Breakups are tough. For advisors whose clients dump them, it can be a costly loss as well as dent to their personal and professional pride.

To find out why investors fire their advisors, Morningstar’s Senior Behavioral Researcher Sam Lamas and Morningstar, Inc.’s Behavioral Scientist Dr. Danielle Labotka gathered data from 184 investors who have fired their financial advisor and asked them, “Why did you choose to stop working with [an] advisor?”

The researchers found six common reasons why clients fired their advisors:

• Quality of financial advice/services (32% of responses)

• Quality of relationship with an advisor (21%)

• Cost of services (17%)

• Unhappy with returns (11%)

• Felt uncomfortable handling their own finances (10%)

• Felt they were missing quality communication (9%)

“We found it’s not mainly about returns, it’s about the client’s perception regarding quality of advice and communication with their advisor and what they think is missing,” Labotka said in an interview. 

Issues regarding the quality of advice and individual expectations can be addressed by better understanding each client and their specific financial needs and goals.

Some investors who fired their advisors said “they wanted personalized advice and their advisor was just giving them cookie-cutter solutions. Or they wanted advice that fit into their risk tolerance, and instead their advisor was giving them advice that they were uncomfortable with. Or my favorite was people wanted more hands-on holistic advice, and their advisor wasn’t giving them a level of direction that they were looking for,” Lamas said.

“But pretty much all of these gaps are the product of the advisor not taking the time to truly understand what the client wants from the relationship, what they’re looking for, their expectations from the advisor,” the researcher added.

Labotka recommended remedying this by using a goal-setting exercise with clients to “delve deeper into what they want and need. But this isn’t where the work ends. Revisit these goals and how they align with their financial plan in ongoing conversations,” she suggested.

If the client expresses issues regarding the cost of services, their comfort handling finances and communication, it’s time to step up communications regarding your value and what you’re doing for the client. No one wants to feel like a number, the researchers said.

Morningstar research shows that clients and advisors “tend to have a mismatch between what they think the value of a financial advisor is. You should be able to communicate to clients not only how you provide the value they are looking for, but also provide the value they may not even be aware of,” Labotka said.

Issues regarding returns and performance can be addressed by setting expectations for the relationship early on, the researchers said.

While clients rank the ability to “maximize my returns” as the fourth most important value financial advisors bring to the table, Labotka said that this stems from a misunderstanding about what advisors do.  

“When establishing a relationship with a new client, clarify the value of taking the long view when investing. Some clients may benefit from reminders about the value of keeping their expectations regarding returns in check,” she said. 

When a client terminates you, or simply, as is often the case, stops responding to emails or phone calls or begins drawing down assets, it may be tempting to tuck tail, but this is the time to open up a dialogue, even if hearing what the client has to say may be painful.

It’s important to have a conversation about the client’s decision so you can remedy the situation if possible, and if not, use the information to grow so you can incorporate changes into your practice, Labotka said. 

“In some cases, the client relationship can be salvaged and improved upon by advisor who can successfully communicate to the client that they hear them, are addressing their concerns and are on the same page,” Labotka noted. 

Listening to clients who are firing you “will help advisors anticipate and remedy these issues in the future,” she added.