I think we have to understand what was it investors were trusting him for, and how were they drawn to him to trust him. When we begin to understand that trust is our ability to RELY on a person, company, product or service to deliver an OUTCOME to us, and that OUTCOME is to:
- meet or manage our EXPECTATIONS
- meet our NEEDS, and
- keep the PROMISES made to us
...then we must explore what was driving these people to Madoff. They obviously EXPECTED that he would manage their money well, and make them money. They were driven by the NEED for either SAFETY and SECURITY, or ESTEEM (making money makes them feel good about themselves). What exactly he PROMISED them, I'm not sure, but GOOD RETURNS would have to have been one of them. He made IMPLICIT PROMISES to them based on his background, who he was, and well he had performed in the past.
Whilever the PROMISES match our EXPECTATIONS and our NEEDS, we are drawn to the person making the PROMISES. So, yes, there is a trust relationship. It's usually formed at a subconscious level, with little understanding as to how the trust was formed.
BLIND TRUST comes about when well meaning and 'trusting' people place their trust very willingly in someone who PROMISES to meet their EXPECTATIONS and NEEDS, and does not think about whether this person has the capability of delivering on those PROMISES.
SCEPTICAL TRUST can go too far the other way, where the PROMISES are attractive, but we don't trust the person behind them, so we procrastinate and often either decide not to trust, or have constant doubts, and can miss opportunities.
Striking a balance between these two is key to trust working for all concerned. Knowing that there are certain qualities that make up a trustworthy person, and checking against those before we trust is also key. Those qualities are:
- Open and Transparent
- Honest and with Integrity
- Genuine and Authentic
- Courageous and Decisive
- Reliable and Proven
- Caring and Empathetic
A truly trustworthy person displays all these qualities in balance, and yes, it's hard to achieve that all the time. For someone like Madoff, there will have been one or two of these qualities that were out of whack, out of balance, that should have been a warning sign to those trusting him with their life savings.
Sadly, this is happening throughout the financial markets, and is something I'm personally moving to shake up. We need to bring about a greater understanding about how and why we trust people and organisations, and then equip people with the necessary skills and knowledge to make proper assessments about whether to place their fragile trust in that person, organisation, product or service, and if so, to what extent.
Gargiulo talks about people 'putting all their eggs in one basket', an analogy we are all used to, but interesting when you know that I use an egg as the metaphor for trust. We simply shouldn't put all our trust in one place unless we are damn sure they are going to protect it, and we should be checking in to make sure our trust is safe there - not in a sceptical, suspecting way, but in a way that simply acknowledges that trust is fragile and needs to be handled with care.
Is there a 'dark side' to trust? I think the dark side exists only because we have not shed enough light on the whole subject.
