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The Equation of Trust

I recently read a paper that was published by the University of Venice's - Department of Management on the structural equation model of trustworthiness in Financial Advisory. The purpose of the paper was to determine if trust between an advisor and client 1) is correlated to the existence of certain aspects of a relationship and 2) can be measured. The answer to both questions is a resounding yes.

The literature suggests that trust between advisor and client depends on two main paradigms: Anticipated Reciprocity and Social Proof. Anticipated Reciprocity describes the feeling that a counterpart in a relationship will repay your good deeds with good deed of their own. For example, if I hold the door for you, I expect you to also hold the door for me. Social proof is a very popular behavioral bias that explains the tendency of people to copy the actions of others in order to "fit in". For example, if you know that I am going to take the Jets to cover a -10.5 spread against the Colts tonight, you would be more likely to also take that bet (and you should, cause it is a lock!).

You may be asking your self "Why is Liam once again burdening me with incredibly interesting and impactful knowledge?".... I will tell you my tadpoles... I am telling you this because by all intents and purposes I am a Financial Advisor and you are my client. I tell you where to put your money and you listen because you believe that I am a guru, because I am.

What does this mean for our relationship? Well, for one thing it means that you probably already trust me, because in return for reading my post's I have provided you with incredible insight that has made you money (if you're smart). It also means that overtime YOU will be responsible for getting others to trust me. However, I do not trust you, and probably never will.


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You have too much time on your hands

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