Outlining expectations and relationship boundaries in a letter of engagement when you take on a client can help prevent problems down the road.fizkes/iStockPhoto / Getty Images
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At some point, all advisors have a client who makes them want to rethink their career choice.
Maybe the person is aggressive, disparaging, or even abusive. Or they’re always late with a payment despite your excellent work. They want you to double their money like someone they saw on TikTok. Or perhaps they call, e-mail, or text – every single day.
For Janet Gray, certified financial planner (CFP) and money coach with Money Coaches Canada Inc. in Ottawa, a difficult client originally hired her to draw up a financial plan – and then barraged her with questions and demands for investment advice for her husband, their children, and even mother-in-law.
Ms. Gray, a fee-for-service planner who quotes a flat fee in advance of the work, was having none of it. She fired the client and refunded the money. Lesson learned.
“The spreadsheet went on and on. I had to say, ‘I’m sorry. That’s beyond my scope and the time I committed to doing this project,’” Ms. Gray says.
For advisors who are in the early years and struggling to build a book of business, it can feel like a very bad idea to push back and show challenging clients the door. Yet, firing a bad client can actually help catapult their careers to the next level.
Releasing bad clients makes way for better ones without the business strain, stress, and time wasted trying to appease someone who probably doesn’t even notice.
“You have to do a cost-benefit analysis,” says Christopher Dewdney, principal and CFP at Dewdney & Co. in Toronto.
Even a large account that produces revenue may need to be culled if you find yourself or your team without the time to assist others or bring in new business.
“As you get older, you become more mature and your business grows, so you have to reassess your book,” he says.
The best way to avoid the problem is to ensure it doesn’t happen in the first place.
Outline your expectations and relationship boundaries in your letter of engagement, says Mr. Dewdney, who also has in-depth conversations about values and mutual respect. Usually, that’s enough.
But sometimes the relationship slips over time. In 2019, he fired a substantial client after struggling with the decision because they began to disregard the time commitment that was negotiated previously.
The client wanted to be in daily communication with Mr. Dewdney, who started dropping hints that he could take his business elsewhere. But the man didn’t budge. Eventually, Mr. Dewdney had to be upfront and let him go. It wasn’t until much later that he learned the client had a history of being fired by advisors.
“We live in a world where there are options for advisors and for clients,” he says. “For what he wanted, he either needed to go self-directed or find somebody who’s willing to put up with that on a daily basis.”
Nipping the problem in the bud
Elke Rubach, principal at Rubach Wealth Holistic Family Advisors in Toronto, says she avoids frustrating clients by being picky about who she works with in the first place.
“It’s about fit and humility on the part of the advisor, an acceptance that, ‘I’m not for everyone and that’s okay,’” she says.
Ms. Rubach, a straight shooter who has a background as a lawyer, is not one to mince words. She doesn’t have time for potential clients who drag their heels about, say, writing a will or spending ample energy teaching their children how to handle the family wealth.
“So, I take a stand, and if people say, ‘I don’t have time for that,’ that’s fine. On to the next,” she says.
Ms. Rubach is also not afraid to stand her ground. A few years ago, she acquired a book of business from another advisor who was retiring. One of the clients was paying huge insurance premiums and she wanted to find out why. His response to her questions was far from civil and bordered on abusive. Eventually, she asked him what he did for a living. The client was head of capital markets at one of Canada’s main banks.
But she didn’t back down, telling her associate, “I’m not going to compromise or allow this guy to treat me like that or change our process because he has a big title,” she says. “It’s really simple; just be decent and firm.”
Impressed by her conviction, he stayed with her firm, and today she says they’re “best buddies.”
Going the diplomatic route
Not everyone feels comfortable being so forthright though, nor do you always have to be, says Ms. Gray. Diplomacy is key, especially if you want to avoid social media backlash later.
She says to use neutral explanations for why you can’t work with the client any longer. For example, “I see we don’t have the same goals in mind,” or “I find that I’m not going to be able to help you further, but here’s a resource.”
Mr. Dewdney says it’s also important to check your client list periodically and think about who to keep and who to pass off.
“Sometimes, you can simply outgrow a client and they can be better suited to someone else,” he says, noting junior associates could take over.
“If it’s a bad client, it doesn’t necessarily mean it’s a bad client for everyone. It might just mean it’s a bad client for you,” he adds.
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