Vetting and walking away

Proper vetting of potential clients in the beginning can prevent bigger problems later. But figuring out which prospects to keep and which to pass on will vary by advisor, as the warning signs about who could turn out to be a problem client aren’t always obvious.

The initial meeting with a potential client is really a two-way interview, where the vetting is reciprocal. Mean-spirited and overly demanding clients are a non-starter for most advisors, as are those looking for services the advisor doesn’t provide. But a superficial vetting process can allow a bad client to slip into your book of business, said Alessandro M. Forte, FCII, CFP, a 26-year MDRT member from South Yorkshire, England, UK.

That’s why MDRT members have developed strategies for vetting prospects and a process for cutting them loose when they’re not a good fit. Kasey Hammer, MBA, a 13-year MDRT member from Lancaster, Ohio, USA, summed it up succinctly: “Sometimes the best clients are the ones you walk away from.”

One of her red flags is a prospect who has bounced around several financial advisors. 

“If they jump firms a lot, they might not be happy, or you might not be able to satisfy them because they might not take your advice,” she said.

Getting a vibe

Forte focuses on two main objectives when first meeting a potential client: figuring out whether they like and trust each other enough to work together and determining if he can help them.

“You can decide whether I’m going to become your advisor or not — that’s fair,” Forte said. “But I am also going to decide whether you become my client, because the basis of any great relationship, whether it’s a spouse or family, has to be a two-way street.”

Anthony G. Engrassia, ChFC, LUTCF, a 28-year MDRT member from Atlantic Beach, North Carolina, USA, established a vetting firewall that he refers to as a “right-fit call” where a staff member from his office conducts a preliminary 20-minute phone call with prospects to learn their top two or three financial priorities.

These calls often reveal if the potential client mainly aims to invest their money, which is better handled by an investment company, according to Engrassia. “We’re more of a holistic planning company, so we tell them that it’s not really a good fit, and we can’t create the value you want because we charge fees for our planning,” he said.

Following that initial round of vetting, Engrassia discusses various aspects of planning the firm offers, such as legacy planning, retirement planning, investment planning and more. Those looking to fulfill just one piece of the financial planning puzzle are often referred elsewhere, he said.

A mismatch in the specific needs of a potential client is not the only deal killer for some advisors though. Savvy advisors also look to see if the relationship will be a good personality fit.

Brad J. Myers, a 22-year MDRT member from Draper, Utah, USA, holds as many as four meetings with a client before formalizing the relationship. Myers uses a vetting method he calls the “Triple-A process,” which considers assets, attitude and advocacy. 

“The second A stands for attitude, and this is where it really goes into play, not only for you as the client, but us as your advisors,” he said. “We only want to work with people we like, and we think we can get along with. If you’re a married couple, we’re also looking at how you interact with each other.”

Myers said it’s not uncommon for him to turn down clients who are combative with him, his staff or each other.

Travis D. Manning, CFP, CLU, a 15-year MDRT member from Caledonia, Ontario, Canada, said he looks for similar negativity at the beginning of the advisor-client relationship to better predict their temperament later on. Manning often has clients wait in the reception area of his office before the first few meetings just to see how they interact with the staff, who he says are very personable. “They are really outgoing and really good with people, so I’m thinking, If you can’t get along with them, how are you going to get along with the rest of us?” he said.

He also gauges whether potential clients have a sense of humor. “I can usually put them at ease right away with a joke,” he said. “If they’re too closed off, though, and they won’t share anything, that’s a bit of a red flag as well.”

More red flags

Abusiveness from a client is the most obvious red flag, but their treatment of other family members can also indicate what they’ll be like to work with, according to Manning. “If they don’t care about their family, that’s an instant no from me,” he said.

Clients often make jokes about not caring what happens after they’ve died because they’ll be out of the picture anyway, but some of them really mean it, according to Manning. “I don’t know if I want to deal with that,” he said.

Red flags surrounding respectfulness can sometimes be seen in how much the prospect involves others in the process, particularly the spouse, according to Myers. The client-advisor relationship is often driven by the husband, some of whom intentionally keep their spouses in the dark. “That’s when we take a pause and ask to bring her in,” Myers said. “Let us talk to her and build that relationship.”

Other caution flags to look for are prospects who are unwilling to respect the advisor’s private life. Both Manning and Hammer said they establish clear boundaries with clients early on, forbidding weekend and evening calls.

“I tell them right up front that I have four young boys, and they all play sports, and I don’t do weekends — that’s my family time, and they respect that,” Manning said. “Every once in a while, I’ll have an evening available, but most of the time it’s just during regular business hours.”

Hammer and her three staffers have 12 children among them, and she built a culture whereby everyone has the flexibility to come in after dropping their children off at school, leave in time to pick them up and attend their extracurricular activities.

“A lot of our clients understand that families come before work and that they might have to wait a day or so before we get back to them because we’re out on activities with our kids. They would put their kids first too,” Hammer said. “When vetting clients, we try to align those values. Some have asked for my cell phone number and whether I would answer if they call me at 8 o’clock in the evening, and I said absolutely not. We’ve had prospects come through our office door for consultations, and we’ve told them, ‘Sorry, we don’t think it’s a fit. We’re not going to be your advisors.’”

Cutting them loose

The vetting process aims to deter problematic or otherwise incompatible clients — and while Engrassia uses the “right-fit calls” as a filter, sometimes advisors just have to break the news that a relationship isn’t going to work.

Manning said that he tells potential clients who aren’t a good fit to call after they’ve given it some more thought. If they reach out again, he typically sends an email saying his services aren’t what they need and they might have better luck with a different institution.

“I just kind of point them in a different direction,” he said.

Manning said most of his clients come from referrals, though, so he often has some understanding of their situation before they come in. “Ninety-nine percent of the time it’s good people referring good people,” he said.

Myers similarly said he is rarely in the position of turning down a client because of quality client referrals. Advocacy is the third A in his Triple-A process, which means encouraging existing clients to advocate on his behalf to friends and family who would be good to work with. It’s essentially another layer of vetting, he said.

“When we’re delivering their documents, and they’re thanking us for helping them, we will bring it up and say, ‘We’ve had a great experience, we loved working with you, and we would love to work with people who are similar to you. Who do you know that we can help?’” he said.