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Financial Advisors: How to Partner with Problem Clients

By ClientWise | April 4, 2013

Are you a financial advisor who has a client (or clients) who, whenever they call, your stomach tenses up in a twisted knot because there is no pleasing them?

If so, you’re not alone. Many financial advisors have clients who are unreasonable, a problem, or even worse…toxic.

So…what to do?

Seth Godin, the best-selling author and entrepreneur (who has not been a financial advisor, btw) has a direct response about dealing with problem clients: “You have three choices: put up with the whiners, write off everyone, or, deliberately exclude the ungrateful curs.” As much as I respect Mr. Godin, I think that his response is glib and dogmatic…and in fact, misses a fourth and best option, e.g. having a direct conversation with the client.

Lewis Post, a producing branch manager for a major wirehouse firm, adopts a proactive approach on how a direct conversation can shift the advisor-client dynamic.

“Often, when confronted directly and politely, the clients will adjust their tone and occasionally beg pardon by saying, “Well, that’s just how I talk. Don’t take me seriously.” Like a lot of bullies, they back down when called on the carpet. I have had personal experiences where I ask the client to not present their frustrations to my staff, because we are really on their side. Feel free to vent to me if you must, but not to my staff. Asking them to help you improve things lets them be magnanimous. It’s amazing how often clients do not hear themselves.”

What is really positive about this approach is two things:


1) Being direct. What this response acknowledges is that clients who act in a bullying manner may not realize what their attitude actually sounds like. When challenged politely and directly, without judgment, they are held accountable for their behavior. Of course, there are also clients who know EXACTLY what they are doing. For these borderline-bullies, a direct manner is best. Clients who act like bullies lose respect for those financial advisors who don’t stand up for themselves, or their team.

2) Partnership. In Mr. Post’s recipe for reacting to the client’s concerns, he invites the aggrieved client to partner with him to help improve how he, and his team, can address the problem at hand. Of course, there is no guarantee that the client will respond favorably, but this approach gives the client the choice to be forgiving. Some clients will chose this opportunity, and some won’t.


A Code of Service Partnership

One team that we have worked with has created a code of conduct that they call the “Code of Service Partnership”. This short but precise document is presented to all clients as part of the new client on-boarding process. It outlines the rules of engagement and cultural norms between the team and the clients, including:

  1. The core beliefs and values of the team, e.g. their passion for client service, honesty and integrity, direct communication, work ethic, mutual respect, etc.
  2. Their client service model and what the team commits to with respect to service delivery,
  3. An explicit process for clients to follow, should the service execution of the team fall short of the client’s expectations. This includes the roles and responsibilities of the team with respect to service matters, and phone numbers and email addresses.

Implicit in this document is the belief that this is a partnership, and that clients will also adhere to the same cultural norms as the team.

What About the Incorrigible Ones?

Regardless of your best intentions, some clients will always be unreasonable. They are not likely to ever have respect for you, your team, or the value of financial advice. In instances like this, it is vital that the leaders of the team not tolerate continued bad behavior.

In these situations, it is best for the team, and in many cases the clients themselves, to terminate the relationship. Breaking up with unreasonable clients in a professional, direct, and gracious manner is a big topic in and of itself. We’ll come back to this one at a future date. 


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Topics: Client Engagement

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