Trading Expertise for Trust


Not that long ago, I was part of a panel discussion on the subject of how professionals of various disciplines (accounting, law, investment planning, insurance, etc.) might best work together.  It’s not a new subject, and one that will continue to be a subject of much discussion in the financial services industry.  But one aspect of our discussions continues to stick with me — why do advisors or clients fail to realize ideal outcomes more often than they do?  While lack of information or sophistication may contribute, clients and advisors often seemed predisposed to settling for something less than the ideal — even when they know, or have strong reason to believe, that they are not getting ideal advice and execution on even very important matters.

But that brings it all back to the same question again — why? Why settle for something less, or even choose not to pursue something potentially beneficial, when it comes to our personal and financial planning? Don’t we want what’s best for ourselves and our families? The answer to that question is obviously “yes” — but only if the cost of saying “yes” is not too great. And the cost is rarely a financial cost. More often it is a distaste for changing relationships with advisors and/or a preference to avoid feeling that the prior retention of past advisors was not as thought out as well as it should have been. To put it another way, avoidance of the discomfort attendant to almost any change in relationships is a strong motivation to settle.

Anna Nichols of Altair Advisors summed this issue up as a willingness for clients to “trade expertise for trust.” It’s a good shorthand for the willingness to settle conundrum — and I thought good enough to make the title of this post. But of course it’s not a complete description of the problem (which wasn’t what she was trying to provide in her comment), because it often has nothing to do with the trustworthiness of the new, higher capacity advisor. Relational inertia for current relationships clients feel good enough about is the metric to be examined, not the lack of trustworthiness of the potential new advisor.

If you agree (and feel free to disagree!), then I think there are several implications and adjustments in how we deliver advice and counsel that may be appropriate:

  1. We should seek to measure a client’s perceived discomfort related to a potential need to change advisors before charging ahead.  Are the marginal benefits significant enough to justify a change?
  2. Is it possible that the current advisors did not have sufficient information to provide more complete/more beneficial advice and solutions?  With that information, would they be able to perform more beneficially?
  3. Are your own interests clouding the discussion?  This could go either way — you may oversell yourself or undersell other, complementary professionals, for instance — if your interest in maintaining or enhancing the relationship receives too high a value over the client’s betterment.
  4. Are there ways to preserve, but repurpose, existing relationships to achieve more?
  5. Is it your vision of the better world that is driving the bus?  Or is it truly the client’s vision?  This, I think, is a big reason many advisors provide the same advice over and over again.

What do you think?  Would you add or subtract from this list?


About Author

Mark initiated this blog due to his passion in assisting and equipping families to manage their wealth and their families well.


  1. Jamie Reeve, II on

    “Relational inertia” is a great term and one most clients seek most comforting. Even when they often know their best interests/biggest needs aren’t being met, the fear of change is often a motivating factor which is difficult to overcome.

  2. Great topic. My experience is that many advisors settle for good is “good enough” and the effort to get to great isn’t perceived to be optimal in terms of time & effort required to achieve it. Getting to great also can take a lot of time (& then some expense) & clients may have a difficult time making the leap in terms of financial commitment necessary for optimal outcomes.

    • Mark A. Shiller on

      Do you have a sense on how much you would lay at the feet of advisors vs. the clients themselves? I’m not sure what the split would be — but I have a feeling that there is some practical implications if we can figure out which is the bigger deal in individual situations.

  3. J. Bernard (Bernie) Fiedler on

    Difficult topic, especially when we discuss “expertise”. In the investment world there is a term called attribution which is similar in concept. It’s in very short supply when measured against the average. I remember one manager that was off the map for attribution. When I asked a well regarded firm how she did it, their reply was, “We don’t know, but generally find luck has a lot to do with it.” My point is that expertise, outside of outright incompetence, is difficult to measure. Especially by someone outside the field.

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