How to dump difficult clients — gently

Sounds simple, understandable and logical right?

Results: It works with most of our clients, but a few diehards, three or four over the years, are either hung up on the fees (which are some of the lowest in the industry), think they are smarter than we are or, deep down, are convinced they can do a better job.

Our patient, educational system creates a strong emotional conflict in the DIY between wanting to control their funds themselves, and seeing the advantages and potentially greater returns using our services.

In the difficult client, the emotions always win. This doesn't happen to us often. When we keep to our process of slowly, patiently explaining why our approach over time will beat theirs, even difficult clients may buy into our management at first. But what I found in those three or four cases, eventually, was that they choose to leave so they can return to manage the funds on their own. Their emotions eventually overcome their logic and they go with what makes them feel most comfortable.

I much prefer this method of slowly, steadily educating our clients and letting them prune themselves out of our practice such that the client makes the decision that they need to leave. I didn't have to fire them. That way there are no hard feelings and I can send them happily on their way.

Case study No. 3: Hard conversation

We are in the process of on-boarding a client, who has some of the earmarks of a difficult client. Remembering my rule of not taking the difficult client in the first place, you may be wondering how I let him get this far with us.

The short answer: I just liked Professor S. A math professor who is a widower with four children, he really enjoyed managing his own portfolio. After four meetings, I was convinced we could help him and at one point he agreed to move his assets over to our management. He called us on his way home from that meeting, saying he was having second thoughts and asked that we wait.

We are planning to meet again this week and it is time for the hard conversation.

Here is what I am planning to say: "You know professor, I can continue to show you, in different ways, why our portfolio management approach will be better than yours over the long run. I can show you in many ways why our management will get you better returns, even after fees, over time and reduce your stress and the time you will need to manage your own portfolio. In fact, we have never had a client, who managed their own portfolio, who did better than we have over the long haul.

However, if you believe deep in your soul that you can do a better job, or for some reason you don't trust us, then you need to go with your gut and continue to do this for yourself. Otherwise you run the risk of never feeling completely comfortable or happy with our services. The main thing we want is happy, satisfied clients who love what we are doing for them.

So the bottom line is this, professor: What will make you feel the most comfortable, happy and satisfied?"

Yes, this is much more blunt than my usual style, but I feel it is time for Professor S to fish or cut bait. Either way this will work out fine for us. If he goes, we save time and stress on the team. If he stays, I know we can keep him happy.