Many advisors will answer never -- but those who have gone through the experience say that, if done for the right reasons, the decision can be a liberating epiphany and a pivotal moment in firm culture.
I recently visited with Tom Pacilio, founder of Pacilio Wealth Management Group in Westport, Conn. He shared a story about firing a client that reminded me what defines successful advisors.
A few years ago, a client with $2 million was complaining to the team's senior portfolio manager about something relatively trivial. The client ended up shouting at the employee, berating him with gusto.
When the same client came into the office for a meeting the next week, Pacilio told the client -- in a very calm respectful way -- that the team could no longer serve him.
SETTING A TONE
It was a simple act with big repercussions, including a clear loss of assets and revenue for a growing firm. The client was flabbergasted. But the move gave Pacilio hero status among his team.
The senior portfolio manager, who is kind and mild-mannered, felt as if his boss had returned a piece of his dignity. Other members of the team felt that they had a leader who had their backs. And the incident reinforced the bond of an already cohesive group.
Among the messages Pacilio's act conveyed:
The team is more important than money.
- We value dignity.
- We will not tolerate injustice.
- Integrity rules.
“If an organization is tolerant of everything, it will stand for nothing,” management expert Patrick Lencioni writes in his book, The Advantage.
LESS DRASTIC TACTICS
Of course, you may want to reserve the nuclear option for the most extreme situations -- but even more moderate steps can communicate culture and values to your team. Consider a few of these tactics to protect your advisors and staff from a T. Rex in your client base.
Allow for venting: Give your employees an opportunity to air serious client frustrations -- in your weekly meeting, for instance. Sometimes just complaining aloud and being acknowledged by the team will be enough to help employees to let go of gripes and move on.
Establish a grievance airing system: That said, you may want to set some guidelines -- how an employee can complain; what level of grievance might warrant airtime at a group meeting; what might require a one-on-one discussion; what staff should let roll off their backs. To avoid traveling too far into negative territory, you will want to limit the airtime and energy you devote to concerns.
Consider consequences for client misbehavior: You may not wish to consider firing a client under any circumstances -- it is, after all, an individual decision -- but are there other ways to address a client's persistent mistreatment of employees? What stress-relieving remedies might you bestow on an afflicted employee?
Rotten tomato awards: One of my former clients used to hold a Rotten Tomato Awards ceremony at his annual offsite. The way he did it was brilliantly productive and fun. Each team member brought an index card with a name and a brief description of the reason the client was being nominated. They each read them aloud with great energy with lots of roaring laughter and occasional fits of hysterics; the team really got into it. After they made the award, the advisor turned the team’s attention inward: They looked at the patterns of behavior, the client trigger points and themes for client frustration and discussed what they as a team could do proactively to improve the client experience and stave off potential future frustration.
This last effort, by the way, had a double payoff: It contributed to team camaraderie, naturally, but it also helped everyone in the practice focus on meaningful enhancements to the client experience.
In my 18 years of coaching, consulting, studying and observing advisors, I have noted that those who have the professional courage to fire clients are wildly more successful than those who seek to be all things to all people. Believe it or not, in my experience this ability is an incredible indicator of a firm's growth trajectory.
Your team, after all, is critical to your firm's success. The Society for Human Resource Management estimates that the cost of replacing staff may be as high as 60% of an employee’s annual salary. If you include intangibles like training time and lost productivity, the total cost of replacement can range from 90% to 200% of an employee’s annual salary.
On the other hand, although establishing culture requires mindfulness and intent, its cost is minimal. That means a collaborative, cohesive, client-focused culture -- one that keeps key employees in place by protecting them from workplace abuse -- can make a contribution to your bottom line that is, simply, priceless.
Christine Gaze, CIMA, is the president of Purpose Consulting Group in New York City.