David R. Evanson

The Career Advisor, Fall, 2004

There are generally two forks in the road where showing a client the door, gently or otherwise, is the right thing to do. First, you may have taken the lessons in our article above, “Less is More,” to heart and are simply taking the plunge. Or you might have reached that other plateau where quality of life and the quality of your own professional experience is starting to become a priority.

Taking on clients whose only qualification was ‘having a pulse’ seems to be a rite of passage in the financial planning business, but at some point, it just doesn’t cut it anymore. And when that point arrives, you need to know how to cut them loose in a way that is professional, ethical and causes the least disruption to the people involved.

Chris Dardaman, a principal in Atlanta-based Polstra Dardaman, says that working in the best interest of the client and the best interest of the firm will yield a process that looks something like this:

Meet in Person. Unless you have almost no relationship with the client, do not send them a letter, says Dardaman. Instead, he says, “It’s best to meet with them in person or, at the very least talk with them on the telephone, because you can be more responsive to their needs.”

Make Referrals. Although there is something to be said from removing yourself from the picture altogether, Dardaman says that he believes it’s best to make referrals to other planners that manage the kind of business this client represents. “You want to get the person to a place where they can move forward, and not leave them stranded.”

While such a referral may place you in a position to earn a referral fee, Dardaman avoids these. “We would need a solicitor’s agreement with the firm we are referring the business to, but that aside, we would prefer to keep the relationships separate and clean.” Plus, imagine the fallout, or just plain ill will, if the referral doesn’t turn out well and the fee comes to light.

Finally, Dardaman says that you must remain flexible, but provide the client with an ultimate timeframe for leaving. Nobody wants to be a member of a club that no longer wants them, but there are practical considerations to a financial planning relationship that may influence the schedule. These can include interviewing other financial planners, the time it take to transfer assets, the onset of tax season, or a one-time event with the client such as a rollover, or impending retirement possibility to consider.

As Dardaman concludes, “Just because you are not someone’s financial adviser does not mean you cannot be friends and have some kind of relationship. Letting them go the right way preserves this and all the positive things that may ultimately flow from it.”