Did You Know Your Financial Adviser Can ‘Fire’ You as a Client? Here Are 6 Times When They Should
It’s a sensitive topic, but sometimes it’s necessary for a financial professional to cut ties with a client. Here are six scenarios where it may be the appropriate action for them to take.
![A man and a woman cringe with disbelief.](https://cdn.mos.cms.futurecdn.net/jyBcXtSPDk7QahLY487NfB-415-80.jpg)
Firing someone is never easy. Thankfully, I’ve never had to fire a client in my career as a CFP®, but colleagues of mine and firms where I’ve worked have had to make this difficult decision.
Our goal as financial advisers usually is to build our client base, not reduce it, so letting go of clients seems counterintuitive. But there are situations where it’s the right thing to do, and sometimes it’s what is best for both the adviser and the client.
Below I address six scenarios and circumstances where I believe a financial adviser should fire a client.
![1. The client is a do-it-yourselfer who wants free advice](https://cdn.mos.cms.futurecdn.net/XHSi5HsMBceeDG78xtbEo4-415-80.jpg)
1. The client is a do-it-yourselfer who wants free advice
Let’s say a client is constantly doing their own research online and leverages their company benefits related to financial planning. But then the client expects you to listen to what they find for confirmation — without compensating you for your time and advice. In the meantime, the existing assets you do manage don't compensate for the additional amount of time the client seeks.
As CFPs, we operate in a highly regulated and ever-changing industry. This includes how firms make money. My current firm, for example, either takes commission, charges for the assets we manage, or bills by the hour for financial advice.
It’s important for financial advisers to remind ourselves that our advice is a key component of the job and that client interaction should be accounted for. Disclosure of fees is also essential, so the client knows exactly what services are billed.
We shouldn’t be in the business of offering free advice and confirmation for a client attempting to act as their own adviser.
![2. The client doesn't appear to need or value your services](https://cdn.mos.cms.futurecdn.net/ew95gu6vEbpHiy3W27DSxP-415-80.jpg)
2. The client doesn't appear to need or value your services
Availability is important with advisers and clients. If a client is regularly not available for meetings or continually fails to give you the necessary information to be able to provide appropriate analysis, it may be best to part ways with that client.
![3. The client is repeatedly rude and unprofessional to the office staff](https://cdn.mos.cms.futurecdn.net/fKPJpyR7uVNd43sRx89TnP-415-80.jpg)
3. The client is repeatedly rude and unprofessional to the office staff
Some advisers may not agree with this point, but if clients aren't able to be respectful to employees, this is a deal breaker for me.
That said, firing a client should be a last resort. I believe the best solution for dealing with an unruly or disrespectful client is to discuss it with your colleagues and managing director. Approach the matter in a diplomatic way, get feedback and input from your staff and try to form an action plan to remedy the situation. Perhaps that’s a conversation between the client and your managing director. Maybe moving the client to a different adviser will help.
Of course, there’s no one-size-fits all solution. The goal is to build a great culture and work environment. If a particular client is contributing to a toxic workplace, it may be best to part ways. And this may end up being the best thing for all parties involved.
![4. The client exhibits unscrupulous, immoral and/or unethical behavior](https://cdn.mos.cms.futurecdn.net/QCiiMnaE76EWUxDtsYp92K-415-80.jpg)
4. The client exhibits unscrupulous, immoral and/or unethical behavior
There could be situations where a client’s finances demonstrate immoral or unethical practices. At the end of the day, we all want to sleep well at night.
Although, I don’t have a personal example of firing a client for unscrupulous behavior, I have encountered a client who had questionable line items in their budget, but the client then moved to another adviser.
As financial advisers grow in their careers, they can be more selective about the clients they work with. Usually it amounts to dollars, but it’s not — and should not be — only about income and asset level. It’s important to work with clients with the right intentions and those who want to do things the ethical way.
![5. The client doesn't fit your ideal client profile](https://cdn.mos.cms.futurecdn.net/J83r3CJgzgUJGyz8YBJwEQ-415-80.jpg)
5. The client doesn't fit your ideal client profile
We are going through new ownership and rebranding in my current firm. In order for us to best serve our clients, we have gone through the exercise of defining our ideal client base. Unfortunately, some of the existing clients don't fit this description.
It’s important to keep your ideal client base in mind when pursuing prospective clients or re-evaluating existing ones. This is a “win-win” for the adviser and the client because you can focus your services to best fit your clients’ needs.
In this scenario, you’re not necessarily “firing” a client in the traditional sense. The client simply might not fit what your firm is looking for, and therefore it would be a disservice to the client to keep them on.
A solution here may be referring the client to a different adviser or firm that can better meet their needs. Usually when you approach it this way, the clients are very understanding, because they recognize you have their best interest at heart.
![6. The client is only interested in investments and outperforming the stock market](https://cdn.mos.cms.futurecdn.net/eAuKEu9V8thrPse732vwpa-415-80.jpg)
6. The client is only interested in investments and outperforming the stock market
This client usually doesn't appreciate asset-class diversification and the long-term finance perspective of investing to achieve one's goals.
You can't consistently outperform the market. Therefore, this client will never be satisfied and doesn't value your holistic planning services.
Making the decision to fire a client is not always easy, especially when you are working to build your client base.
But if you have a client who is rude or unethical, doesn’t need you or solicits free advice, or doesn’t fit your ideal client profile, letting them go could be the best judgment call you make for both your business and the client.
The 7 Mistakes That Investors Keep on Making
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Rubina K. Hossain is a financial reviewer and writer for Annuity.org and a Certified Financial Planner™ professional who has attained the prestigious CFP® certification. She specializes in preparing and presenting sound holistic financial plans to ensure clients achieve their goals. She was selected to be Chair of the Council of Examinations at the CFP® Board. She also has conducted budgeting workshops for disadvantaged girls in middle school, and she works as a pro bono adviser at Savvy Ladies Helpline and Women in Distress.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Congratulations on Your Raise: Three Things to Do With It
We're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
By Andrew Rosen, CFP®, CEP Published
-
Check Off These Four Financial Tasks to Finish 2024 Strong
The new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
By Daniel Razvi, Esquire Published