credible an effective sales pitches today are often not sales pitches at all. They give information, not hype and put control in the hands of the consumer by offering choices. Vanguard has never sold a product, just offered information that looks out for the investor’s best interest. Vanguard has been clear about their story of simple easy-to-understand portfolios. Because they have listened carefully to investors, their credibility is superior to most or all of the other mutual fund companies.
Okay, financial advisers, you are all set up. Just join one of these two professional organizations and use Vanguard with your clients and your trustworthiness, and your practice will grow. Trust and money are emotional topics and you will be on the right side of the clients and history. The world has changed as evidenced by the tremendous growth of The Vanguard Group.
Summary. I agree with the authors’ basic premise–the information and advocacy conversation must be a two-way street between advisers and clients. Underneath the anger, clients still want help, and they are a forgiven group IF you change on how you conduct your business. It’s up to the professional to engage the clients. The authors wrote people want direction and guidance. But, they never want to be told what to do. The authors accurately report the era of the authoritarian and hyperactive expert is over. They believe that trust could be established over the long-term because of advocating and educating.
I applaud the authors for taking on this complex and daunting subject. Now finish the job of including advisers’ stories of a straightforward investment philosophy, and trustworthy duties, and then, the industry will have gone the extra mile to earning the public’s trust again. I think the following quote says it best: It’s not what you say, it’s what they hear. Vanguard’s twenty million clients heard what Vanguard can do for them, and all twenty million cannot be wrong.
Additional articles about TRUST. It is a big deal. Steve’s suggestion on how the author’s of the Language of Trust book could finish the job by illustrating how the language in an actual adviser/client setting might look like. Here it is! Read my article on what a fee-only fiduciary financial adviser’s conversation with a client might look like: http://latebloomerwealth.com/2016/05/24/conversation-with-a-fee-only-fiduciary/
And my previous blog article about Trust and Investing. In this article, I advocate taking trust out of the equation by learning to invest without an adviser. It is a lot of work and requires a little risk trying to find a trustworthy adviser. If you take to heart what I have written about this complex topic, you should be fine with or without a fee-only fiduciary adviser.