The value (and necessity) of trust

I recently listened to Stephen Covey (the son of Stephen Covey of the "7 Habits" fame) speak on trust. It truly resonated with me, and I'll share just a bit here and more in an upcoming newsletter.

Our industry has suffered from a loss of trust. A highly successful and revered leader, Bernie Madoff, turned out to be a charlatan and a crook. Former New Jersey Governor and Senator, and former Goldman Sachs CEO, Jon Corzine ran a company that appears to have misappropriated client segregated funds. If ever the need for trust was evident, it is today.

In our GIPS(R) (Global Investment Performance Standards) and non-GIPS verification, we must have trust in our clients: if we encounter someone who we don't trust; who we think will try to deceive us, then we won't take them as a client.

As Covey points out, there are two important aspects of trust: character and competence. To gain our full trust, one must have both. To have character without confidence, we know that the person will strive hard to do a good job, but won't fully know enough to be successful, and so will need our support, counsel, and guidance. If the person is highly competent but lacks character, then there is nothing we can for them.

But in a relationship such as this, we, too, must win the trust of our clients, by demonstrating our competence and character. We want them to have confidence in our counsel, and see us as a highly trusted advisor. This is critical to success.

Yes, trust is extremely important. And again, more to follow.