It’s not necessarily a bad thing when a client wants to end his or her relationship with a financial adviser. It could be the right path for both parties. But it’s important for the business to learn from the experience.
Above all, it’s essential to understand why clients are leaving. Do they not value your services? Have you made a mistake? In their eyes, did you not do what you’d promised?
“If you’ve made a mistake and not delivered the service you promised, own up to it and explain to the client what you’ve changed, so that you don’t make the same mistake twice,” says Michael Miller, a certified financial planner and principal of MLC Advice Canberra.
The path the adviser should follow when a client wants to leave the firm depends on the relationship. But, Peter Horsfield from SMART Advice says, best practice is to approach the situation with an open mind and as a learning process.
“Clients have many reasons for leaving their adviser,” Horsfield says. “These can include a change in their financial situation or in their relationship or career.”
He recommends phoning clients as soon as you know they are leaving, to find out why.
“The conversation may lead to the client remaining, or minimise a run of other clients leaving. This would be particularly important if clients are departing the business after the firm has recently bought a new practice,” he says.
Tim Wedd, executive director of advice practice Crystal Wealth Partners, suggests the reason for leaving will determine the flow of subsequent communication.
“You need to have a face-to-face meeting or a phone call to discuss the issues,” Wedd says. “The mechanics of severing the relationship, including [handling] data files and the potential transfer of the relationship to another adviser, can be dealt with via email and phone follow-up.”
AMP financial adviser Andrew Heaven, from WealthPartners, says the main consideration is whether the client is an ideal one and worth keeping.
“Most practitioners have criteria they use to categorise clients,” Heaven says. “For instance, the client may be easy to deal with. They may refer people, or they may have other positive attributes, such as [being] good to staff.”
Advisers should also assess negative attributes. For example, the client may be overly transactional and, therefore, expensive. Or they may constantly challenge advice or shop around on price.
Assess your service offering regularly
“Build a balanced scorecard and determine who is an ideal client and who is not,” Heaven says. “The other consideration is the cost to the firm of losing the client. They could be high maintenance and hard to service.” In this circumstance, it may suit the practice for the client to leave.
He agrees it’s important to find out why clients depart.
“The broader question is around whether you have properly articulated your service proposition to the client,” he says, adding that the next step is to learn from the experience. “Use it as an opportunity to refine and review your processes to make sure you’re on the right track.”
Above all, an assessment of whether the business’s service offering remains relevant to clients should be part of the practice’s annual business planning process.
This should go a long way towards helping ensure fewer clients leave the practice. Also, the ones who decide to remain would probably be the type of client the firm values – and who also value the firm.
TOPICS: Andrew Heaven, Crystal Wealth Partners, Michael Miller, MLC Advice Canberra, Peter Horsfield, service offering, Smart Advice, Tim Wedd, WealthPartners
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