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Perspective NewsletterThere is not much in life that is more important than trust. It is the elemental glue in personal interactions, business relationships and society itself. It allows people to feel safe, collaborate, disclose important information, receive benefits and thrive.

It also adds to efficiency and saves both time and money because, with a trusted person or organization, you don’t have to vet and investigate every motive and decision. When trust is broken, it can be a long road to restore it.

As advisors to families of wealth, we think about trust a lot, because we are asked to hold information, confidences, and future plans for our clients on a daily basis.

Many years ago, I came across the Trust Equation developed by author and consultant Charles Green. I have used it myself in evaluating relationships of trust and have passed it on to hundreds of people, including my MBA students, staff and clients. I have found it helpful so I thought I would share it.

Here is the equation:

T = (C + R + I)/ S

It suggests that Trust (T) is created,or lost, based on four component factors.

The first is Credibility (C), which is related to the words we speak and how knowledgeable, expert and believable we are on a particular subject or issue. Someone might say “I can trust what she says on the topic of honey bees; she is very credible on that subject”.

The second factor is Reliability (R), which has to do with our actions, particularly our dependability and follow-through. A person might say “He said he would get back to us tomorrow and I’m sure he will because he is very reliable.”

The third factor is Intimacy (I). This one is a little more nuanced. Essentially it refers to the level of relatability, comfort and safety in dealing with another person. In this case, you might hear “I can trust her. I know she cares about me and has never broken a confidence in the past.”

As you may remember from your early arithmetic classes, division is more powerful than addition or subtraction. So no matter how much the first three factors add up to, the impact of the fourth factor, Self-orientation (S), can erode any trust you have built up.

Self-orientation is about the focus and intentions of the other person, and particularly whether they are concentrated primarily on their own needs/ opportunities or the other person’s. Even if someone is Credible, Reliable and has a high ‘Intimacy’ score, you can usually smell a highly Self-oriented person a mile away. You have probably heard (or said) “I know he’s smart and experienced, but it really doesn’t seem like he is listening to what we need and is just trying to sell us something. I’m not sure I can trust him.”

The trust equation is a handy tool to help you assess whether or not someone is trustworthy (or whether you are). My gut is often a good indicator of how much I trust someone, but I have found that this little tool helps me think through why I may be feeling the way I do. It also allows me to drill down deeper on areas of potential concern.

Trying assessing yourself, or the last person you had an interaction with. How did you/ they measure up? How can you improve? What should you watch out for? What should you be more aware of in your connections and conversations?

Trust is a key factor in any relationship – personal, business, and community – and paves the way for productive interactions, fruitful outcomes, and lasting bonds. The Trust Equation provides a helpful way of understanding what makes someone trustworthy or not.

For more information, you can go to:
https://trustedadvisor.com/why-trust-matters/understanding-trust/understanding-the-trust-equation

Northwood Family Office

Tom McCullough

Tom McCullough is Chairman and CEO of Northwood Family Office, which looks after the investments and integrated financial affairs of wealthy families with $10 million or more. He teaches ‘The Management of Private Wealth’ in the MBA program at the University of Toronto’s Rotman School of Management, and is also co-author of the books, Family Wealth Management and Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask.

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