While I consider myself to have been a successful advisor for 16 years (people entrusted me to over $60M in-house, plus I helped them manage funds in 401k plans, outside IRAs, real estate properties and elsewhere), I’m not ashamed to say that I was also fired on many occasions.
Did I like it? Never. Did I deserve it? In many cases, absolutely.
The Reasons NOT To Fire Your Advisor
I was furious when I was fired for irrational reasons. You shouldn’t fire your advisor for events beyond their control.
I was fired:
- …in 1999 during the tech craze because my client’s portfolio had only risen 38%. His friend’s portfolio had gained well over 50%, and I had this silly attachment to diversification.
- …by a guy for a series of missteps I’d made…supposedly, but had never made. I couldn’t figure out why the guy kept getting more demanding and tightening the screws on me. Then I found out that he’d been dating the assistant I’d just let go. Why didn’t he just tell me the truth? I’ll never know.
- …in 2002 because the market dropped. I’d recommended a series of defensive measures before the bottom burst and my client said he didn’t need them. He’d already shared with me that his former advisor had written him a note saying, “When you find your magic want, let me know.”
Those still make me angry as I write this and they happened over a decade ago!
However, there are good reasons to fire your advisor.
Here are some reasons I was fired that I completely respect:
- My client shared with me three times that her risk tolerance was lower than the way we were invested. I told her over and over that she wouldn’t reach her goals if she didn’t stay the course. She continued to worry and finally let me go. I should have been a better listener, regardless of whether I was right or not.
- I had to reschedule with a client three times in a row due to family situations. It didn’t matter. By the end the client perceived that his business wasn’t really important to me.
- I had recently raised my fees and hadn’t explained them well to a client. There were a series of improvements that these fees were subsidizing which impacted my ability to serve her. She left immediately.
- During the “growing pain” years I failed to meet regularly with some clients. They left to find advisors who would pay better attention to them.
Fees, meetings and performance are all acceptable reasons to fire an advisor. In these cases, I deserved to be fired.
I know these clients didn’t always want to leave. Some clients called me and told me they were going. Others left without notice and sent transfer paperwork via the new advisor. While I preferred to be called I respected people who didn’t call me. They needed a change, and I wasn’t the guy.
Getting Fired Can Be Good For Your Advisor
In most cases, getting fired was a good thing for me. It stung, but it made me introspective. I wanted my practice to be a black hole: once clients entered they never left. If I were a great advisor, people wouldn’t leave. My clients who left taught me how to serve better my clients who stayed.
How To Fire Your Advisor
Although I mentioned that I appreciated phone calls from departing clients, I don’t think I’d make that call. In most cases, your advisor will do what I did: lay on the charm to convince you to stay. In most cases, this didn’t accomplish anything constructive. Even if you decide to stay put, your advisor will always think you’re about to leave, and the relationship will be strained. You probably won’t completely trust the advice he gives you. Do yourself a favor and follow this list:
- Interview new advisors. I’ll discuss how to do this in a future post. Promise.
- Hire one.
- THEN relieve the current advisor of duties.
I know this sounds underhanded and that some who read this want to see the current advisor as your friend. As a former advisor I’ll set that straight: I wasn’t your buddy. I was a paid gun who had a job to do. If I wasn’t getting it done well, I deserved to be relieved.
Let’s add a caveat. Have you actually had a heart to heart talk with your advisor?
Here’re what I detest: people who fired me who never first let me know that I wasn’t delivering. Because I considered myself to be (and marketed myself as) a financial coach, I promised a close relationship. In that relationship, I was delivering quality information to you based on discussions we’d had. If I was fired out of the blue without any warning, I was furious. I felt like I’d done my part of the job while you hadn’t given me any feedback to let me know something was wrong.
As I explained to one client, “I’m not Marvin the Mind Reader.”
Examples of great feedback from clients and how it helped my practice:
- Early in my career I hired an assistant (the same one I let go in the story above). One client told me, “The reason we hired you was to talk to you. It seems like you’re busier and are transferring all of your communications to your assistant. We want to talk to you.”
For some advisors, this might have been the end of the relationship. For me, it was a wake-up call. I loved talking to my clients! I hated paperwork! Why was I doing all the paperwork while I delegated talking to my secretary?! I rearranged my practice based on this piece of advice.
