Trust and trustworthiness: what’s the difference and why does it matter?

Across industries, the notion of “trust” is often at the forefront — even rising to the level of being a buzzword in some cases. But I think we are having an incomplete conversation – and companies that implore customers to trust them have it backwards. They should be focused on being trustworthy — which is significantly more important and reflects a much deeper commitment.

Let me explain what I see as the difference. Trust is the near-term perception or leap of faith on which to base a decision. Trustworthiness is earned through an active pattern of behavior over a period of time. Trustworthiness is based on a simple question that can be answered definitively: has a company consistently lived up to its commitments? In other words, you don’t convince someone you’re trustworthy — you earn it over time.

In this spirit, I’m not asking people to simply trust Northwestern Mutual. I want us to earn their view that we are truly trustworthy. I want them to look critically at our business,  history and behavior and assess whether we have proven ourselves to be authentic, consistent and committed to our policyowners’ best interests. Based on a pattern that has been established and will continue, they can truly conclude we are trustworthy. This thinking has been a hallmark of our company for generations – and it drives our business.

Mutuality at the core of trustworthiness

Trustworthiness is built into our business model as a mutual company. Northwestern Mutual was established in 1857 with a mission to do what’s right for our policyowners. Even the language we use underscores this point. Our customers aren’t referred to as policyholders, they are policyowners. As a mutual company, our policyowners come first and we are here to help them achieve a lifetime of financial security.

The language is a little lofty but one quantitative study found that trustworthiness can be defined as the trusting party’s evaluation, based on certain factors, of the likelihood of the company “acting in her or his interests in a situation entailing risk.”

That’s an excellent description of how trustworthiness applies in our business. Our policyowners put their well-being in our hands in situations that involve protecting against very significant risks – including serving their loved ones if they die or become disabled. We put our mutual values into action by doing what’s right, taking the long view, delivering excellent product value, maintaining superior financial strength and building lifelong relationships. We are there for our policyowners when they need us most.

Our network of financial professionals play a critical role in this. They listen with empathy, ask questions that get to the heart of what truly matters to policyowners, and deliver with products and services tailored to their particular needs — and that has been especially true over the last year as people sought calm, reason, and guidance through difficult circumstances.

We also have a unique and differentiated way of helping people build financial plans that both protect against risk and help people build wealth through the future. When your financial plan includes both insurance and investments, people can both protect what they have and prosper for the future — and we have proven that this approach leads to clients getting better outcomes.

Trustworthiness as a competitive advantage

I believe that trustworthiness actually drives our business in both good times and through challenges. I’m not alone in this thinking — and other prominent professionals have noted that trustworthiness is a competitive advantage across industries. “This capability distinguishes you from the competition, attracts both employees and customers, and can earn you an enviable reputation among customers, investors, regulators, suppliers, and policymakers.”

They continue, “The pursuit of trustworthiness is not a purely altruistic practice. It is a choice that some companies make to establish themselves in an age when corporate reputation matters.”

For us, and through our 164 years in business, it has always been an age when this matters.

Financially, we’re the strongest company in our industry with the highest financial strength ratings. Broadly, our ratings make us one of the strongest companies in America across all industries. We’re proud of our success but are also working hard every day to prepare for the future. We know that maintaining our trustworthiness requires that we have capital and contingency plans for multiple scenarios, including major disruptions. We are starting 2021 in a historically-strong financial position - the past year didn’t deplete our strength; it fueled it. We continue to listen to policyowners and innovate on their behalf to ensure we are delivering the tools and perspectives that they need to reach the financial security they deserve.

A history of consistency

Since 1872, we have paid a dividend every year, through two world wars, the Great Depression, numerous recessions, natural disasters and even a previous global pandemic. We pay the highest possible level of dividends while maintaining our exceptional financial strength — and we have added more than a billion dollars to our yearly payout since 2017.

We have proven that challenging times such as the current pandemic reveal character, staying power and trustworthiness. That has been a powerful draw in these uncertain times. People have a choice about where to build their financial security and they have resoundingly chosen Northwestern Mutual through the volatility of the past year.

In 2020, we welcomed a record number of new clients, surpassed $1 billion in new life insurance sales, announced a record dividend of $6.2 billion for 2021, and saw strong investment performance in our general account. Our persistency rate — the number of policyowners who stayed with us — was 97 percent, the highest in the industry.

The early leaders of our company wrote a powerful statement back in 1888. They vowed to preeminently be the policyowners company. That laid the foundation for us to build trustworthiness that endures. Trust, by contrast, seems small compared to a generations of earned trustworthiness.

Every company is different, of course, but our long experience has shown a number of proven ways to build trustworthiness, including:

Competency counts — a lot. If you aren’t capable of doing what you say you can do, trustworthiness is impossible. Competency, combined with reliability and having the customers’ best interests at heart, are essential pillars of trustworthiness.

Be open and forthright. People are basing important life decisions on what you tell them. Be sure they have all the relevant information and that you’re fully transparent at all times.

Stay close to customers. Cultivate a culture and follow practices that keep you in close touch. You can’t know if your customers’ needs aren’t being met — or how to evolve to serve them better — without a constant dialogue.

Establish practices that support ethical behavior. Employees work within the systems and cultures companies establish. Employees must understand that you are there to support them in doing the right thing at all times for customers.

Decide for yourself

There are plenty of companies asking people for their trust. We see it another way. Throughout Northwestern Mutual’s history, earning and demonstrating trustworthiness has always come first.  Our policyowners know they can rely on us to be authentic, competent and always have their best interests at heart. This allows them to face the future with confidence.

Over 164 years, we have built a reputation for putting our policyowners first. Ask the critical question that determines trustworthiness: has Northwestern Mutual lived up to its commitments over time? It’s not through chance or luck that we have thrived; it’s because we have proven ourselves to be trustworthy when our policyowners have needed us the most.