You’ve seen many articles giving advice on how to keep a client. This isn’t one of those articles.
Nobody wants to see a client jump ship and take their business to another firm. But there are times when it’s not worth remaining in a client relationship and you need to let that client go.
On several occasions throughout my years in the financial services industry, I have had to walk away from or — as some would say — “fire” a client.
Let’s take a look at the top five reasons a financial advisor should walk away from a client.
1 The client gives you incorrect information about their financial situation.
Determining clients’ income streams and monthly expenses is critical to being able to give them the proper advice on their retirement. Two of my clients (a married couple) started working with me shortly after they came to one of my Social Security maximization workshops. At the end of the workshop, I offered the couple a follow-up meeting so that we could go over any Social Security optimization and retirement income planning questions they had. The husband was set to retire in two months at the age of 67. The wife was 58 and had a few more years to work.
My planning process for the couple was very thorough and covered areas such as income and expense analysis, completion of a risk tolerance questionnaire, and a session in which the couple and I could talk extensively about their retirement goals and objectives. After several meetings with the couple, they became my clients.
When the couple and I discussed what their monthly expenses and income streams would be after the husband retired, he told me they would spend $4,000 per month. Together we concluded their income streams would add up to $5,000 per month between the wife’s salary and the husband’s pension and Social Security.
The husband began his retirement, but only two months later he called me. He said he was unhappy that he and his wife couldn’t live on the amount of money they had coming in each month. After another round of meetings, we discovered that the husband had only guessed at their expenses, even though he had given us the monthly expense number in writing. As we dug deeper, it turned out their monthly expenses added up to $7,000 per month, not $4,000 per month.
With the new monthly expense number, the couple was forced to take some other assets and turn them into income streams sooner than they or I had expected. The conclusion was that the wife would have to work another five years to secure their retirement. The husband became extremely difficult to work with after that and when their annual contract was up, I decided to terminate my relationship with them.
2 The client does not follow your advice, especially upfront.
Your clients need to trust you. One sign of that trust is when your clients follow your advice. While I was advising a married couple, we discovered the husband had a pension.
Most pensions have several options available (lifetime only, 100 percent spousal benefit or 50 percent spousal benefit, to name a few). Because the husband was nine years older than the wife and had health problems, I advised him to take a lesser pension payout that would in turn pay his wife a 50 percent partial benefit at his death.
When the husband signed up for his pension, he took the lifetime-only option, which meant a higher payout for him. But at his death, his pension benefit would be terminated and his wife would receive nothing. This was why I terminated their contract. If your clients don’t take your advice, then why are you working for them?
3 The client is belligerent and disrespectful.
You work to serve your client with the best of intentions. All relationships go through their rough patches, and it’s always best for both sides to have open communication. Clients should feel comfortable voicing their concerns if they’re unhappy, but if they become belligerent and disrespectful, it’s time to move on from them.
4 The client is being dishonest.
If your client asks you to lie for them or sign a document that is in any way not true, don’t do it! No matter how long your relationship or how much income is involved, it’s not worth losing your license or ending up in court. On two occasions, I had a client ask me to lie for them. Both times, I refused to do what the client asked. Soon after that, they took their business away and I was happy to sign the papers to transfer their assets to another advisor.
5 You are not meeting client expectations. Or your client’s objectives have changed and their new objectives and goals do not meet your advisory skill.
Maybe you have been working with a client to accumulate assets, but you are not good at income planning, Social Security planning and distribution planning. Let’s face it — we advisors cannot be experts in everything. If you run into a situation where the client’s needs no longer mesh with your skill set, then find a partner who has that skill set or be willing to give the client up to another advisor who has the needed skill set.
Accumulation planning and distribution planning are very different. If you are good only at helping clients accumulate, then be willing to give them up to a competent distribution expert at the appropriate time.
As advisors, we work hard to secure and maintain client relationships. I would never tell you to walk away just because the relationship became difficult. However, sometimes the relationship is not salvageable or repairable. So we must be smart enough to listen to that old Kenny Rogers song and “know when to walk away, and know when to run.”
We must do what is in our client’s best interest. Sometimes that means becoming more educated, but sometimes, to maintain our integrity as well as our sanity, we need to walk away.