Tuesday Email: The Trust Equation

Happy Tuesday!

Every Tuesday I'd like to offer strategies for the week ahead and a thought to fuel your action.

When my dad passed, I took over conversations with his clients.

I remember one family conversation vividly.

They cried.

Not about their portfolio balance. Not about returns.

They cried because they lost someone who understood them.

That conversation changed how I see this entire industry.

Because here's what they said: He was a great person. He understood me. I trusted him. I could talk to him about anything. He was always there for me.

Here's what they didn't say: He generated great returns. He created a perfectly balanced portfolio. He had the perfect financial plan.

You know you have deep connection when clients don't call when the market goes down.

You know you have deep connection when you have the highest retention of anybody in your firm.

You know you have connection when people come in for an hour and a half and most of that time is talking about life—your life, their life, what matters.

But here's the tension: that's not what we show clients.

We show them the performance reports. The portfolio allocations. The financial plans. We lean on the numbers because we think that's what builds trust.

The reality? The value that we show to clients is actually not the root value clients desire.

Look, something fundamental shifted in this industry over the past 20 years. Yet, there is a great majority of this industry that continues to operate on the foundation built prior to that shift.

It used to be really hard to access investing.

You needed an advisor just to execute trades, just to get information about what was happening in markets, just to build a basic allocation.

That access was the value. The barrier to entry was so high that if you could deliver surface-level investment management, you had differentiated value.

Now? Robinhood. Betterment. Claude. ChatGPT. Every piece of market information you could want is free and instant.

Investment management has been commoditized.

So it's not that people never wanted connection with their advisor, it's that they never got past needing the surface-level stuff.

That always took precedence.

Now that investment management is just this thin layer that's expected, you have to go deeper. You have to deliver on the second layer: purpose, meaning, values alignment.

This is where “advice alpha” of the future resides. And advice alpha of the future resides in intimacy.

There's a framework that makes this concrete.

It's called the trust equation, and it says that trustworthiness is the product of three variables—credibility, reliability, and intimacy—divided by self-orientation.

Let me break down what each means for advisors.

Credibility is the intellectual dimension. Your CFP. Your depth of knowledge about tax law, financial planning, market history. The accuracy of what you say. This matters, but here's the thing: it's hard to differentiate on. Everyone has credentials. Everyone can speak intelligently about markets.

Reliability is the behavioral dimension. Following through on commitments. Meeting deadlines. Doing what you say you'll do. Again, table stakes. If you're not reliable, you're out of business. But being reliable doesn't make you remarkable.

Intimacy is where it gets interesting. This is the emotional dimension. Intimacy represents the degree of emotional safety a client feels when sharing personal, often vulnerable information about their fears and insecurities. This is giving space where the client feels comfortable sharing that stuff.

And I think too often we think we have a relationship with our clients, but we never have an intimate conversation because we think that's maybe too therapist-like.

But the deepest connected advisors are those that have the ability to have that intimate conversation. If your client doesn't feel like they can have that intimate conversation with you, you're really lacking on this variable and it's lowering your trust equation.

Then there's the denominator: self-orientation. This is the killer. Even if you have perfect credibility and perfect reliability, you can be deemed untrustworthy if the client perceives that your primary focus is your own self-interest. Asset gathering. The desire to appear intellectually superior. Your ego versus the client's needs.

Of this equation, credibility and reliability are hard to differentiate on.

Intimacy and self-orientation—that's where you can actually stand out.

In a world where technical skills are commoditized, how do you differentiate?

You go deeper. You lower self-orientation and increase intimacy.

Here's why this matters right now: more than 70% of heirs do not remain with their parents' financial advisor after inheriting wealth. And it's rarely about investment returns. It's almost always about a lack of trust and connection.

The younger generation often perceives their parents' advisors as a performance-first dinosaur who does not understand the digital native purpose-driven perspective.

I need to be honest with you—I caught myself on this one.

I've always said, "Don't build your business around generational wealth transfer. That's going to trickle in over 30 years. You can make money today." And that's true.

