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Market volatility is unsettling for most financial advisors. Dealing with up and down conditions is tough, but what makes it even worse is the emergence of “toxic clients” who begin calling frantically. These clients are “toxic” because they can have a poisonous effect on both the advisor’s mental and physical health.
Advisors who consult with me complain about anticipating these dreaded calls from clients who suffer from what I refer to as market “Collapse-O-Phobia.” They continually demand explanations and/or reassurance from their advisor. Dealing with these clients taxes the patience of advisors and exacerbates their frustration, self-doubt and anxiety, raising the probability of advisors succumbing to burnout.
Because many advisors are hesitant to send any business away, they will put up with unbearable, demanding, self-centered clients, whose behaviors can add exponentially to the advisor’s career-related stress.
But, as their advisor, you have a choice. You don’t have to retain these clients. Many advisors who have culled these clients from their “herd” note that because their stress was dramatically relieved after doing so, they were much more successful prospecting for replacement clients, thus they did not suffer a loss of AUM as a result of eliminating the toxic ones.
Undoubtedly, you will meet prospective clients with these toxic traits, but you won’t see the traits because these prospects will be on their best behavior, waiting for you to sign them on. Many may be high-value prospects, thus tempting you to ignore the warning signs as you sell them on coming on board. My goal is to help you to recognize toxic traits that may be lurking behind a veneer of good behavior and make the hard decisions about whether it is in your best interest to take on or retain such people.
For current toxic clients, I suggest doing this culling on your birthday or anniversary, etc., so that you give yourself the wonderful gift of peace of mind.
In my book, “The Financial Advisor’s Ultimate Stress Mastery Guide,” I describe 10 toxic personality types you are likely to encounter and which you should consider avoiding or eliminating from your practice. Because you have not learned how to recognize the warning signs prior to accepting these types as clients, it is highly likely that you already have such clients in your practice. I will describe the first two types here and the rest in subsequent articles.
1. The Abusive (Or Abrasive) Alan
This is a hostile, disrespectful person who keeps others at a distance with his abusive, insulting “candor.” He doesn’t use diplomacy in communicating and believes that being direct and “telling it like it is” all of the time is a virtue. He seems to thrive on provoking and bullying people in a seemingly desperate need to show how smart he is. In fact, he feels powerful by “putting down” other respected people, such as his advisor.
Since this is often a high-value client, he believes you will continue to take whatever he dishes out; but can you afford to be constantly provoked by a client who has a chip on his shoulder from childhood and will act out a lifetime of insecurity and anger, attempting to bully or belittle you every time the market takes a skid?
2. The Controlling Connie
“Control freaks” tend to be all-or-nothing thinkers, fearing that if they are not in control of everything in their lives, they will lose it all. They often expect perfection from everyone they deal with, so they hire you, expecting the perfect performance—consistently.
Since it’s impossible for these clients to delegate complete responsibility to you, they micro-manage you, wanting to take part in and question every decision you make. Is it really in your best interest to retain a client who questions every move you make, worries about every dip in the market and obsessively questions most of your decisions?
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3. The “Eddie Haskell” Passive-Aggressive Client
If you are in your late 50’s or older, you undoubtedly remember this fictional character from Leave It To Beaver , the popular 1950s TV show. Eddie was a classic example of a passive-aggressive, toxic personality. This type of person tries to curry favor with you by slyly complimenting you, hiding his shallow, sneaky character and hostility behind a veneer of “charm.” His main agenda is manipulation, while trying not to be obvious about it. If he slips and lets his hostility out, he covers himself by exclaiming, “ I was just kidding .”
These people are phony, kissing up to anyone whom they believe can do them any good. Their needs always take priority over yours.
You obviously can’t trust such an individual and what he says. How will you ever be able to get an accurate feel for this client’s needs and concerns if he is a phony with you, while maintaining his hidden agenda?
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4. The Gloom-And-Doom Debbie
We all know people who constantly bemoan their bad luck and predict that bad things will continue to happen to them and their money. These pessimistic, negative people always feel like victims. If there are two ways to look at a situation, they always choose the negative way. In their catastrophic thinking patterns, they are filled with “what if’s.”
