Although the revenue that a particular prospective client could provide may be enticing, money should not be the sole reason for taking that person on as a client, warns Grant Gold, a lawyer with Ricketts Harris LLP who spoke at the Financial Planning Standards Council’s annual CPF professional symposium in Toronto on Wednesday.
In fact, it’s just as important advisors choose the right clients as it is that individual investors choose the right financial professionals, said Gold, who shared his thoughts with the audience of certified financial planners about qualities that new clients should possess in order to develop a relationship that is productive for both the advisor and the client.
An advisor should seek new clients that fill at least two of three criteria, said Gold: “Clients should be interesting and the matter that they give you should be interesting and challenging; they should be people you enjoy [working with]; and they should make you money.”
Clients who can contribute to your practice’s success and can be counted upon to speak highly of your skills to others are also important components, suggested Gold. In fact, advisors should not avoid the topic of referrals with clients who can help bring that type of individual into the business.
“That’s where some of us fall short,” he said. “We do good work for a client, but we don’t go to the next step and look for ways that those people can get us more clients.”
Getting clients who are dependable and pleasant to work for could be as simple as asking a current client if he or she knows anyone who would benefit from your services. If the client says yes, he or she will likely offer to get in touch with a family member or friend first and provide a positive testimonial that will also work in the advisor’s favour, said Gold.
An advisor’s goal should be to have a practice full of clients that make him or her want to go to work every morning, said Gold: “The happier you are, the more successful you will be in your profession.”
That said, not every client relationship is meant to last indefinitely and advisors need to recognize when it’s time to let a client go, he adds. The clients that need to go are the ones that “suck the energy out of you” and those whose expectations you never seem to satisfy.
As revenue can play a role in taking on a client, it can also be the reason why professionals keep clients who are no longer contributing to a positive and productive relationship, Gold suggested.
“I encourage people to do a little analysis on how much money those clients are worth [once taxes and expenses are paid],” he said. “Is the grief worth $200 in your pocket? Give up Starbucks coffee for a couple of weeks.”
Once you decide to let a client go, ensure the process is handled professionally through a letter that explains respectfully why you are making this move. For example, you might say that the client would benefit from another objective view of his or her financial circumstances or would be better suited with an advisor who has a different communication style. Try to offer an alternative to the client by referring them to other advisors who would be better suited to that particular client, suggested Gold.
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