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Trust and Your Wealth Health PDF Print E-mail
Written by John D. Buerger, CFP®   
Thursday, 29 October 2009 15:09
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John Buerger

"Trust is a funny thing. It's also a delicate one. It takes quite a while to build but very little time to destroy. It's fragile and powerful all at once." - The Chalfont Project

Trust is at the core of every relationship and financial transaction in life.  Trust IS the lynchpin of a capitalistic society, even one that is far from a free market (and getting further away every day).  Without trust at some level, almost no transaction or trade can occur.

As you go through each day, you operate on both sides of the trust equation.  As such, it is important to understand trust and how it fits in with your work as well as the daily decisions you make about where and how you spend your money.  The first (your work) is mostly in your role of the "trustee," the last (your money) is in your role of the "trustor."

WHAT IS TRUST?

There are many definitions of trust ...

The Merriam-Webster dictionary defines trust as "assured reliance on the character, ability, strength, or truth of someone or something."

OK, that's not a lot of help.

I could go on (and if you want to, do a Google search for "trust definition" and you'll get more variations than you could ever imagine) ... but here is the best definition of trust we could assemble.

WHAT IS TRUST - REALLY (and in simple terms)?

"Trust is the willingness of one party (the trustor) to be vulnerable to the actions of another party (the trustee) based on the expectation that the person being trusted will perform an action important to the placing that trust, regardless of the trustor's ability to monitor or control the trustee."

There is a lot on the line when trust is in play.  If I place trust in you and you prove to be trustworthy, then I will be better off for having trusted you.  If you break that trust, then I will be worse off than if I hadn't trusted you.

Knowing when to trust someone (and when not to) is critical to your Wealth Health.  If you keep trusting the wrong people, you'll end up broke, having spent all your money on transactions that made you worse off, not better.

THE THREE QUALITIES OF TRUST

Essentially, there are three qualities of trust.  Usually all three are present in every financial transaction.

  1. Honest - Be true to your word.  A lying cheat cannot be trusted (although oddly enough, criminals trust each other all the time - which usually ends up hurting them).
  2. Benevolent - Be attentive to the needs of others.  If a person places trust in you, they are assuming that you will operate in a way that (at the very least) does not go against their interests.
  3. Competent - In the grand scheme of a trusting relationship, this is not at the same level as honesty or benevolence, but it is still important especially in the business world.  While people are more likely to forgive incompetence (we do it all the time for politicians - rimshot), nobody is going to hire you to fix their broken drain-pipe until they have some assurance that you can actually fix the pipe without creating more damage in the process.

BE A GOOD TRUSTEE

Let's start with the "trustee" side of the equation.  If you want to do more business, make more money or be more deeply involved in the lives of your fellow humans (all part of building wealth), then what follows are the points to which you need to pay attention.  If you don't care about building stronger relationships with others or having more income, then skip to the next section (look for "The Buy Side - Trustor").

What does it take to be a good Trustee?  Be honest.  Care about others.  Be good at what you do.

Those are pretty simple concepts ... but human nature being what it is, they are not easy.  We all make mistakes.  Even the best intentioned most morally developed person can slip up and lie or become selfish.  That is why (note to trustors) it is important to hold high standards but also be able and willing to forgive.

ACTIONS TO BUILD TRUST

I don't think just being trustworthy is enough.  You must actively develop trust with others.  The hermit does not get trusted, even though he may be the most honest, caring and talented individual in the county.

Within your daily interactions you can do the following to increase the number of other people who trust you and how quickly you gain that trust.  This is one of the most powerful forms of marketing ...

Effective Listening - If you listen well, people will trust you. "You cannot establish trust if you cannot listen. A conversation is a relationship.  Both speaker and listener play a part, each influencing the other. Instead of being a passive recipient, the listener has as much to do in shaping the conversation as the speaker."

Empathy - Empathy is valued currency. It gives insights into what others may be feeling or thinking.  It also sends a message to the other person that they CAN be vulnerable and that you will not betray them – Betrayal is the ultimate curse.

Share Consistently - One of the reasons that network marketing (mixers, business network groups and even social networks) is so effective is that you are creating constant reminders (daily, weekly or monthly) of how honest you are, how much you care and how good you are at what you do.  There is a human bias to "trust what is familiar" which is why old friends and family members are often trusted more than new acquaintances … even though doing so may not be in your best interests.

THE BUY SIDE - TRUSTOR

The buy side of the trust equation is equally important to your Wealth Health.  If you are constantly trusting the wrong people (those who break that trust), you will spend more and get less value or maybe even get ripped off.

The challenge is that every business, trustworthy or not, understands that in order to get more business, they have to build trust with their prospective clients.  They do this through advertising and marketing.  The most effective businesses use systems and processes that encourage you to go into trusting mode right from the very first encounter.

How do you tell the difference between a business or person who really is honest, caring & competent and a business or person who is just presenting themselves that way?

The most reliable way to confirm whether someone is worthy of your trust is through a recommendation from someone else with whom trust is already established and verified.  Ask your friends and family members if they have any experience with that product or company.

If you can't get verification through a trusted friend, family or advisor, then look for some method by which you can back out - The unconditional money back guarantee is my favorite (make sure it is in writing).  It allows you to spend time working with the person and seeing how they really behave.  While time together does work to build trust, it also gives you opportunities to find cracks in any facade, to assess those three qualities of honesty, benevolence and competence.

BUYER BEWARE - RESOURCE

Not to put too fine point on this, but it is important to understand how much effort is made to build trust where sometimes trust should not exist.  If you want a fascinating read, try Robert Cialdini's "Influence, the Art of Persuasion" which delves into some of the tricks of the advertising and marketing trade.

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Last Updated on Thursday, 17 December 2009 01:00