The clients you don't want
Sometimes, we inadvertantly reinforce the often flaky preconceptions of consumers - who may think that IFAs are so desperate for business that we will accept it on virtually any terms. We may do so by failing to be absolutely clear from the outset as to our terms and process for the provision of financial planning advice. We may also aid and abet such clients by not having a very clear picture of the kind of client that we're actually looking for.
This happened to me as a wet-behind-the-ears IFA in 1992, when I encountered a client whose behaviour I was simply unable to understand. We had proposed an IHT solution for this person which was so affordable that the client would barely have noticed a blip in his budget, and yet created an immediate reduction in his taxable estate of around £300k. Everything stacked up, and yet the client refused to proceed.
Why could this be? The client had a huge potential IHT liability, and was very motivated to mitigate it. He wanted to do it, and the cost of the proposed solution was so pifflingly small that any sentient being should have jumped at it. So why not? And the answer was that he saw the commission involved - even after enhancing the product, we would still have earned £13,000.
Setting aside the issue of the basis of remuneration (this is a historical case, and a lot has changed in 17 years), this case should have rung warning bells about the type of character this client was. Unfortunately, it didn't - and as a result, I wasted far too much time chasing the forlorn hope of business from someone who saw it as his purpose in life to deprive my practice of revenue, but still wanted advice.
Over the last few weeks and months, we've spent quite a bit of time trying to help Member firms deal with similarly challenging clients. These people share a few remarkably similar traits: (i) they don't read what you send them, (ii) they appear to retain very strange memories of conversations you did have - and of a few that you did not, (iii) they always see every issue only from one perspective (their own), and (iv) they are never, ever, ever wrong. You can present them with a meticulously-documented refutation of their complaint, and they won't even pause for breath.
Take some advice from an 'old-timer'. You don't want these people as clients. You really don't. The moment you identify these kinds of character-traits (did they, perhaps, fall out with a previous adviser? Have they, perchance, already been compensated in the past?), you need to implement a polite but firm strategy to sack them.
Life is simply too short for this stuff - and if you attempt to persevere, idealistically ignoring the warning-bells, you will live to regret it. | 