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Build Trust from the Beginning

February 2, 2018

This time we hear from Darlene Steffen, financial planner at Moline, Ill.-based Life Planning Solutions. She tells the story of how a client's deceit taught her to prioritize transparency with clients.

Several years ago a woman came to me wanting to know when she could reasonably expect to retire. She was in her mid-fifties and had recently gotten a divorce. Her ex had a pension and she got half of that but she didn't have much money put away. Her income as a department store clerk was enough to cover her basic expenses but not much more than that. I told her I'd do everything I could to help her but as things stood she wasn't going to be able to retire until her late sixties.

She agreed to work with me and together we put a plan in place. But during that process I started feeling that something wasn't right.

First, the client had an unexpected medical issue and needed to pay for it. According to the information she had provided me when I was putting together the plan, she should have had enough money set aside for the expense, but she told me she needed to withdraw from her retirement account to cover it. I explained to her that doing so would come with a tax penalty and could further delay her retirement but she insisted she had to do it.

Not long after that she bought a car without consulting me. I asked her why she'd done it and she told me a friend had convinced her it was a good deal. I told her that when she did these things it disrupted and undermined the work I was doing with her. Later, when I looked at her accounts I didn't understand where the money for the car had come from. I confronted her about it and she confessed she had a cash account she hadn't told me about.

I scheduled a meeting for us to talk about our future together. I asked if there were other things she was keeping from me and she told me she was paying legal fees as she fought her ex for visitation time with their special-needs daughter. She'd needed the car, she said, to visit her daughter. She'd kept all this from me because she was still battling shame and sadness over her divorce.

I could tell this woman was in emotional distress and I told her I sympathized with her. But I explained that if we were going to continue working together she had to be forthright about her assets and expenses and she had to consult me before taking advice from a non-professional. Just as she was looking for an honest planner, I told her, I was looking for honest clients.

She said she understood, and I believed her. Since then, slowly but surely, we've repaired our relationship. She's back on track to retire in her late sixties, she trusts me with her finances, and I trust her to be transparent with me.

Darlene Steffen

What I learned from this relationship is that it's important to have the conversation about honesty and trust up front. Many advisors think about how to convince a client to trust them; it's also important, I realized, for me to remind my clients that I am putting my trust in them, too. Now, when I meet with a potential client, I talk about the importance of divulging all financial information and not approaching others for important financial advice. Most people aren't purposely deceitful but a lot of people don't realize how hard it is to collaborate when there is not trust on both sides of the relationship. Building that trust can take time but it starts with being honest and forthright from the beginning.