A cautionary tale: Clients don't like firing advisors. But when the relationship goes south, they will work through the awkwardness.

At first everything’s great. You talk all the time, set life goals together, exchange notes. One day you notice the conversations have gotten shorter, the notes less frequent. Calls go unanswered. Maybe you two aren’t such a great fit after all.

The problem is, this person manages your life savings. 

“The good and the bad of the financial advice industry is that it’s so deeply rooted in the relationships that form between advisors and their clients,” said Michael Kitces, a partner at Pinnacle Advisory Group in Columbia, Md., with a blog, Nerd’s Eye View, that’s widely followed in the industry. ”It feels like [you're] firing a friend. And most human beings don’t like confrontation with other human beings.”

In one classic “bad” scenario, Kitces said, the advisor “seems really nice and friendly, and you move a little bit of money” into a simple financial product, only to find him becoming “increasingly aggressive” and pushing you into something “more complex, and you’re nervous you don’t really understand it.” Kitces’s advice: Don’t wait for the investment to blow up in your face.

“Sometimes your intuition is trying to tell you something about the relationship,” he said. “Clients even acknowledge a point in the middle when they knew something wasn’t right with the dynamic but didn’t do anything because it’s awkward.” 

One man who was trying to settle a family estate approached Lisa LaMarche, a partner at Milestone Wealth Advisors in Greenville, Del., and said he was “getting horrible service from his advisor’s team. They wouldn’t return his phone calls, wouldn’t turn over the money” to the beneficiaries, LaMarche said. She took part in an exit call with the man and his advisor — whom she found polite and cooperative.

However the break came about, she said, “if a client feels that their advisor is unavailable or is providing explanations that do not make sense to them, they develop a lack of trust in that person.” Her view is that “when it comes to client experience, perception is reality.”

Nola Kulig, a Longmeadow, Mass., financial advisor, helped prep a woman to explain why she was leaving her advisor, whom she described as more of an insurance salesman. Kulig suggested the client tell him she had decided to take “a more holistic approach” to her finances and was reviewing everything in her portfolio. 

Pigs, liars and perfectly nice guys

If your advisor has lied to you or misrepresented fees or investments, as in this nasty cavalcade, you end it, period. If you’ve simply fallen out of love after a long relationship, or have a nagging feeling you could do better, it can be more like the Seinfeld episode in which Jerry agonizes over breaking up with his barber. 

But, as with LaMarche’s example, it isn’t always black and white. A study by the White House Council of Economic Advisers estimates that conflicted advice, short of outright lying, may cost retirement savers as much as $17 billion a year. Many of Kulig’s clients come to her from big brokerage firms wondering whether they’re getting the best fund or just the one that best compensates the salesperson, Kulig said. 

“It’s hard for someone to say, I trust you, but I don’t trust your firm or how you’re compensated,” she said.

One woman on a personal finance message board said she has assumed her advisor was looking out for her best interests; she had worked with him for 16 years, and he was “really nice” and a strong supporter of his church. When she raised the “unreal fees” she was shouldering and asked him if there were cheaper products, he said she was paying for the benefit of actively managed funds and their superior performance. An astonished commenter told her to dump the guy and reassured her that “he’ll survive.”

“If you’re worried about your advisor’s reaction, keep in mind that he’s enjoyed 16 years of commissions, loads, 12b-1 fees, wrap fees, etc.,” the commenter said. “He’s done OK.” 

Ending it can be especially hard if everything’s been fine. Debora Killeen worked happily from afar for many years with an Ameriprise advisor in the Bay Area after she moved from California to France. They enjoyed each other — she was six months older, and he called her Big Sis. When she returned to the U.S., living in Sacramento, she wanted to take a more active role in her finances, with access to a local office where she could stop by with questions. He was two hours away. 

“The long-distance relationship wouldn’t work for me,” Killeen said. She began meeting with a woman at an Edward Jones office near her home, enjoying an education in money management. 

See also:

Case study: How dishonest responses on applications put your clients and your practice at risk

The 5 best ways to earn client trust

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.