When someone approaches you with their story of a client-adviser relationship gone wrong, don’t think of it as stealing a client when offering to help them, but rather as helping a prospective client address a problem and move to a better situation.
Often clients complain about their adviser. It is human nature to complain when things do not work out. Some complaints are serious and changes will need to be made.
Very possibly a client’s adviser may have put his own interests ahead of the client. They may have recommended products with higher fees when others were more suitable. They may have given inappropriate advice.
Your prospective client may have outgrown their existing relationship. Often this happens when the adviser works in one segment of the business. The adviser might offer insurance but not investment products or lending services. The client’s needs have changed and one product category no longer provides all the answers.
However, the most frequent failing of advisers by departing clients is lack of contact or attention. The client feels taken for granted. They are rarely contacted and their calls are rarely returned.
Also, there is a dark side to running a fee-based business. The original logic of charging clients a fee on assets is the adviser is paid fo
The most frequent failing of advisers by departing clients is lack of contact or attention. The client feels taken for granted.Thinking about themselves. Outgrowing the relationship. Being taken for granted. It does sound like a romance turned sour. So how do you leave this lover?
Beginning with the assumption that your prospective client has a valid reason for leaving their current adviser it might follow that they do not know how to have a conversation to effectively end the relationship. Clearly, you cannot have it for them or offer to write it out. But you may want to role play and help them with structure of such a conversation.
Think of it in three parts: What is the issue? Why is this a concern for the client? Finally, what action is your prospective client going to take? This approach is simple and it makes sense. If the adviser becomes argumentative they can restate the three parts over and over.
Ignored
Clients pay fees to advisers and so have a right to expect something in return. They deserve respect.
Issue: A couple of years ago we moved to professional money management. Previously you were calling regularly with suggestions on buying and selling.
Concern: I have not heard from you or your assistant during 2012. I know you cannot control the market or performance, but you should have been letting me know how I am doing.
Action: I am moving my account to another firm. They asked me how often I wanted to be contacted. They have also pledged to keep in touch and to provide quarterly reviews of how my account is doing relative to the market.
Outgrown
Clients are often business owners. Businesses expand. Clients’ lives get more complicated. They marry and start families. They may have been with an adviser for a long time. Now they have needs requiring specialised knowledge. Their current adviser may have stopped learning or become comfortable with a narrow set of products.
Issue: We have been together for years. You were with me when I graduated from medical school 15 years ago. Over that time I started in private practice and have built a practice with 12 professionals. Things are a lot more complicated now.
Concern: I have made money, now my concern is keeping it and passing it on to my children and grandchildren. My accountant suggested interviewing several practices specialising in wealth management in London. I have met with several and chosen one. They have said it would be best if all my assets were held in one place.
Action: I appreciate everything you have done, however my needs have grown beyond investing. For that reason I have decided to consolidate my accounts with another adviser I’ve been in contact with..
Best interests
Clients know if their adviser is overtrading or getting them into products with high-fee structures. They feel the adviser is taking advantage, making money at their expense.
Issue: It has been a difficult five years in the market. I know I have not got back to where I started. No one I know has been that lucky.
Concern: What I do not understand is why it cost me so much money to not make money. When I met with my accountant she showed me what I have paid in fees, not only this year but over the past five years. She explained I bought investments with large up-front fees, then sold them to buy others with large up-front fees. That is not right.
Action: I’ve been recommended a different adviser. They have this arrangement where they charge an annual fee. My adviser can make recommendations and change investments with no up-front transactional costs. He said this has been around for a few years. Why did you not suggest that? I am moving my account to somewhere else.
Sometimes your prospective client does not want to cut ties completely with their current adviser, but likes you enough to establish another relationship. You can help.
Philanthropy
The world is made of givers and takers. Philanthropists are givers. Often they meet hard working people they like and decide to send some business their way. That could be you.
Issue: After my heart attack my major interest has been supporting cardiac research. My life was saved. I want to use my time and money to help save other lives. I regularly attend or support every event the heart foundation organises.
Concern: I met an adviser who serves on the same committees at the foundation. He is always organising events and fundraising. I like him.
Action: I want to do something for him because he does so much for the foundation. I have decided to transfer my retirement account over to his firm. It is not a huge amount relative to the other investments I have with you, but I wanted to tell you personally before the paperwork went through.
Diversification
The wealthy usually have multiple financial advisory relationships. The financial scandals of the past decade, if evidence were needed, made a good case for not keeping all your eggs in one basket.
To make the case for diversification, start by suggesting to your prospective client that they ask their accountant: “Is it wise to keep all my investments with one firm?” It is likely they will say no.
Issue: If we learned one lesson from the last five years, big and small financial firms alike can get into problems.
Concern: For some time I have been considering diversifying my holdings, instead of keeping everything at one firm. My accountant agrees this is a good idea.
Action: I am setting up another account at another firm. They also have a good reputation. I am only moving a small amount, but I wanted to tell you about it first. It will help me sleep better at night.
You do not want to steal clients. You want to help people leave bad relationships. When something is missing and you offer a better alternative, you can help.
Bryce Sanders is president of Perceptive Business Solutions