Any good news you give them about their financial situation will be quickly shut out by the first negative thought that comes into their mind. You show them how well an investment turned out and they respond with a “Yes, but…” In spite of your positive outlook, they believe that it’s inevitable that something terrible will happen to their portfolio.
Is it worth it to be dragged down by the heavy, negative energy of such clients?
5. The High-Maintenance Marty
This type of client needs to be hand-held through every decision for him to feel safe and secure. Sadly, he maintains a serious lack of self-esteem and rarely feels secure.
This client will become very dependent on you for constant reassurance and he will call regularly to see what decisions you have made in managing his accounts.
Warning: This dependency on you can bleed over into much more than your role as his financial advisor. Once he sees that you care and are responding to him, he may depend on you to help him make everyday decisions. He will look at you as his mentor, confidante or counselor.
Can you afford to spend the time and the emotionally draining outcomes necessary to manage such a needy client?
6. The Histrionic Harriet
This client has been rewarded in life because of the attention she gets with her dramatic, emotional, over-reactive behavior. Often exhibiting narcissistic qualities as well (see the Narcissistic Ned, in Part 3 of this series), you will exhaust yourself trying to accommodate her.
If you have clients who are actors, on-camera personalities, politicians or celebrities, you know this type. In their profession, they are praised and rewarded for exhibiting this behavior, but if this becomes part of their persona, these behaviors can weave into all of their interactions. You never know if you are dealing with the real person or the showman.
While they are often viewed as charismatic, charming, fun, lively and interesting, they become “over the top” when they don’t feel as if they are getting the attention they demand. They often get frustrated or irritated with situations that involve delayed gratification. Because they are used to immediate gratification, they demand to speak with you immediately. This makes them very difficult to deal with during down markets, for example, when they want explanations now !
7. The Narcissistic Ned
This client is an elitist and has a high need to be admired and adored. He is so wrapped up in himself that he believes he is your most important client, insisting on your attention whenever he wants it. Since he feels entitled (perhaps because of the amount of fees he pays you), he may insist that your assistant should interrupt you to take his call.
These people spend most of their time looking for attention and accolades from everyone they meet. Do you have the patience and wherewithal to give this energy-zapping client the time and consistent praise he demands?
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8. The OCD Olivia
These clients are constantly anxious and attempt to moderate that anxiety by controlling every possible detail in their lives. This affects their interpersonal skills as they try to control conversations. Having difficulty giving up control to anyone, they cannot delegate decisions and must be in on every decision that you make on their behalf.
What is really frustrating is that they are so concerned with being perfect and not making mistakes that they ruminate for hours over even little decisions. This client is very difficult to work with and take a tremendous amount of your time, as you have great difficulty getting her to make timely decisions. You may even have to go into excruciating detail with her because of her underlying fear of making a mistake.
Can you afford the frustration that comes with this kind of client?
9. The Type A Ted
You are very familiar with Type A personality traits since it is highly likely that you possess many of them yourself. Since so many successful people possess Type A characteristics, it is highly likely that many of your clients fit this pattern. Type A traits are not a problem, per se. It is only when the traits of having to be in total control and be perfect come into the equation, that they can be quite toxic. Fearing the loss of control, such clients are easily angered and aggressive. They go way beyond assertiveness in dealing with everyone who they perceive as a threat.
With both of you having the need to be in control, can you see how keeping this client in your practice will ramp up your stress?
10. The Wishy-Washy Wanda
Constantly worrying about making a mistake, this client vacillates back and forth regarding any financial decision you need her to make. Indecisiveness is the key to her sad existence. An extreme people pleaser, she tries to determine what YOU want her to say, rather than tell you how she really feels. She doesn’t want to offend you or have you judge her negatively.
These clients are chronically unhappy people because they rarely get their needs taken care of; instead, they spend all of their energy pleasing others, including you. Although she may be easy to manage because she wants to please you, you will never really know her true feelings and fears regarding her financial situation.
Can you afford to have these type of demanding, dramatic clients in your practice?