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Transfers of Trust

By Ray Sclafani | February 10, 2021

Close up of handshake on city background with business chart. Togetherness concept. Double exposure

Whether in the context of the work we do with advisory firms looking to merge, or building structures to facilitate the move of clients from a founder to a next generation leader in the firm, an effective transfer of trust is perhaps the most essential driver of success.

In his book The Speed of Trust, Stephen M. R. Covey makes a compelling case that trust occurs at the convergence of character and competence. He proceeds to outline the key behaviors that build each of these components, along with three shared behaviors – all of which are fundamental to a successful transfer of trust:


Character Behaviors
  • Talk straight
  • Demonstrate respect
  • Create transparency
  • Right wrongs

Competence Behaviors

  • Deliver results
  • Get better
  • Confront reality
  • Clarify expectations
  • Practice accountability

Character & Competence Behaviors

  • Listen first
  • Keep commitments
  • Extend trust


In order to establish genuine, lasting trust in any relationship – whether with clients, between founders and next generation leaders, or between the principals of merging practices – you need to demonstrate both a strong character as well as the competence to get things done.

Extending trust in M&A

First you need to trust yourself. That allows you to begin trusting others. And the more you extend trust to others, the more likely they are to extend trust back to you. It’s an incredibly simple, but effective framework; especially in the context of the work we’re doing with firms looking to merge.

We’re talking about a marriage here, where future divorce would be at best extremely costly and at worst, potentially disastrous. You need to get it right. Before rushing off to obtain a valuation on your firm, both parties need to sit down and engage in an open, honest, and candid conversation where you get tough issues out on the table. It’s the first true step towards building a level of trust which will make the ensuing merger process so much easier.

If you and a potential merger partner can’t establish that level of trust, simply walk away. Because moving forward without trust is nothing short of a recipe for disaster.

Transferring trust across generations

These same principles hold true when transferring the business from a founder to a NextGen advisor. We’re working with a number of clients on solidifying their succession plans, and these same type of tough “to the point” conversations need to take place.

First, founders need to be clear about what they want out of the succession and completely candid about the time frame for transition. What’s a NextGen successor to think if you establish a thorough transition plan that’s built around you exiting the firm in 3-5 years, and then suddenly you change your mind and push your departure out an additional five years? What sort of foundation for trust does that establish for having straightforward and transparent future conversations?

In addition to clarity around your intentions, you’ve got to commit to developing those next generation leaders. They not only want a clear time frame, they want to know what they need to do to improve their competence as a leader to drive results for the firm. What do they need to do to get better? They may have to confront some uncomfortable realities about their behavior, how they interact with others, or specific competency shortfalls. By identifying them and together working on them, trust develops.

For successful principals, delegating is often one of the most challenging hurdles to overcome. You need to be willing to let go of the reins to some extent. If you’re on a 3-year ramp to transition, think about putting together 3-year development OKRs for your future successor. These are the objectives we want to get accomplished. Here are the key results we need to achieve to get there. And then step back and let your NextGen take ownership of the objectives. Keep your nose in (to advise, consult, and mentor), but keep your fingers out!

Avoiding boomerang clients

Lately, many founders are also finding themselves struggling to address client trust gaps. Faced with COVID-driven uncertainty and volatility, clients who were “successfully” transitioned to NextGen advisors within the firm over the past several years are suddenly bypassing their advisors and reaching back out to firm principals to talk them off the cliff.

This can serve as a valuable lesson to NextGen advisors that they need to be constantly working to build trust with clients when markets are calm and positive. Demonstrating their competency and commitment to serving the client’s interests. Putting together solid financial plans and strategies. Making sense and talking straight. As a result, the client gradually develops trust, reinforced over and over with each positive interaction.

That way, when the market inevitably corrects, the likelihood of the client reverting back to the founder is diminished. If it DOES happen, however, the best approach is for the founder and NextGen advisor to talk with the client together – with the founder reassuring the client that the NextGen advisor has put together a terrific plan and implemented a solid strategy with plenty of downside protection to allow the client to ride out the storm.

By validating rather than second-guessing your NextGen, the level of trust between the two of you will skyrocket. He or she will be able to relax knowing that you aren’t stepping back in and taking over, but instead, simply offering support.

Coaching Questions from this article:

  1. How can you build greater trust with your firm’s future NextGen partners/owners? What actions can you take to provide greater clarity around transition timelines and competency development needs?
  2. What actions can you undertake to delegate more to future leaders and allow them to share in organizational decision-making?
  3. Sit down with your NextGen leaders and devise a structure for jointly addressing future “boomerang clients.” What steps will you take to validate and support their competency and capability?

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Topics: Trust

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