Everyone knows the 80/20 rule. Buried in that 20% of clients providing 80% of your business, there are a few skewing those numbers even further. What would you do if your biggest client left?
You might consider it unlikely. “They would never leave.” Perhaps they died. Maybe one of their children married into the business and they are moving their business over to be supportive. The reason doesn’t need to make sense. One morning you discovered they just left.
Plenty has been written bought increasing the stickiness of relationships. Other articles talk about getting to know the spouse and the nest generation, aka, “the heirs.” The issue isn’t about preparation. Now it’s about damage control and disaster recovery. Here are a few strategies:
1. Is this for real? Don’t take everything at face value. Over the weekend a radio program talked about a fellow holding Bitcoin at an online firm. He signed in, or more accurately thought he signed into his account at that firm. When he tried a second time, he discovered his balance had vanished. Call your client. Confirm they initiated the request to transfer.
Why: You want to be sure it wasn’t a bogus request.
2. Can we have a final meeting, an exit interview? Your client has told you there are really leaving. They vaguely explain they decided to go in a different direction. Based on the strength of the relationship, can you meet face to face one last time?
Why: The face to face meeting gives you the opportunity to read their mood and expressions. You can draw them out. Hopefully, they aren’t closing the account to go all in on a speculative investment. You can respectfully alert them to capital gain consequences if they sell out now, or afterwards.
3. Respect their decision. People generally want to avoid confrontation. So far, you have acted professionally. If they are moving to a competitor, acknowledge they are a fine firm.
Why: They will respect and remember your professionalism. This is valuable if their new advisor becomes critical of you and your firm. They will think “He doesn’t know my previous advisor at all!”
4. Avoid pleading. Your client hasn’t said: “I’m thinking of moving.” They are beyond that point. They are moving. Don’t become confrontational. This isn’t a negotiation session. “It’s about fees, isn’t it? OK, I’ll match whatever they are offering you.” Don’t tell them the door is closed and if they leave, they can never return.
Why: Don’t let the last impression you leave with your former client be a negative one.
5. Continue to advise. Let’s assume they own some individual equities. A few weeks later, something worked out. You are recommending your clients lock in their profits. Call your former client too. Acknowledge you aren’t together anymore. They bought this stock on your advice months ago. You have advised your clients to sell. You are passing the same advice along to them.
Why: They should feel you care about them as a person. You have taken ownership of your recommendations. If their new advisor “sold the stock” when the assets transferred over, they are aware of the profit they missed. (Perhaps the new advisor’s replacement suggestion worked out too.)
6. You are still here to help. There may be questions at tax time. What was my cost basis? How can I get a replacement 1099 form? You respond graciously to their requests.
Why: You communicate although they have left, they haven’t burned the bridge behind them.
7. Cultivate clients nearby. They referred friends. Fortunately, they are still clients. Give them good or even better service than before. Suggest stocks, if appropriate. Help them actively manage their portfolios.
Why: If they are doing well and making money, they will tell their friend, your former client. They will thank them for making the connection. They will likely talk about how well they are doing.
8. Check in after six months. A New York advisor uses this strategy. She calls after a few months. She says: “I realize you left several months ago. You had your reasons. I respect that. You were a very important client. Has everything worked out the way you expected?”
Why: There might be a thought to be greener on the other side, but once you cross over, you realize it’s the same grass. They might be regretting making the move. Pride keeps them from calling you. You are meeting them halfway. “I was meaning to call…”
9. Learn from the experience. Suppose the client is lost forever. Review the circumstances leading up to their move. What might have happened? Were there warning signs? Do you have any other clients on the same trajectory?
Why: It’s a teaching moment. Try to limit your losses to one relationship.
We hope it never happens, but someday a big client might leave. You need a plan in place.