TRUST me, I'm an Adviser......

Trust is a multi-dimensional notion integrating cognitive, emotional, and behavioral dimensions (Lewis & Weigert,1985). Use the  definition you prefer, but by any measure, clients of Australian financial advisers have justifiable trust issues.

Madamba & Utkus (2017), found within their own clientele  that trust in a financial advisory relationship can be divided into three components—functional,emotional, and ethical. Emotional trust has the greatest impact on overall trust, followed by ethical and functional trust.

Advocating for a client and acting in the client’s best interest are the top two drivers of an advisor's trustworthiness. While emotional trust has the largest influence in building trust, a failure in any of the components can compromise trust. Investment underperformance, neglect of the relationship, and unsound investment decisions are key contributors to the erosion of trust.

Functional factors

These refer to an advisors’ qualifications and skills, and the day-to-day operations of their practice including the development and administration of a financial plan. Functional trust accounted for 17% of overall trust.

Emotional factors

These are intangible aspects of the relationship that exists between the investor and financial advisor capable of eliciting affirmative emotions in the investor.

Emotional trust was the largest component, accounting for 53% of total trust.

Ethical factors

Cover practices or behavior that are consistent with socially mandated expectations of correct conduct. Such practices span the absence of a conflict of interest, complete transactional and informational transparency, charging reasonable fees, and acting in the best interest of the client. Ethical trust represented 30% of overall trust.

Cull on Trust - Australian Financial Planner Research

Cull and Sloan (2016) specifically examined trust in Australian financial planners and expanded on the attributes they believe are fundamental to client trust in their advisers as shown in the diagram.




Empathy+Integrity +Intelligence+ Transparency

The research empirically demonstrates that competence - both behavioural and technical - is a characteristic of trust in personal financial planning. What is frightening is that according to ASIC little more than 30%+ of Australian financial advisers have so much as a basic undergraduate degree; what an absolute farce. And they want to charge you how much to do what? That’s too much for doing in many cases nothing.

The work of Cull & Sloan suggested that increased legislation and improvement in the behavioural and technical competency of advisers can build consumer trust in financial advice. If only somebody had told the companies that have since conspired to drag financial advice into the mud through what amounts to larcenous acts against clients.

Grand larceny on scale in Australia

And so it is again, not for the first time in recent memory, a financial advisory industry has been found sorely wanting; in integrity, competency and sensibility.

The current Royal Commission into The Australian banking and financial services industry found that major operators, The Commonwealth Bank, ANZ, Westpac, National Australia Bank and AMP had financial advisers that failed to comply with the best interests of customers in 75% of advice files reviewed. 

It’s gratifying to see the market punish operators that sail close to the wind; AMP, for example, is now facing four class actions because of its fee-for-no-service scandal and the subsequent misleading of the corporate regulator. The wealth manager’s chief executive, Craig Meller, and chair, Catherine Brenner, have both been forced from their roles.  Around 30% has been wiped from the company’s share price in the past three months.

There should be no pity shown these firms. Their leadership needs to double-down on regulatory compliance and make efforts to evolve their core competencies, transactional transparency and fee-justification without compromise in order to rebuild a modicum of trust. They could do worse than hire 'C' level leadership from outside the industry.

The ultimate perversity of course is that in all of the available literature, “trust” is highlighted as the most important determinant in seeking a financial service professional for advice (Hung et al., 2010).

Of course, given the depressingly large number of cases of incompetence and fraud inflicted on paying customers ( in a true profession we have clients; in financial advice there are customers until the level of professionalism evolves) it would not be unreasonable to suggest that only a handful of financial advisers would read any industry-focused academic research, let alone understand it. They should be knocking down the door of people like Dr Michelle Cull of UWS and asking questions and accepting advice on how to improve. There are many passionate, qualified financial advisers who consistently do the right things, it's to them we must look for for leadership. They will need encouragement and support to implement the mooted ASIC changes from external technical experts. 

Australian Millennials Vote with Disinterest

Unsuprisingly, younger generations make very little use of professional advisors

Only 7.4% of Millennials who have any type of wealth management product obtained it from a financial professional but were much more reliant on their employer (89.1%). Generation Z shows a similar picture, with only 4.1% purchasing from a professional, compared to 91.7% from their employer. (Roy Morgan Research - Australia, 2017).




are not buying what you are selling


The challenge for professional advisors and wealth management customers is how to provide advice to low value customers and how to get them more involved in a topic of little interest to them.

“With the employer generally being the major channel for obtaining wealth management products, due to the dominance of superannuation, it is unlikely that they will have the resources to provide comprehensive financial planning advice, this is the role of the financial professional. (Roy Morgan, 2015)

How do we build trust with Millennials?

Providing persuasive design principles are not hijacked and twisted into deceit and manipulation, they can be used to guide interactions in general and technology interventions in particular that build trust, confidence and competence.

Even in this current dire circumstance, there is real opportunity for investment firms who can master the hybrid advice mix. Despite their love of all things digital, tech-savvy millennials will still require the human touch and nuanced advice a human advisor can give— particularly in more complex investing situations. Combining that with the speed, low cost and mobility of robo-advice would allow  firms to best serve Millennials moving forward.

This diagram (Accenture, 2017) summarises the needs of Millennials when it comes to tech-based service delivery. Australian (and NZ) financial advisers may want to engage in a complete overhaul of core competencies, fee transparency and the grafting on of a moral compass to their banal vision statements before seeking behavioral science and product development expertise from a professional services market who increasingly regard financial advisers with suspicion yet hold the key to opening the door to millennial wealth advice.


The next article will illustrate and explain how persuasion can be used ethically to lift trust and responsiveness in the financial advice market.


Burke, J. and Hung, A. (2016). Trust and Financial Advice. SSRN Electronic Journal.

Cull,M. and Sloan, T. (2016). Characteristics of Trust in Personal Financial Planning. Financial Planning Research Journal, 2(1), pp.12-35.

Debbich, M. (2015). Why Financial Advice Cannot Substitute for Financial Literacy?. SSRN Electronic Journal.

Kim, K., Anderson, S. and Seay, M. (2017). Financial Literacy and Financial Decisions of Millennials in the United States. SSRN Electronic Journal.

Madamba, A. and Utkus, S. (2017). Trust and Financial Advice. Vanguard Research. [online] Vanguard. Available at: [Accessed 28 Jun. 2018].

Dr Daryl Foy

Dr Daryl Foy is a Behavioural Scientist who specialises in the design of effective health behaviour change apps based on evidence including his own validated models for optimising persistent use. He consults to industry on how-to integrate persuasive design into LEAN product development as well as conversational UI. He can be contacted at