- I finished what (in my mind) was an awesome meeting with clients. They’d just hired me, and we were reviewing their asset mix. I’d shown them some fairly complex strategies that would raise their dividend income but leave their tax situation unchanged. I felt like a peacock strutting around the zoo. At the conclusion, I confidently said, “ What do you think?” My client said, “It was okay.”
I leaned forward. “Really?” I was pretty full of myself.
My client said, “It was good, but I thought you were going to go over our budget. We didn’t do that at all.”
This client makes over $300k per year, and they want to review a line item budget? Lesson learned. I never knew why people hired me, and I needed to ask immediately so I could exceed expectations.
I could continue but you get the point: talk to your advisor. Tell them what you’re looking for. If it seems like they can’t deliver, dump them. If they have proven already that they are incapable of delivering what you need: dump them. Remember: you don’t owe your hired help anything. You gave them your time and your money for a period and they were rewarded with fees, commissions, or in some cases, both.
Mrs PoP @ PlantingOurPennies
Love it, Joe! I’ll definitely be passing this one along =)
Good! It ended up being a fun post to write, although remembering some of those awful clients makes me want to go grab a beer…..
Matt @ momanddadmoney
Really great stuff here. I 100% agree with your advice on how to go about finding a new advisor. From being up front with any issues to finding a new one before firing the old one, I think it’s spot on. I also think the clients that fired you for the wrong reasons were better off gone anyways. You want people who know how to work with you, and those people clearly didn’t. More time for you to focus on your better clients.
It sounds like you learned something every time you were fired =) That’s a good thing, right?
John S @ Frugal Rules
“I had this silly attachment to diversification” Lol, who needs something crazy like diversification?! 😉 Seriously though, nice post and the thing that it points out to me is not only you as the advisor knowing your client, but also them knowing you so the two can communicate at the same level. I believe that so often in relationships like this that communication plays a huge role.
These all sound very familiar to me! Although I have not had anyone fire me because I let go of their girlfriend. 🙂 Understanding expectations is so key – sometimes we expect opposite things so we either adjust our expectations or decide to go on our merry way. It’s hard getting fired and it’s hard to fire clients too. But more often than not, it’s ultimately best for everyone involved. Like you – I appreciate if they let me know they were unhappy prior to leaving so I can improve my business, assuming it’s me, not them being unhappy because I believe in diversification too. 🙂
Tie the Money Knot
It seems like you have really sound approach to handling this type of situation, especially since you’re differentiating between ones where the client wasn’t rational and times where it was understandable. Overall, I think when dealing with customers/clients, the reality is that some decisions aren’t rational or necessarily fair to the business owner (or advisor).
Silly attachment to diversification…..how could you? 🙂 Not surprised to read the year there, 1999. Irrationally exuberant times!
Common Cents Wealth
This is a great article. As someone who wants to get into the financial adviser field at some point, this is interesting for me to read. My mom is a realtor and has many of the same frustrations. It’s nice when people are more vocal about what they want and expect instead of just pulling the rug out from underneath you without a warning.
Edward - Entry Level Dilemma
Firing anyone is hard because they are naturally going to react defensively and try to get you to change your mind. Then they go into “sales” mode and there’s nobody I hate dealing with more than a salesperson.
I’m with you…I hated even being put in that position. Then the key was to BE in sales mode without APPEARING to be in sales mode. Nearly always that was a lose-lose for both me and my client.
This brings up bad memories. I remember a hand-full of times when I messed up and I probably would’ve fire myself; however, clients would show more patience than I would have. On the contrary, I cringe when I think about how often people make up stories and only hear what they want.
I was frustrated with clients who didn’t want to learn but only wanted someone to blame. That always made me the most angry. Some people were looking for that magic bullet without having to actually do any work themselves.
Lindsey @ Cents & Sensibility
Thanks for the information – this was really good stuff. Thanks for sharing your ups and downs (!) as a Financial Advisor.
DC @ Young Adult Money
“…in 1999 during the tech craze because my client’s portfolio had only risen 38%. His friend’s portfolio had gained well over 50% and I had this silly attachment to diversification” Haha unbelievable!
People can take these lessons and apply it to any job. You definitely learned from your mistakes, which is more than most people!
I always found it sad when my friends who were advisors would always blame the client as being “an idiot.” Getting fired is a great opportunity to learn about yourself and apply it toward those awesome people who’ve decided to keep you as an advisor.
Holy cow! I laid off the RSS reader for a few weeks and you’ve been publishing like a man possessed over here! I have some catching up to do, it seems!
We’ve missed you, Mike. Welcome back to the party.