Building Trust as Finance Shifts From Traditional Advice

Transparency as a Rising Concern

Valerie Rivera, financial planner and founder of FirstGen Wealth, said the shift the industry is seeing is, in part, due to transparency concerns.

“If we think about it, why is there a high level of mistrust in the first place?” Rivera said. “I think some wealth management firms have earned mistrust due to their lack of transparency. One example of that is clients not being able to understand what the cost of things is. That’s huge.”

In a January report about how the wealth management industry will transform in the coming decade, McKinsey & Company determined that “consumers of wealth management services will come to rely on new sources of trust,” outside of traditional models, such as online networks, algorithms and large language models.

Waning Confidence in Key Institutions

McKinsey warns in the report that “polarization, misinformation, and regulatory lag may erode faith in governments, corporations, and financial intermediaries. Instead, we may see the rise of a new paradigm, in which digital and distributed trust are grounded in transparency, data security, and verifiable systems, rather than reputation alone.”

Rivera shared that advisors, especially those who are going independent or focused on serving younger clients, should simplify their language around fees and services they provide. This might include posting real-world examples or case studies about how their area of expertise can benefit clients.

“Just being able to state in dollars what the fee is,” can help advisors to grow trust, Rivera said.

“A lot of firms may hide behind charging by percentages (of assets). I’m not trying to say charging by percentage is wrong. But not being able to state a cost range in dollars, I think that’s done by intention. (Firms) could say: here’s a percentage fee and here’s what that means roughly in dollars within a certain range. And if we look at things like mutual funds and ETFs, and the fees charged to those, that’s hidden according to so many people’s purview,” she added.

Digging for Information

“Even 401(k)s, or other forms of work retirement plans, you may have to dig through the prospectus or fact sheet to even get to the fees. The transparency around the cost of the products that you hold is a big thing causing mistrust. Firms can say: ‘Here’s what our fee means per thousand dollars,’” Rivera said, adding that fees, or fee ranges, should be more clearly and prominently stated on advisors’ websites.

“As long as the broader financial services industry wants to hide things, there’s going to be mistrust because they earned that mistrust,” Rivera said.

Gen Z and Millennials Turn to Social Media for Advice

The McKinsey report noted that fewer young people will likely turn to traditional wealth management services as the years go by.

“Today, 76% of Gen Z and 65% of millennials already seek financial advice online or via social media instead of from financial institutions,” the report said, noting that 14% of Gen Z say “they would turn to a financial professional first when faced with a question about finances, compared with 39% of baby boomers.”

“At the same time, the wealth relationship would evolve from ‘trust me’ to ‘show me,’ where confidence is earned through transparency, explainability, and consistent outcomes,” the report said.

While Rivera has seen that younger individuals are turning to non-traditional sources for financial advice, she noted that “it’s not just younger people” making these shifts.

“One client, they cosigned on a $10,000 Parent Plus loan for their child 10 years ago, and they owe more on the loan today – $25,000. They sent me the entire ChatGPT (analysis they pulled) and asked me what I thought about it. And the information was so inaccurate. You can very easily be steered down a wrong direction, or just a specific direction that doesn’t take everything about your unique situation into consideration,” Rivera shared.

A Question of Cost, Access

There’s also a growing issue of accessibility and affordability driving consumers to other outlets for their financial services needs.

“There’s the concern of whether you can afford to hire professional advice. And some people may not understand the cost of not using professional advice,” she said. She added, “that’s why these other (non-traditional) models are being used, because there is a gap to be filled.”

“My fear is that the people who get burned early will have a mistrust in the financial system, but really they went to the wrong place,” Rivera said.

McKinsey offered that, “while wealth management firms cannot directly affect overall sentiment among potential clients, they can work to counter them by designing trustworthy systems — through governance, cybersecurity, and ethical AI — and cultivating trusted human relationships that convey empathy, discretion, and continuity,” the report said.

“The firms that thrive would likely be those that master both, proving that in an era of digital fragmentation, trust can be rebuilt through design,” the report said.

Other articles by Danielle Walker:

• Advising Public Sector Clients Through Times of Upheaval
• Indiana Law Sets Stage for Broader Crypto Use in Retirement Investing
• How the US-Iran Conflict is Impacting Portfolios and Advisors

Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.


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