He and the client acknowledged they were both frustrated with each other and decided to part ways professionally, though they remain friends today, years later. "It doesn't mean he was right and I was wrong, or vice versa. It means we were just not the right fit," Heider stressed.
A lot of trouble, though, can be avoided if advisors and clients talk things through beforehand. "We spend considerable time upfront over multiple conversations to get to know a prospective client's goals, expectations and risk tolerance," said John M. West III, chief operating officer and chief compliance officer at Spraker Wealth Management, a Maitland, Fla.-based fee-only financial planning and wealth management firm. "Our initial conversation is ultimately a two-sided interview … to determine if a client and advisor will work well together."
Among the qualities that figure into West's evaluations of potential clients are their willingness to listen to tough advice, their sensitivity to daily market fluctuations and whether they want all their assets managed as part of a comprehensive financial plan.
"We can’t be all things to all people, and sometimes certain personalities do not work well together," he said. "We take a holistic approach to managing wealth, and not everyone is looking for a deep, life-long connection with an advisory team that really cares. Some are simply looking to have their portfolio managed without guidance and recommendations in all areas of financial planning. That one-sided approach usually isn’t a fit for our firm."
His advice for potential clients: shop around. Interview multiple advisory firms to make sure you choose one that meets your needs. That way, you can "avoid the hassle of switching firms down the road," he said.
On the other hand, the same could go for advisors. "The biggest way to avoid bad clients is to do the right thing before you 'hire' them," said Heider. Lay out all your expectations and limitations in advance, and ask them about theirs. "Ensure they will be a good fit," he said, and the relationship should go smoothly.