Advice and the Advisor

7 Tips for Handling Problem Clients

Michelle Lodge,|Special to
Troels Graugaard | E+ | Getty Images

You’ve all dealt with them. They’re the clients who make your life a living hell. They are those who pay late but demand instant results, always have a hair-on-fire crisis, challenge your every recommendation of financial planning, you name it.

Your stomach churns whenever they’re on the phone, coming to your office or emailing you. Because you know it’s never going to be easy.

“I define a difficult client as someone who hires me to do a job and then doesn't want to follow the advice I’ve given,” said Valerie Adelman, a 25 year veteran in the field and a certified financial planner with the Financial Asset Management Corp. in New York City.

Adelman notes that the members’ online discussions and bulletin board of the Financial Planning Association, FPA, are heavily populated with questions about problem clients; in fact, the dilemma is so vexing and widespread that the organization offers numerous resources for dealing with it.

While Joseph J. Duran has had his share of difficult clients, he suggests you start out evaluating a situation by asking, “How much of it is me and how much is them? What is my role in their frustration?”

Duran, a certified financial analyst and the CEO of United Capital Financial Advisers, LLC, in Newport Beach, Calif., works with investors, counsels other financial planners and speaks on the subject of client relations. (He is also the author of the forthcoming "The Money Code: Unlocking the Secrets to Great Financial Decisions," his third book.)

Here’s what Duran and other seasoned planners recommend in working with clients:

Vet new clients beforehand.

Whenever possible, secure clients by referral or recommendation. It can increase the chances of landing reasonable clients and give you an opportunity to find out about them in advance.

Define the relationship.

“The best way to avoid a difficult situation is to be clear about roles, responsibilities and expectations when first engaging with a client,” said Adelman. “It's a good idea to discuss overall investment policies and strategies upfront. In that way, when a discrepancy comes up, we can go back to our original assumptions and try to determine the source of any miscommunication.”

Be clear about fees.

Adelman had a client who, although she valued her advice on investments, thought that Adelman’s counseling should cost nothing or next to it. “We parted ways amicably,” she said.

Evaluate your role.

“Ninety percent of clients are difficult because the advisor has made statements about how their life is going to be,” said Duran. “My first question has to be, have I met my obligation to this person?”

Determine whether it’s the situation or the person.

“If I tell a client, ‘Things didn’t work out the way we’d planned, and you are going to have to work another three years,’ the client may be angry with me,” said Duran.

But, he added, if the financial planner has done his or her job properly, it’s still more than likely that the client is disappointed with the situation. Nevertheless, the chances are good that the situation can be resolved satisfactorily for both the professional and the client.

Don’t work with bullies.

Duran said he may give a client a pass if he or she is difficult, but only once.

“I don’t want any client to think of me as their slave, that’s not a long-term good client,” he added. “And I will never, never work with people that make me miserable. The cost emotionally of dealing with these clients, if being objective, is unbelievably high: It affects your service standards, you productivity and your revenue.”

Ditch testy clients.

Here’s how Duran might handle it: “I see I have failed you. I suggest you find someone else.”