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Thursday, June 06, 2002

Earning Trust

by: Tony Pennino

Enron. Global Crossing. Tyco. The Merrill Lynch settlement. The Arthur Andersen trial. Investors' faith in the financial services industry has been rocked in recent months from these and other similar scandals. Mutual fund firms and other companies in the investment community have lost the trust of their clients. And firms are beginning to respond to those sentiments. Case in point: John Hancock.

Over the next few days, John Hancock is sending out letters to about 10,000 of its financial advisors. The message: begin to win back the trust of your clients.

The letter was written by Keith Hartstein, head of sales and marketing at the firm. His message to the reps in the field is that people are nervous -- not just about investing, but, in this post-September 11 world, about life itself. "Our job - together - is to try to restore the public's confidence and faith. We believe that the best way to accomplish this task is by communicating with your clients on a frequent basis. It's all about trust, and trust begins with communication," Hartstein writes.

In the missive, Hartstein provides some important statistics for the financial advisors:
  • less than 20% of the advisors contacted clients right after September 11,
  • among advisors failing to contact their client, 33% of clients are seeking a new advisor,
  • investors who were contacted immediately after September 11 do not indicate a great willingness to change advisors,
  • and clients who are contacted by their advisors in turbulent times tend to send in more money.
For the last, the executive cites October 1987 when clients who were contacted sent advisors an average of $260,000 in new assets.

Hancock has prepared letters for reps to give to their clients. The firm also has information to help reps explain bear markets and periods of volatility. It has also alerted its wholesalers to be available to help advisors.

Hancock makes it clear that trust is a key element to success in the investment business. And it is starting to reclaim that trust through communication between clients and the advisors in the field. Using the reps to make the case will no doubt be a key element in Hancock's tactics. One-on-one communication with a person clients' know will no doubt make a lasting impression over letters mailed or e-mailed to clients.  

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