About the Series "Trust Blueprint — Real Estate Reconsidering the Essence of Wealth"
This series explores how we have moved from an era of "growing" assets to one where "what we leave behind" matters. Through real estate — the oldest asset class — we examine trust, succession, society, technology, and human value across 6 installments.
"My relationship manager has changed five times in ten years. Each time, I had to start over from scratch. By the time I began to trust someone, they were already replaced. Now, I trust no one."
I once heard these words from a wealthy investor with over a billion yen in financial assets. The tone was not angry, but deeply resigned. It reminded me that owning substantial assets and having someone you can truly rely on to manage them are entirely different matters.
Why Japan's "Trust Score" for Advisors Is Among the World's Lowest
In wealth management abroad, high-net-worth individuals often maintain relationships with the same advisor for 10 to 20 years — through changes in family composition, business ups and downs, and succession planning. The advisor is treated as a long-term partner who has shared all the important milestones of life.
In Japan, the answer is often different. "Relationship managers change every few years anyway." "They just want to sell products in the end." These words are not prejudice — they are hard-won wisdom from experience.
The lack of trust is not a people problem. It is a structural problem.
Structural Flaw #1: The Distortion of Commission-Based Compensation
The Products That "Sell" Are Not Always What's Best for Clients
In wealth management, there are two major compensation models. One is commission-based, where income is generated with each product sale. The other is fee-based, where compensation is tied to the client's assets under management.
In a commission-based world, a manager's income depends on "what and how much was sold." Higher commissions create stronger incentives to promote certain products. Even an honest manager, working within an organization that measures success by sales volume, will find it hard to always recommend what's truly best for the client.
The Fundamental Difference with Fee-Based Models
Fee-based advisors benefit when client assets grow — their interests are aligned with the client. There is no need to push any particular product. Doing what's best for the client is directly in their own interest.
Structural Flaw #2: Exclusive Dealing (Kakomi-komi) in Real Estate
The Problem with Dual Agency Transactions
The same structural conflict exists in real estate. In Japan's real estate industry, a single agency often represents both buyer and seller — collecting commissions from both. Yet a seller wants to sell at the highest price, while a buyer wants to pay the least. These interests are fundamentally opposed. One agent representing both sides inherently risks serving neither side fully.
Conflict of Interest Is a Design Problem
"Just find an excellent manager" seems reasonable. But this view has limits. Even the most honest managers are not immune to their organization's incentive structure. Trust lives not in people, but in structure.
5 Criteria for Evaluating an Advisor's Trustworthiness
1. Transparency of Compensation Structure — Is it fee-based or commission-based?
2. Continuity of the Relationship Manager — Can the same person continue working with you?
3. Independence of Products/Properties — Is there pressure to recommend in-house products?
4. Stance on Information Disclosure — Are risks and downsides proactively shared?
5. Exclusive Agency in Real Estate — Does the firm practice single-agency representation?
My View
At INA&Associates, we operate on the principle of single-agency representation. This is not a differentiation strategy — it is how we embody our core values of "trust and honesty" in practice, not just in words.
To truly represent a seller, we cannot simultaneously serve the buyer's interests. "Being on both sides" means "not truly being on either side." To protect client trust at the design level, there is no option other than structurally eliminating conflicts of interest.
Summary
- The root cause of Japan's wealthy distrusting advisors is not a lack of personal integrity — it is a flaw in the design of compensation structures and transaction frameworks
- In commission-based models, the manager's interests are structurally misaligned with the client's
- Dual-agency transactions and exclusive dealing in real estate contain inherent conflicts of interest, even if legal
- Rather than searching for the "right person," selecting an organization with the right design is what sophisticated investors should prioritize
- Trust lives in structure — not in individuals. Transparency of compensation, continuity of relationship, information disclosure stance, and exclusive agency are what matter
