Step #5: Eliminate toxic clients from your practice, regardless of the AUM they represent.
Many types of toxic personalities are resistant to active listening or assertive communications from advisors. Perhaps some clients have been rewarded by getting what they want from former advisors or from you, and they are extremely resistant to changing.
Many advisors will stick with such abrasive, demanding clients because they fear losing their assets. But can you afford the aggravation and stress that comes with retaining these clients?
In his wonderful book, “Behavioral Investment Counseling,” Nick Murray recommends the following: “Every year on your birthday, give yourself the priceless gift of self-esteem: fire your biggest PITA (an acronym, of course, for Pain In The A**).” He suggests you dismiss the client using grace, class and style.
A Great Advisor Example
I would like to share some information about a wonderfully successful advisor who practices the five steps for managing the stress inherent in the advising career: David Bahnsen, managing director and senior portfolio manager of the Bahnsen Group in Newport Beach, Calif.
David continually and consistently educates his clients about his core investment values and strategies, especially during the most challenging times. For example, during a recent market free fall, in his weekly commentary to his clients, David wrote: “I am steadfast in managing through this, being opportunistic where appropriate, and making intelligent and poised decisions throughout. I am not fighting a temptation to abandon any part of the strategy. … My commitment to my clients supersedes a two-day, or two-week, or two-month, or two-quarter timeline. I am in this for the long haul with you, and over the long haul, I strongly recommend you maintain your faith in a strategy that right now feels like it is being tested.”
When David has a client who remains toxic, abrasive, impatient, unrelenting, etc., regardless of David’s attempts to explain his investment strategies and the plan for his family’s wealth management/enhancement, David cuts him or her loose!
David believes that advisors “need to value themselves enough to not keep such people on their client rosters.” Every time he gives himself the gift of such freedom, he feels a form of “liberating self-esteem” and calm. Most importantly, he believes that culling these clients from the practice provides him with renewed energy to engage in activities that actually bring much more to his practice than the AUM that the dismissed client represented.
Your Action Plan