I read an excellent piece in last week’s edition of the FT Weekend Magazine by Tim Harford, the self-styled Undercover Economist. It was titled, When it comes to personal finance, who should you trust? Great question…

The article explored a piece of academic research on the sometimes contradictory advice given by ivory tower economists and personal finance gurus, but it also got me thinking about trust at a more fundamental level.

The value or ‘brand equity’ of most organisations is built on trust, and this is by no means only applicable to businesses. The damage done to the reputation of the Metropolitan Police by this week’s revelations about David Carrick have fundamentally eroded trust in that organisation.

Equally, there are many examples of companies that have destroyed trust in their products or services. Gerald Ratner’s legendary “crap” comment is but one example of how something as seemingly insignificant as a throwaway line in a speech can hole a business below the waterline.

For service industries, including financial services, trust plays an even more fundamental role because the ‘products’ are relatively intangible. When it comes to insurance, banking or indeed financial advice you cannot “suck it and see”, and you may not be able to tell if “it does exactly what it says on the tin” for many years.

It is for these reasons that financial services are also more open to abuse and fraud, and that only serves to further increase the importance of trust.

This presents a challenge because trust takes time. If one considers the vocabulary of trust it speaks to that incrementality: one can ‘build’, ‘earn’ or ‘gain’ trust, and this can take years. And yet it can also be lost in an instant.

Of course, there are things that any organisation or individual can do to burnish their credentials for trustworthiness, but these too may take time because they themselves are often based on age and experience, or professional qualifications that cannot be achieved overnight. Possibly hardest of all is reaching the point at which a business’s clients are prepared to recommend its products or services to others.

It might therefore be concluded that this process is largely passive. That organisations have to bide their time, do the right thing, improve their product or service and wait for trust to accumulate, whilst constantly guarding against anything that might serve to undermine it.

I don’t believe this is entirely true. I think building trust is more of an ‘audience participation’ game than that, by which I mean it’s about setting expectations. By defining the criteria by which you believe your product or service should be judged, particularly in the intangible world of financial services, you are effectively guiding your clients towards the basis on which they should trust you.

I don’t think this is just about a tick list of ‘deliverables’ (I hate that word), but more of a shared understanding, and this is something all businesses can work towards.