Why you’re more likely to trust a financial adviser who acts like your doctor

 

Variations of the old chestnut – trust takes years to build but can be destroyed in seconds – have been around for decades. So it might come as a surprise to learn that there is no scientific evidence to support it. Indeed, science has revealed that trust is not something to be built and destroyed at all — trust is two things to be built and destroyed.

Our decision to trust is always based on two independent judgements we make about the trustee. The first judgement is our perception of the other’s intentions towards us. Does this individual have our best interests at heart? This evaluation has its roots in our evolutionary approach-avoidance mechanism so, not surprisingly, it is the most important of the two. It is also made very quickly. We can decide in a millisecond whether we think someone is ‘on our side’. But that judgement is also very fragile: the perception of good intentions vanishes at the first sign of selfishness.

The second judgement is based on our perception of the other’s ability to act on those intentions. Does this individual have the skills, resources, contacts, etc., to make good (or bad) things happen? Competence judgements require observation and due diligence, so they take time to build, but they are also very resilient to the occasional setback. A positive competence judgment decays with each observed poor outcome….[continue reading on the MarketWatch website].

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.