But here's where I was wrong: that mindset is exactly what killed Kodak. Exactly what killed Blockbuster.

They saw the future coming and said, "That's 20 years away. Why would I cannibalize my current business?"

And then they woke up and it was too late.

You don't have to change your whole business. But you should start doing some small things about it today. You can exploit what you're doing today while exploring what you need to do tomorrow.

So what does that actually look like?

It starts with different questions. Not "What's your 401(k) balance?" or "How much do you spend?" You should know that stuff. But lead with: What does a successful life look like to you? What do you want your wealth to accomplish for your family and community? What are we doing this all for?

Because here's the thing: enough is not a mathematical event, but an emotional one.

I'll raise my hand—I do this all the time.

I define enough based off a number. I back into it based on spending needs.

But no matter what I define, there's always this hesitation from clients. "Well, I think I may need more. What about inflation?" And even if they accept what I provide, there's something deeper going on.

Because there's never a number that makes it feel like enough.

Let’s say all of a sudden you now you have $10 million? The same worries, fears, desires, anxieties you had the minute before you had $10 million, they'll still be there.

I see it across the spectrum.

Enough is when you're living a life of purpose. And the only way to get to that is not through an Excel spreadsheet. It's through conversation. Through connection.

But I know what you're thinking: Where's the line? How do I know if I'm going too personal?

Here's my answer: Just be you.

Share your values. Share things about yourself. You understand where the line is. You don't need someone to tell you where the line is.

This industry makes us so restrictive because it's regulated and we're dealing with other people's money.

But you're human.

Be more human in these relationships and you will create deeper connection and a more differentiated relationship with your clients.

Let me tell you what I learned from those conversations after my dad passed.

When I talked to his clients—and he had the largest book of business in our firm—they all hurt so deeply.

They knew me already because my dad had talked about me, about our family story, about what we went through. They knew about my kids, what they meant to him. They felt connected to him and aligned on values.

And here's what struck me: my dad had almost double the number of families as other advisors in the firm (and the industry average).

Everyone always said, "Well, you just have to do so much work for each client. I can't possibly handle that many."

But my dad didn't work twice as hard. He created relationships that weren't dependent on the work. He met with all of them, yes. But the trust wasn't built on deliverables. It was built on: Are you there for me?

He redefined what success meant.

He turned the conversation away from portfolio performance—which you can't control—to income generation, which is more controllable. But that was the tactical side. It was the relational that mattered.

When they had meetings, they talked about life and values and how world events were impacting them. They talked about what mattered.

The research backs this up. Seventy-two percent of clients believe the true value of an advisor lies within the relationship itself, specifically citing trust, personal connection, and proactive outreach as the deciding factors.

We spend so much time on credible analytical tasks. But clients are evaluating us on the depth of the intimate connection.

We're constantly trying to control the uncontrollable, investment returns, to drive our relationships. We show the times when that works for us. We rationalize why that works to hold our clients. But the reality is that the thing that we do control, the thing that actually drives clients' perception and commitment to a relationship, is the relationship itself.

The quality of the relationship. The quality of the communication. The quality of advice. Return performance is so far down on that list, and yet we try to control it.

If we spent more time controlling how we communicate, how we create depth and rapport and trust and alignment on core values and meaning, that would drive more value than trying to outperform a benchmark.

This isn't an industry about performance.

This is an industry about connection.

Performance is something we show and we highlight and that people think we do.

But the ones who do it best? They rarely talk about performance. They just have a really good connection with their clients.

My dad had it figured out.

Not because he read about the trust equation. But because he understood something fundamental: people don't cry when they lose their financial advisor. They cry when they lose someone who understood them.

That's the opportunity.

That's advice alpha.

That's what creates retention when markets drop and loyalty when heirs inherit and differentiation when everyone else is still leading with performance reports.

Value is driven in the depth of the relationship, and that can only be measured via the strength of your connection, independent of portfolio returns.

The best is ahead!

-Matt