Say It in a Letter

When you’ve decided to fire a client, use a letter to explain why.

By Bill Bachrach, CSP

There is a “right” number of ideal clients for your business. A number that allows you to do the best you can for both your clients and your business. But chances are you currently have too many clients and must decide who to keep and who to let go. When the time comes to thin the rows, how can you begin this process with efficiency and grace?

A letter is a simple, clear way to help people understand what you are doing. Of course, sending letters has its hurdles, the primary one being clearance from your compliance department. The other difficulty, knowing what to write, will be addressed here. We’ve tried to make the message as compliance-friendly as we can, but you should work with your own people to ensure that it is acceptable.

A two-letter approach
Consider creating two different letters, which you’ll send to different types of clients. First, is the “Dear John” letter saying, essentially, that you’re working in a different market niche and they are not part of it. You can also include a referral to another advisor, if there’s someone in whom you have confidence. The other letter is more of an announcement of coming changes and an invitation for clients to talk with you—their advisor—about what the new changes will mean.

In either case, let people know that in order to provide the best service to your clients, you are focusing on a core group who meet specific criteria. These criteria should include both personality characteristics, such as “enjoys delegating financial tasks,” as well as financial factors, such as “has investable assets exceeding $250,000.” Including these criteria in the first letter could help recipients realize for themselves that they are not your ideal clients. The letter might start along these lines:

Dear Joe and Susan,
This letter is to announce that we have been examining how we can be of the utmost service and value to our ideal clients. Although we have appreciated your business and have enjoyed working with you, it has become apparent that we will no longer be able to serve your needs. We are enclosing a referral to a reputable financial advisor who may be better suited to your financial situation and advisory requirements. Also enclosed is our Ideal Client Profile, which details the type of client who benefits the most from working with us. If you feel there has been some error or misunderstanding, please contact our office, either by calling 555-5555 or by emailing us at advisor@trustedadvisor.com. We wish you the best of success in your financial future.

In the second type of letter, the tone is somewhat different, and you’ll also request a personal meeting. This brief communiqué could read like this:

Dear JoAnn and Tom,
As a result of examining how we can be of the utmost service and value to our ideal clients, we are excited to announce that we have made some important changes to our business that will positively affect you. Enclosed is our Ideal Client Profile, which will give you a sense of the kind of client who benefits the most from working with us. We believe you may be that person. Please contact our office, either by calling us at 555-5555 or by emailing us at advisor@trustedadvisor.com, to schedule an appointment to discuss what great new effect this will have on you.

Why it works
If you think these letters are a bit too direct, consider that it’s highly unlikely anybody you would really want as a client would be offended by the truth. I realize things have been tough lately, and you may still be in a survival mode, but think about this for a moment. Anyone who is put off by such a description either doesn’t fit that description or gets riled up over nothing. In either case, this is not a person you want as a client. The ones who fit the profile will feel privileged and will be excited to work with someone who specializes in working with people like them.

Let people know that in order to provide the best service to your clients, you are focusing on a core group who meet specific criteria.

It’s more likely that a desirable client will ask you for clarification or else make a change to meet your criteria. A number of advisors have told me that when they shared their ideal client profiles with people, some clients simply asked what they had to do to bring themselves up to snuff. Some brought their assets from other places in order to keep working with the advisor. Some have even been willing to write checks to make up the difference. For example, one advisor might say that a person’s account must yield $8,000 per year to the advisor, and one person is close—let’s say the account yields $7,000 a year. Then that person could elect to simply pay the additional $1,000 outright. (I acknowledge that some advisors do not have this latitude due to licensing or company restrictions, but most do have the ability to adjust the percentage that clients pay them based on their assets.)

You should find that sorting through your existing client base goes smoothly as long as you remember that you are doing it for the good of everyone concerned. The ideal clients benefit because they will be getting improved service from you, and those who are let go will be free to pursue a relationship with a financial advisor who will regard them as ideal clients. Remember, it’s all about them. Use the sample letters recommended here as a way to ease into the conversation of how and why things will change, and it should also work out to your benefit.

Don’t be a salesperson; be a Trusted Advisor.

©2004 by Bill Bachrach, Bachrach & Associates, Inc. All Rights Reserved.

Bill Bachrach, CSP, is an author and industry speaker. You can contact Bachrach & Associates, Inc. at 800-347-3707 or visit their website, www.bachrachvbs.com.