Top reasons clients fire their advisors

“People have a personal, emotional attachment to their money,” Pyle says. “And when advisors don’t respond to their emails and phone calls in a timely fashion, they get upset. Clients expect a response within one business day or sooner and if you don’t deliver, they think they’re not important to you and start looking elsewhere.”

Here are some other common reasons clients fire their advisors:

> Disappointing performance
Poor portfolio performance is just one of the reasons — and not necessarily the most important one — that clients decide to fire their advisors. In fact, engaged clients who are in good relationships with their advisors should be prepared for market fluctuations.

It all comes down to expectations, says George Hartman, managing partner with accretive Advisor Inc. in Toronto.

“It’s important to put things on the table at the outset,” Hartman says. “A client may expect a 5% annual return, but you have to tell them that some years that won’t be possible. Explain that you will monitor the account regularly and when it looks like you won’t meet your target, you’ll be in touch to discuss things.”

While clients are never happy with poor performance, Pyle says, “they’re more likely to take disappointing numbers in stride if they know that you’re paying close attention to their portfolios.

“As long as they see that there’s a process in place to manage the portfolio,” Pyle continues, “they’re less likely to think they’ve been neglected, even if the performance is less than satisfactory.”

> Failure to provide multiple financial services
“Today’s clients expect help with everything: financial plans, education planning, wills and estates, and succession planning,” Pyle says. “If advisors don’t broaden their delivery of services beyond money management, clients may look elsewhere.”

A 2012 survey conducted by the Lincoln, Calif.-based Paladin Registry of Financial Professionals confirms Pyle’s point. It found that clients whose advisors provide a “holistic” view of all their assets are more likely to be satisfied with the level of service they are receiving and to retain their advisors.

> Lack of fee transparency
When clients are getting high returns, fees usually don’t bother them. But in the current economic environment, fees are a potential flash point.

“It’s important that people understand what they’re being charged for,” Pyle says. “Otherwise, they may start to wonder, ‘What am I getting for my money?’ That’s particularly true when performance isn’t where they’d like it to be.”

> Note: when it’s over, it’s over
Once clients leave, says Rosemary Smyth, a business coach for financial advisors in Victoria, they’re gone. Clients rarely change their minds after firing their advisors.

“Try to find out why they left,” Smyth says. “But don’t ask them to come back and don’t try to make them feel guilty about it. Make it a learning experience.”