My previous article, Clients Driving You Crazy? 10 Ways to Respond, clearly resonated with advisors.
Within 24 hours, I got three responses on dealing with challenging clients. Here’s what these advisors had to say:
I am trying to part company with a new client who came as a referral, and he’s SUPER negative and ‘hates’ people (everyone including me and even himself). In 39 years I’ve never run across someone as cynical as him, so I view him as a potential liability risk – today anyone can sue anyone for anything. Any tips for gently moving him on?
One of my largest clients is extremely volatile. There are some meetings when he’s a pleasure to deal with, others where he ends up yelling at me for the performance of his portfolio. I’d hate to lose this client (among other things he’s referred a couple of friends who are also large accounts) but the stress of dealing with someone who is so up and down is taking a big toll on me and my assistant.
And the third response was on APViewpoint:
We are a boutique money manager and, in our practice, I would say I personally have the least tolerance for clients with annoying habits, largely because I am too busy. Aside from decreasing my workload to deal with being overcommitted, I've also found it useful to assign annoying clients to another portfolio manager. Different personalities may work better together, or just a fresh perspective can help.
In every case but one, reassignment has solved the problem; in the case of the one client where reassignment only frustrated the new manager as well, we are resigning entirely from the business. While client retention is important, so is peace of mind, AND the opportunity to free up time to generate new business to replace the clients you let go.
When is a client a liability risk?
There are two cases where you have no choice except to part company (and do it right away): when clients are a liability risk or when they are emotionally or verbally abusive to you or your team.
There are a number of factors that can make a client a liability risk. On the specific issue of potential lawsuits raised in the first email, the best indicator of the risk that a client will sue you is whether he has sued or threatened to sue other providers in the past – not just advisors, but tradespeople, vendors and other professionals. People operate in patterns. If there is no evidence of suing or threatening to sue other suppliers, even if a client has a negative outlook, the risk of a lawsuit may not be higher than for your typical client.
Of course, that doesn’t mean that you necessarily want to keep working with them. In a case where he is difficult and negative but not a true liability risk, you still have to choose whether to work with him, but now it is a choice.
Parting company with clients
There are a number of keys to the messaging when you decide to part company with a client:
- It is clear and to the point – there is no ambiguity as to your message.
- It keeps the emotional temperature to a minimum.
- It minimizes the chance of ill feelings on the part of the client.
Here’s what to say:
Dan, from your comments in the past couple of meetings, I am clearly not meeting your expectations. What I've learned is that when clients feel that they are not being well served, it is best for them to begin working with someone else who is a better fit. In light of that, I think you would be best served if you found another advisor. I suggest that you find someone in the next 30 days and I will do anything I can to ease the transition.
Firing clients is no different than firing staff – once you have made the decision, you need to be unequivocal in following through, even though clients may suggest that you give it another try. After this conversation, confirm in writing that they will move to another advisor in the next 30 days and that you will provide relevant documentation to the new advisor.
When you’re on the fence
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Every advisor knows that not all clients will be a pleasure to deal with all the time. With some clients you’ll be on the fence – there are issues in dealing with them, but they’re not deal breakers and on balance you’d rather have these clients than not. How do you deal with clients who are on the fence?
One approach that I suggested in my article, Clients Driving You Crazy, was to write down the names of problematic clients and list beside each client the behavior that is causing issues. See if there are any commonalities in that behavior – and if the answer is yes, ask if this is their issue or your issue. Perhaps there is behavior that might not be a big deal in and of itself but that causes an over-reaction on your part.
That’s where the advice from the advisor who posted on APViewpoint comes in – sometimes changing the advisor to someone else on your team can change the dynamics.
Another approach is to have an open conversation with the client that starts the same way as the one where you part company, except here you try to turn it into more of a dialogue:
Dan, from some of your comments in the past couple of meetings, my sense is that my team and I may not be not fully meeting your expectations. Could we talk about that?
You hope this will lead to an open conversation about any irritants from the client’s point of view. As an aside, don't expect the client to change his behavior – you can't control that – but you can control your response to his behavior. Think about the things he does that press your buttons and think about whether you can respond differently.
Still another strategy relates to your fee for difficult clients. In my previous article, I suggested raising the fee of problematic clients and explaining that this was something you had no choice on given increasing regulatory costs, etc. ... so that at least you are being compensated for the pain. And if that makes them leave, fine.
One final complicating issue is if a troublesome client came in as a result of a referral. If you do part company, you have to think about how you manage this with the person who referred you without breaching any client confidences – perhaps something as simple as, "Thank you again for your confidence in introducing Dan to me. I did want to let you know that this has ended up not working out and that we have agreed that Dan will be finding another advisor. But just to reiterate, I truly do appreciate your confidence in introducing me to your friends."
When dealing with problematic clients, there is no cookie-cutter formula that works all the time. But by getting clarity on and being proactive in dealing with what is causing the issue, you will manage the damage from problematic clients for you, your team and your practice.
Dan Richards conducts programs to help advisors gain and retain clients, and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com.
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