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Success Tips for Releasing Non-Ideal Clients – Episode 30


  • Have your wealth management process in place before releasing clients.
  • Release clients in stages to minimize the impact on your revenues.
  • Maintain great communication with all involved parties throughout the process.

Let’s be honest: There probably are at least a few clients—maybe a lot—who simply aren’t right for you and your practice. Letting go of those clients can generate tremendous benefits—not just for your business, but for those clients who aren’t ideal for you.

When it comes time to disengage from non-ideal clients, there are four typical options to consider and assess—quiet file, hire, transfer or sell—all of which you can read about here.

If you decide to transfer or sell clients to other advisors (either within your company or to an outside advisor), here are seven steps that will help you do so effectively.

1. Have your wealth management process in place before releasing. You need to have your wealth management process fully in place and running well before you begin releasing inappropriate clients. For most financial advisors, the best timing for beginning the release process is about 90 days after you have established a “rediscovery” process. If you have any doubts about the best timing for releasing clients, work with your team or a coach to identify the optimal time frame.

2. Identify the right providers before releasing. Do not begin releasing until you have identified other advisors or firms that are eager to take on your clients and that will take excellent care of them.

3. Release in tranches. In most cases, it’s not in your best interests to release all inappropriate clients at once. The reason: Doing so would cause an abrupt and possibly significant drop in revenue. Instead, consider releasing clients in tranches according to their assets.

Example: You might begin by breaking out the bottom 20 percent of your clients and packaging them for sale to a firm that specializes in serving clients at that asset level. Once you have replaced that revenue with the addition of ideal clients, move up to the next 20 percent and find a provider appropriate for serving that asset level. Keep going until you hit your goals for revenue and number of ideal clients.4. Establish close client contact. While you should meet with clients with larger accounts in person to explain the sale or transfer, you can use phone meetings for those clients whose account sizes do not warrant individual meetings. It’s best to make these calls yourself, unless it is such a large number that time doesn’t allow you to do so. In this case, have a member of your team help with the calls. Dedicate one day to phoning these clients to help ensure that you reach each one.

Follow up the telephone calls with a letter. It is essential that the phone call precede the letter. Along with the letter, you will also mail the appropriate form required to change the registration and to allow the buyer to receive the fees and/or commissions.

Call all clients two weeks after mailing the letters to verify that they received them, to answer any questions and to ask when you can expect to receive the consent forms. If necessary, send additional copies electronically.

Consider arranging a conference call with the principal financial advisor to whom you are selling or transferring the clients. This will be your opportunity to introduce the new financial advisor, who can then address any questions or concerns the clients may still have about the arrangement.

5. Keep all parties interested. Regardless of whether you are an independent financial advisor or an employee, it’s important to make sure that there will be an earnout provision based on the degree of success in transferring or selling the revenue opportunities. It is in both parties’ interest to facilitate a smooth transition.

6. Get compliance assistance. It’s critical to get compliance assistance when undertaking any transfer or sale. Seek help either from the compliance office of your broker-dealer or, if you are an RIA only, from your own legal counsel. Pay special attention to your company’s privacy policy to confirm that all provisions are followed properly.

7. Maintain good client service. Finally, bear in mind that if clients have received poor service in the past, they may use either a transfer or a sale as an opportunity to explore other relationships with other financial advisors. Minimize the possibility of this by continuing to provide all clients with excellent service up until the time that you release them, and then by making the sale or transfer as convenient as possible for them.

Letting go of clients who aren’t the right fit for your business can be a win-win for you and for the non-ideal clients—so be sure to take the right steps to sell or transfer those clients successfully.



To download a transcript of this episode, click here.

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