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The Wobbly Relationship: Clients Who Jump


It’s so easy to ignore clients. If you have hundreds, it’s easy for someone to get lost in the sauce. If you’ve embraced fee based business, the advisor is being paid regardless. What started as “Paying advisors for doing the right thing” (staying in touch) became “I never need to speak to that guy again!” These can be catalysts for losing clients.

Most people (possibly excepting professional wrestlers) avoid confrontation. Clients don’t put you on probation. They just vanish. The account transfers out.

The Case for Few (or Many) Clients

Years ago, the “smaller is better” strategy emerged. You can do more business if you work with fewer, larger clients. The logic was simple. You got to know them better. You increased share of wallet by introducing non-traditional products like insurance and lending. They gradually consolidated assets with you. Their friends became clients. You sold up and down the family tree.

Not everyone signed on. Advisors in the “many” camp didn’t want to give away accounts without being compensated. They felt every small account had the change of being the next Powerball winner. They rationalized the trailers added up. “If they need my help, they will call.” They forgot the rule; “If a problem develops in a client account and it’s under your production number, you own the problem.” Most advisors know an urban legend about someone’s client having bought a stock at $20.00 and riding it down to $2.00 without a call from their advisor.

What are the Warning Signs?

Lack of contact is usually top of the list for why clients leave. But what are the more visible signs?

  1. They don’t return calls. How am I supposed to provide advice if they won’t even speak to me?
  2. Ignoring your advice. Portfolios usually require constant rebalancing. In a fee based account, no transaction fees apply. You are paying attention. Problems develop when clients ignore your advice and refuse to take action.
  3. Adding an intermediary. This can be the kiss of death. An older client introduces a nephew into the picture. They must approve all the advice you provide before they will take action. Sometimes, it’s the client’s accountant.
  4. The serial complainer. They get upset over the smallest stuff! They can’t find a dividend payment on their statement. Their statement didn’t arrive. They can’t get you on the phone when they call at odd times.
  5. Silent but deadly. Ever have an account where everything goes wrong? If one e-mail vanishes into hyperspace, it’s theirs. If one stock declines the day after you bought it, it’s theirs. If one phone message gets lost, it’s theirs. Amazingly, they don’t get upset. They are calm. They are establishing distance.
  6. The dollar watcher. You call to provide good service, but they say: “OK, what do you want me to buy now?” You suggest rebalancing “What’s this going to cost me?”
  7. The spouse can’t stand you. You have a primary contact person in the relationship. You treat their spouse as a secretary or even worse, voicemail. They might have a picture of you on their dartboard. You detect the frosty tone in their voice.

Related: The Soft Sell: Establishing Yourself as the Alternative

Related: How to Easily Get Clients to Do More Business

What Can You Do?

It’s tempting to say: “Life is too short. I can do without them.” They might have been a good client once. This might be a radical change in behavior. You care about these people. Make the effort.

  1. Initiate a face to face meeting. Not Skype. We are going old school, sitting across from each other. It might be over dinner at a restaurant. You might visit them at their home. You want them to be as comfortable as possible. A Boston advisor led off with the comment: “Things haven’t been good lately.” Someone nearby might yell “Incoming” because a barrage of angry complaints often follows. They need to get everything off their chest. As their advisor, you are in a difficult position. You don’t want to admit guilt for something you haven’t done. (They might be recording this. Who knows?) However, you don’t want to refute points as they make them, either. That’s called arguing. It’s important to see things from their point of view. A good strategy is to wait until the storm subsides, relate to their frustration and make your points. It’s important to bear in mind that when you make recommendations, you have two points of data: Where things were and where they are now. When they are complaining, they have a third data point. Where things moved to. Your recommendations are based on information available at the time.

You haven’t turned yourself into a punching bag because you enjoy it. You want to save the relationship. Now’s the time to say: “How can we move forward together?” It’s very difficult for the client to say: “We can’t” after you initiated the meeting and withstood their onslaught. Things might be tender going forward, but hopefully you saved the relationship.

  1. Communicate through different channels. They think you are always selling every time you call. They don’t return calls. You have plenty of other communication tools in your toolbox. Send along your newsletter. It might be online or in print. Send a letter. Send educational material. Try e-mail. If they see you are educating them and paying attention to the relationship, they may soften up.
  2. Meet that spouse. Spouses can swing or break deals. They can work against you in the background. “I don’t know why you insist on working with her.” Take the battle to the home front. A Texas advisor calls when he knows the primary contact person won’t be home. He gets the spouse. He says: “We never met. We need to meet. Maybe I’m not the right advisor.” This initiates a visit to their home. The advisor conducts a thorough portfolio review, having researched almost anything they could ask about beforehand. Far more that 50% of the attention goes towards the angry spouse. The advisor is very respectful.

He wraps up with “Decisions should be based on information, not emotion. I will do my best to give you the best information that I can.”

Two strategies are active. The middle one is passive. They each fit for different scenarios. Would one work for a relationship you think is at risk?

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