The #1 Worst Practice: Getting Rid of Clients

I knew that book pruning was not in the best interest of clients, but I nonetheless bowed to management pressure. I regret to this day the decision to turn my back on clients who had placed their faith and trust in me. — Financial advisor with a national wirehouse 

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One of my daughters, Nicci, has a delightful way of threatening her kids when a threat is required.

She says, “I’m going to count to one.”

I’m going to borrow that. Instead of telling you the 10 worst practices in client marketing. I’m going to tell you the worst.

I have railed about it in the past. As a matter of fact, this will mark my 20th anniversary of trying to drive a wooden stake into its heart. As we approach Halloween, a comparison to the undead is certainly apropos. This thing will not die.

What pushed me over the edge and caused me again to attack this “strategy” was a single line in an article published on AdvisorOne, “What’s your Practice Worth?” by James Green. If you are within 10 years of retirement, read the article. Then go visit FP Transitions.

This is the company in the financial services industry that brokers the sale of financial services practices. The owners, David Grau, Sr. and Jr. are the best in the business. And if you are wondering what your practice might be worth, you should by all means get in touch with them.

Here is the line from “What’s Your Practice Worth” that launched me, once again, on my quest.

The factors that can detract from a firm’s value, he said, were:

• A lack of nonsolicitation agreements for employees;
• A higher-than-average client age, such as when the average age is in the 65-70 range;
• A greater amount of asset concentration among clients, such as when a firm falls prey to the Pareto 80/20 rule …

There it is: The “Pareto 80/20 rule” which countless gurus, coaches, speakers and even companies have embraced and to which legions of financial advisors have fallen prey.