Lessons from the Loss of a
Multi-Million Dollar Account
By Dan Richards*
April 14, 2009


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Dan Richards

Last week, I had a conversation that showed the price advisors pay for lack of attention to detail.

A successful tech entrepreneur – let’s call him Jeff – in his thirties started his company in the 1990s on a shoestring with little except vision and determination. With limited capital, he went through the typical tribulations of a start-up before developing momentum; last year he fulfilled every entrepreneur’s dream and successfully sold his company to a large multinational.

About five years ago Jeff began working with a financial advisor from a mid-sized independent.  A fellow CEO referred this advisor to Jeff, after Jeff decided to establish a corporate 401(k) plan for his firm. By the time of his company’s sale, assets in the plan approached $1 million and this advisor was also handling Jeff’s personal accounts and those of his senior team.

Throughout their relationship, Jeff was frustrated by his advisor’s lack of attention to detail and failure to be on top of things. On one occasion, they agreed to transfer a $1,500 account at a bank – but someone this never happened.  Another time, when meeting to conduct a portfolio review, the advisor forgot to include a significant non-registered account.

Sloppiness and lack of follow through became a growing problem and understandably undermined Jeff’s confidence in the advisor – it also became an issue with the other senior members of his team working with this advisor.

Nevertheless, Jeff wanted to give his advisor every opportunity to shape up. A few months before the sale of his company, he made a point of taking him aside and informing him of the upcoming transaction – and told him that now was the time to step up his service level and demonstrate that the advisor really wanted to work with him.

In spite of this heads-up, there was no improvement in the level of service. As a result, shortly after the successful sale of this company, Jeff and a number of his colleagues were introduced by their financial advisor on the transaction to a contact at a bank-owned firm, where they ultimately moved their multi-million dollar accounts.

At no time had performance entered into this decision – it was purely and simply driven by the loss of confidence in this advisor’s follow-up and attention to detail.

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