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Signing up a new client – any client – feels like an achievement, especially for new advisors . Keeping money coming in is after all the number one priority. Over time however you’ll find that you have two types of clients: Clients you actively look forward to speaking to i.e. those who are pleasant to do business with, make realistic demands on your time, and are fully onboard with your ideas. And then there are the others – the ones you come to dread dealing with.
As a financial advisor you should aim to only work with clients who are enjoyable to deal with and profitable. It’s not only acceptable to prune out bad clients – but essential to keep your business healthy.
So how do you know when it’s time to let go of a client?
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1. When your clients don’t fit your ideal client profile
Make a resolution to, over time, weed out clients that don’t meet your ideal client profile . In future this will mean that you don’t have to deal with problem clients in the first place.
If you haven’t done so, draw up an ideal client sheet. Make a list of all the ideal attributes your perfect client should have – go into detail, for example look at age, geographic location, hobbies – or anything that could indicate whether they’d be a good fit for you.
Take inspiration from your best clients – they’re sure to have many characteristics in common. Use these traits to help you envision your ‘ideal client’.
Also, if you have a background in a certain profession e.g. medicine, this could help you establish a good rapport with doctors or surgeons. Perhaps you have a specialist knowledge of retirement planning ? If so decide to only work with clients actively planning for retirement. Add this to your sheet.
Once you’ve identified the type of clients you want to target, find out how to meet them.
2. When clients are not acting on your suggestions
There’s nothing more frustrating than clients who don’t appear to be listening to your advice. It’s sometimes the case that clients are too indecisive to stick to a recommendation. They need to be told over and over why it’s the right decision for them – but there’ll come a point when too much of your time is spent explaining the options, with no result.
Similarly, if you come across a client who never returns your calls or fails to turn up for meetings, even to sign paperwork – then it’s obviously not working out.
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3. When clients demand too much of your time
Once you take on a client you’re committing yourself to a long-term relationship that includes providing them with regular updates and calls – they should get a friendly call just for a catch up, even when you have nothing new to say.
However there comes a point when hand-holding certain clients becomes too much. If you start to receive non-stop calls, emails and messages with questions regarding their portfolio, alarm bells should go off. You cannot be available 24/7 to answer questions so decide when it’s time to draw the line.
From a practical point of view clients with larger accounts will be worth spending a little extra time with – but even multimillion-dollar clients’ demands can become excessive and untenable.
Related: Take Action: You Understand Market Volatility, Your Clients Don’t
4. When you sense there’s a lack of trust
When you first take on a client you won’t know each other well – and it takes time to build trust . If after time though you find a client is constantly second-guessing you, and asking your intentions on every recommendation, it could be time to call it a day.
5. Maybe you’re just a bad match?
There will be times when your service simply doesn’t match a client’s needs. As things go on it may transpire that a client is really seeking advice on stocks rather than someone to plan and manage their investments. If so, call it a day and move on to another client who is seeking a more holistic service.
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Once you’ve decided a client is no longer a good fit for you, tell them right away that you don’t think you’re the right advisor for them and that they could be better served by another company. You could even provide them with a contact. In any case, always stay polite and professional – don’t make things personal.
It can seem counter-intuitive to wave goodbye to clients and their business but once you decide to only deal with clients who fit your ideal client profile, you’ll start finding your work more enjoyable, productive and profitable .