Market volatility is unsettling for most financial advisors. Dealing with up and down conditions is tough, but what makes it even worse is the emergence of “toxic clients” who begin calling frantically. These clients are “toxic” because they can have a poisonous effect on both the advisor’s mental and physical health.
Advisors who consult with me complain about anticipating these dreaded calls from clients who suffer from what I refer to as market “Collapse-O-Phobia.” They continually demand explanations and/or reassurance from their advisor. Dealing with these clients taxes the patience of advisors and exacerbates their frustration, self-doubt and anxiety, raising the probability of advisors succumbing to burnout.
Because many advisors are hesitant to send any business away, they will put up with unbearable, demanding, self-centered clients, whose behaviors can add exponentially to the advisor’s career-related stress.
But, as their advisor, you have a choice. You don’t have to retain these clients. Many advisors who have culled these clients from their “herd” note that because their stress was dramatically relieved after doing so, they were much more successful prospecting for replacement clients, thus they did not suffer a loss of AUM as a result of eliminating the toxic ones.
Undoubtedly, you will meet prospective clients with these toxic traits, but you won’t see the traits because these prospects will be on their best behavior, waiting for you to sign them on. Many may be high-value prospects, thus tempting you to ignore the warning signs as you sell them on coming on board. My goal is to help you to recognize toxic traits that may be lurking behind a veneer of good behavior and make the hard decisions about whether it is in your best interest to take on or retain such people.
For current toxic clients, I suggest doing this culling on your birthday or anniversary, etc., so that you give yourself the wonderful gift of peace of mind.
In my book, “The Financial Advisor’s Ultimate Stress Mastery Guide,” I describe 10 toxic personality types you are likely to encounter and which you should consider avoiding or eliminating from your practice. Because you have not learned how to recognize the warning signs prior to accepting these types as clients, it is highly likely that you already have such clients in your practice. I will describe the first two types here and the rest in subsequent articles.
This is a hostile, disrespectful person who keeps others at a distance with his abusive, insulting “candor.” He doesn’t use diplomacy in communicating and believes that being direct and “telling it like it is” all of the time is a virtue. He seems to thrive on provoking and bullying people in a seemingly desperate need to show how smart he is. In fact, he feels powerful by “putting down” other respected people, such as his advisor.
Since this is often a high-value client, he believes you will continue to take whatever he dishes out; but can you afford to be constantly provoked by a client who has a chip on his shoulder from childhood and will act out a lifetime of insecurity and anger, attempting to bully or belittle you every time the market takes a skid?
“Control freaks” tend to be all-or-nothing thinkers, fearing that if they are not in control of everything in their lives, they will lose it all. They often expect perfection from everyone they deal with, so they hire you, expecting the perfect performance—consistently.
Since it’s impossible for these clients to delegate complete responsibility to you, they micro-manage you, wanting to take part in and question every decision you make. Is it really in your best interest to retain a client who questions every move you make, worries about every dip in the market and obsessively questions most of your decisions?
Stay tuned for my next article, where I will discuss the “Eddie Haskell,” “Doom-And-Gloom Debbie” and “High-Maintenance Marty” client personalities.