Practice Progress: How to Lose a Client (or Not)—Lessons Learned From Unsuccessful Advisory Relationships

PLANADVISER’s most recent Practice Progress webinar offered suggestions for financial advisers who are debating about leaving a struggling client relationship.

Julia Carlson, founder and CEO of Financial Freedom Wealth Management Group in Newport, Oregon, began the webinar by recounting the positives—and negatives—of growing her firm, a move that ultimately ended up losing her several clients.

At first, Carlson worked on her own as the sole adviser at her firm and only hired assistants to help her with scheduling or organizing paperwork. When she began to hire additional advisers as the firm increased its size and assets, Carlson was met with some pushback from clients who had worked with her since the start. Former clients who had partnered with Carlson for years refused to work with newer advisers at the firm.

“Those clients that I had 20 years ago, they were always expecting just Julia,” Carlson explained. “And that’s a problem for a lot for advisers who are growing their practices. They were wanting all my attention, and in the past I could have done that, but now I couldn’t do that anymore.”

While Carlson said she recognized the loss of assets the firm faced when dropping a client—up to thousands of dollars in assets at times—she knew there would be a new set of clients who valued the work of an advisory team and not just an individual adviser.

“The clients trust that there is a team involved, that it’s not just one person,” she said. “They want that partnership value. They want someone who they can rely on and who can be that fiduciary for them.”

Today, Carlson employs seven financial advisers and eight support staff on her team at Financial Freedom Wealth Management Group. David J. Wright, a portfolio manager and wealth adviser who works at the firm, said he’s found there’s a level of success that comes with collaborating in a financial service setting, rather than working in an individualized practice. While other firms may hire six advisers, each with a different role, he finds most clients prefer the synergy of a team and the alliance it creates. “A lot of clients want more than just investments,” he said during the webinar.

As she was growing her firm, Carlson said she realized that it’s not just clients who respond well to an advisory partnership—it’s new, prospective workers as well. As Carlson added new team members to Financial Freedom, she realized most employees appreciated having a group mentality.

“When you’re adding team members and you’re telling them about the process, people love that. That’s going to be an advantage to the adviser next door that doesn’t have that together,” she said.

Wright agreed, noting that at Financial Freedom, advisers work under a single unit on everything from investments to education. As a result, when one adviser thrives, “we all do well,” he added.

Fostering a team mentality in the workforce will likely translate well to working with clients, too, the two advisers said, since clients can see the firm as a team of advisers working to grow and protect their assets instead of as one person. And it can bring opportunities to work on more than just investments. Aside from providing financial education, for example, Financial Freedom hosts monthly webinars for clients and prospects and is active on Facebook, Twitter, LinkedIn and YouTube.

The team at Financial Freedom also partners with certified public accountants (CPAs) to tell clients how to read their 1040 tax returns and how to save money on taxes. Education on industry changes is also a priority, Carlson and Wright note, and one that might have proved useful during the market volatility in March 2020. When the team reached out to clients during the downturn, many of them weren’t too concerned, a response Wright and Carlson believe was attributed to the team’s education and client services, as well as their past efforts in working together.

Wright recalled that most conversations didn’t even involve investments or assets, and, instead, focused on the health of the people involved. “What amazed me is that most of the talks weren’t even about money—it was about how everything was going, how their health was and letting them know that we’re taking care of their money.”