Should You “Fire Fast” in the Client Relationship?

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0514JFP.inddHave you ever heard the phrase “Hire slow, fire fast”? In part, it promotes a hiring process that is consciously deliberate. This process typically includes having multiple people conduct multiple interviews, carefully checking references, and making use of available testing services and assessments. Although this takes time, wise advisers know that a great hire is an enormous asset to the firm, while a poor hire is costly and can drag the firm down emotionally.

Even when such care is taken in the hiring process, however, a poor hire sometimes occurs. When this happens, it is in everyone’s best interest to assess the lack of fit quickly rather than stewing about a bad situation and letting it go on indefinitely. That is, it can pay to “fire fast.” Advisers have heard this multiple times, and many organizations have learned to heed it.

But can this same strategy be applied to clients? When is it appropriate to fire fast in your client relationship?

Identify the Outliers
Forget about the angst of deciding to prune small clients. Instead, focus on clients whose needs and desires simply do not match the way your firm does business. Remember, just as employees who are not a good fit may get into your firm, so can new clients who just don’t mesh. Once these clients do slide into your practice, they will need ongoing care and nurturing. To help prevent this scenario, take the time to identify “outliers.” These are clients, for example, who are:

  • Looking for only high-investment returns instead of a financial planning relationship that addresses their goals
  • More interested in frequent trading rather than looking at the longer-term strategies
  • Seeking only the latest and greatest new fad product or techniques, with little interest in balancing such approaches with those that have historically worked well

As soon as clients such as these have been identified as outliers, it is the time to fire fast. The longer such clients are serviced by your firm, the harder it will be to end the relationship.

Follow Your Instincts
The value of your early instincts in assessing client relationships should not be underestimated. If your gut tells you it was wrong to take on a new client and you feel regret, terminate the relationship before inertia sets in. In fact, the client will be more likely to understand the decision to sever the relationship early on, as opposed to prolonging the decision to a point at which both parties are not satisfied. In short, embracing fire fast can be beneficial for both the client and the firm. It may be a difficult process, to be sure, but will allow you to focus on and nurture the client relationships that are the right fit for your firm.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management

Commonwealth Financial Network
Waltham, Mass.

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