Trust, Not Persuasion

Thought Leadership in the Paradox of a Behavioral Value Proposition

I think I have made very clear since I started B2Bahnsen the impact Nick Murray has had on me on my career. Particularly, my philosophy around the relationship between the advisor and the client has been significantly influenced by Nick, and there is little to no daylight between his work here and the philosophy we have put into practice at The Bahnsen Group. I would basically summarize what I am referring to this way:

1. The core of the client-advisor relationship is trust, and trustworthiness, and no advisor should ever work with a client who does not trust them. It follows from this in the most obvious way imaginable that no advisor should ever work with a client who does not follow their advice, or who regularly challenges their advice.

2. While #1 is really all that needs to be said, some important practicalities flow from it. Most importantly, the advisor does not seek to persuade but to be believed. This is literally a verbatim quote from the great Nick Murray. Being believed does not flow from an intellectual process but rather from the moral authority of the advisor.

3. We believe at TBG that moral authority is not declared but earned, and it is earned by truth-telling. Therefore, we seek to tell the truth, all the time, to have strong opinions, to believe in what we are doing, to have and to demonstrate strong conviction, and out of this, to work with those who choose to believe us and follow our advice.

4. One of the core truths we share and live by is that the advisor’s value proposition centers around behavioral modification – that the propensities of human nature (euphoria at the wrong time and especially panic at the wrong time) – require an intervening advisor. We believe that avoidance of the big financial mistakes is not merely a core part of a value proposition, but is worth multiples of the fee that a client pays for it. While we seek to add value in a lot of elements of the relationship and take a lot of pride in our planning services, stewardship of the entire wealth management process, and various other advisory solutions we provide on a daily basis, we will always place behavioral modification at the top of the value chain. We find market timing to be the promise of a fool, best case, and a charlatan, worst case.

5. At the risk of redundancy, we believe that it is necessary to really interview prospective clients on the front end to ensure that they are a good fit to work with us (for the reasons cited in #1-3), and after a client relationship is formed, should there be a moment where it is clear the trust has failed to persist, we believe it is necessary to graciously terminate those relationships. Taking a fee from a client who does not follow our advice is outside of our moral compass.

So take those in as you see fit, but I can definitely say that we have followed those above points pretty consistently throughout the history of TBG (and throughout the origins of my work as a sole practitioner). I surely made mistakes over the years, taking on clients I shouldn’t have or keeping a client longer than I should have, but with the latter it was almost always a mistake of excessive grace and patience – not the far less acceptable motive of “being afraid to lose the business.” For whatever reason, I have always believed Nick and believed the underlying mantra that the advisor’s business benefits from not working with poor fit clients.

Now, this gets me to the subject of today’s B2Bahnsen post: If the objective is to be believed and not to persuade; if the value proposition is behavioral and not market timing; if our practice is focused on planning and solutions and not market prognostication … then why do we create so much content centering around markets and the economy?

Sometimes it is helpful to answer a question by reiterating what the answer is not. We do not create content that promotes market timing. We do not offer a perspective on “things” that is driven by a short-term market outlook. Our point of view is never, in any way, shape, or form, antithetical to planning and solutions. For us, it really comes down to these three things:

1. We create a lot of market and economic commentary because it is authentic to who I am, and the perspectives are authentic reflections of what we really believe.

2. Without any need for elaboration or explanation, I simply love writing, and the process of research, analysis, and presentation of views animates me.

3. It builds trust with our clients. And this is the essence of a client-advisor relationship.

The first two don’t seem to me to require a lot more explanation. Every advisor reading this has read the typical “market bulletins” or “macro commentaries” that pass for punditry out of so many firms and research shops, etc. Without commenting on how good or bad they are, I do not believe anyone would say they reflect an “authentic” perspective. They are purposely vanilla, safe, and boilerplate to the point of being, well, wearisome. It would never concern me if someone didn’t agree with my writing, or didn’t like my writing, but it would bother me a great deal if there were ever an accusation that my writing was not authentic (actually, even that isn’t true; it would only bother me if it were true).

The heavy flow of perspective and content we create is an authentic expression of our own investment philosophy and viewpoint on world events, often blended with analysis of public policy, the Fed, and various macroeconomic or geopolitical occurrences. It avoids what all advisors should avoid (“the market may go down next week”), it leans into what we most care about at TBG (dividend growth, free enterprise, a certain political and cultural worldview), and I never, ever, ever begrudge doing it. When you love something, do more of it.

But what about that client trust thing? How does a business heavy on content creation and thought leadership build client trust? Well, first of all, it does not, if the content, commentary, and perspective were not authentic or based in love. Regurgitated cut and paste of someone else’s vanilla views may be reasonably true (or not), but it is not trust-building. It does not reflect the authentic passions and convictions of the advisor. It cannot, therefore, build trust. But the reason I believe, speaking only for myself and my firm, that we can build trust with an abundance of public commentary, is because it demonstrates to our clients (and prospective clients) who we really are. We are studious. We are engaged. We are workaholic. We are intellectually curious. We are passionate about markets and how they can be used to produce solutions for individuals and families. We are opinionated about matters of public interest. We are thoughtful about our core philosophy. We are committed to a variety of things (behavioral primacy, dividend growth, a particular asset allocation process, what markets fundamentally are, avoiding impediments and mistakes). The benefit for us does not come from attempting to win any kind of argument in our commentary, or to persuade others of our point of view – the benefit is merely the trust that is built in us being truth-tellers, diligent workers, and people of conviction. That’s it. We are not using commentary to say “our car is faster than that guy’s car” or “our predictions are more accurate than that gal’s predictions.” We are not saying “you’ll get 10% with us but only 8% over there.” In fact, any such claims would undermine the entire value proposition, which is to be trustworthy, and anyone saying such poppycock deserves no trust.

I say a lot in public forums (written commentary, podcasts, TV media, video, books, speeches) because I have a lot of things that animate me. I gladly accept the risk that what I say publicly will not always be liked by others, and can even be used against me (“you said Congress was unlikely to do XYZ, but then they did XYZ you moron!”) I take that trade-off without hesitation because I love the process of research, analysis, and presentation, and because it is authentic to me.

To the degree it generates interest in our firm and our way of doing things, that is a blessing for business development. I may be under-stating that point, but only because I am humble and honest enough to know that I never knew this would prove so valuable in building trust. What I know is that (a) It has proven productive for us to be earnest creators of authentic content, and (b) If I sold vacuum cleaners for a living and didn’t benefit in any way from doing it, I would still do the same thing, even if the audience was just me and my three closest friends.

Writing the Dividend Café has proven to be a real refuge for me over the years. I mean that very seriously – it is a therapeutic process to do the reading and writing that goes into it, and has been one of the real blessings of my advisory career. I truly believe I will be doing it for the entirety of the rest of my life. I have written things I regret. I have been wrong on things. And yet, through it all, I really believe our posture on being significant creators of commentary, opinion, and perspective, has built trust – for no other reason than I believe we have been trustworthy. To that end we work.