Decision action is needed to get rid of clients draining a Financial Planning practice by making unreasonable or unrealistic demands, speakers said.
In a session called: 'Clients from hell – Lessons from planners' three leading Financial Planners - Tina Weeks, Financial Life Planner, Serenity Financial Financial Planning; Janet Hugo CFP, director and wealth manager of Sterling Private Wealth, South Africa and James Mallinson, senior manager, partnership development, St James’s Place Wealth Management spoke about their own experiences of 'clients from hell' - so-called difficult or unreasonable clients.
Ms Hugo said she was working with a 77-year-old client who she had enjoyed working with for many years but recently he had begun challenging her firm's 0.8% annual fee charged on assets under management and wanted to pay an hourly fee instead.
She explained that when he first came to her his finances were in a mess and they were now sorted out. The firm had invested a lot of time in 'fixing' his finances but he still felt 0.8% per annum was too much although he had been happy with the fee for several years.
She said her firm was not geared up to charge for every minute and she had to decline.
His daughter had also wanted to access some of her inheritance early but Ms Hugo had to tell him he could not afford it. The relationship had become consistently challenging, she said, and she was preparing a 'Dear John' letter telling him her firm was going to withdraw from looking after him.
One planner in the audience said she had recently 'fired' a difficult client and found it "very liberating."
However, Tina Weeks, Financial Planner at Serenity Financial Planning, said she believed that many potential 'clients from hell' could turn out to be 'a gift' if the relationship can be turned round.
She said this happened where she could establish an emotional connection to the client and get to the root of their issues.
She said in some cases, early on in her career, the problem was failing to communicate what was expected from the relationship on both sides. She said sometimes the fault had been hers in not explaining what the client was expected to do.
She said she tried to decide at the first meeting if potential clients were suitable to work with and if not write them a "nice letter" just saying she didn't think Serenity was the right firm of advisers for them.
She could only think of one case where clients failed to turn up to meetings or respond to communication where she had to let them go.
Mr Mallinson of SJP said one 'client from hell' he experienced who was using income withdrawal was too demanding expecting quarterly meetings, email responses within four hours and so on. He said he had to "reset" the relationship by having a frank conversation about what was reasonable for the client to expect from his Financial Planner.
He spent a lot of time "re-educating" the client and it had paid off, the client stayed and the relationship was much better. His message to planners was not to let bad client relationships continue but to try 're-setting' them.
He added: "The best clients aren't always the biggest."
The two-day event, headlined ‘Changing Lives,’ is taking place this year on 1 and 2 October at the Hilton Birmingham Metropole Hotel at the NEC.
• Financial Planning Today will be reporting throughout the event - check out our coverage.