This article article was published in the "New Rochelle Review" in the October 2005 issue.

“Life And Money”  TM –  Financial Planning and Trust - Part 2

By Frank Sisco

In the first part of "Financial Planning and Trust" in last month's column, trust was defined as an assured reliance on the character, ability, strength, or truth of someone or something.  Without having trust in people, it is very difficult to handle significant financial matters.  That column explored the many areas of our lives, where our trust has been breached, making it so difficult to trust, including regarding the financial services industry.

Here are some guidelines in sorting out how and in whom you can trust.

1. Enroll and engage - Reflect honestly on your trustworthiness and your own risk tolerance level.  Fully accept the fact that you need to trust in order to access important resources and information from others and in order to be a vibrant involved member of your family, your community and world.

2.  Questions of trust - Make it clear to individuals and companies that, before you place your trust in them, they must reassure you that they will act with integrity and responsibility for you and in your best interests. Listen carefully to their answers to provocative questions, like this one for a bank officer wanting your banking business - "Doesn't it bother you that your bank sells fixed-rate annuities that guarantee only the first year rate to the investor and then the bank cuts the rate for the balance of the surrender term?"  Or this question to a full-time insurance agent trying to sell you more life insurance - "Do you have an ethical problem knowing that there are other insurance companies with less expensive policies than the ones you propose?"  How about asking your financial planner whether there are no-load well-diversified index mutual funds rather than the front-loaded managed funds he recommends.  Or ask the registered representative of a brokerage firm her feelings about the fact that her firm recently paid over $10 million in penalties for violating securities rules and what has changed in the firm to justify future trust. Of your business' CPA, ask whether he or she has ever been involved in abusive tax shelters or other frauds like some of the top Big 5 accounting firms. Question your estate attorney about any relationships with life insurance salespeople.  Further on the relationships, ask all these financial advisors about their own personal falls from grace and the lessons they have learned which will speak volumes about the type of people they are, and the degree you can trust them.   During the discussions, share your own experiences and stories to reinforce why trust is so important to you.

3.  Don't place trust in information that conflicts strongly with your common sense and intuition, conflicts with long trends, and conflicts with your sense of values. 

4.  Monitor what happens to your financial situation and your involvement with the individuals and firms, speaking up when you get frustrated or feel the trust has been violated. 

5.  Do your part to show you are deserving of trust.  Hold yourself to the standard you hold others to.

6.  Make trust an essential ingredient in even the smallest of transactions.  Look people in the eye and speak truthfully and from your heart.  Extend yourself to others.  It is much easier to be trusting when you yourself are trustworthy.

6.  Start small in your own family, among your friends, in your community and then watch trust spread like it was contagious. 

7. As you deserve more trust and give more trust, extend the boundaries by enrolling others to do more for you because you trust them. 

About the author

Frank Sisco is a CPA and Personal Financial Specialist, and author of several articles about personal finance and issues of life and money.   His firm, Financial Management Corporation, is located in Harrison, NY.  Frank makes his home with his wife and daughter in New Rochelle, NY.  He can be reached at 914.381.3737 or by email at ideasmoney@aol.com, or visit his website at www.LifeAndMoney.com.

Submitted 10/5/05, 11:00am