The power of saying no

Many financial advisors seek rapid growth, but not all growth is beneficial. Taking on clients without proper assessment can lead to frustration and damage to your reputation. Successful advisors prioritize collaborating with the right clients. Misalignment between an advisor’s services and a client’s expectations can result in dissatisfaction and lost revenue.

Saying no to prospects may seem counterintuitive, but accepting the wrong clients can have serious long-term consequences.

Multiple studies have shown that dissatisfied clients share negative experiences more frequently — that’s true across multiple industries. This can significantly hurt an advisor’s reputation.

For example, the American Express Global Customer Service Barometer reported in 2017 that U.S. consumers tell an average of 15 people about a poor experience, while those who’ve had a good experience tell just 11, on average. Add to that the reality of negativity bias, which leads people to take negative stories more seriously than positive ones.

Poorly suited clients often demand excessive attention, leaving less time for ideal clients and increasing advisor stress. Ultimately, focusing on the right clients enhances your satisfaction and profitability.

Evaluating prospects

Evaluate a potential client before you onboard them. There can be several reasons why a prospect may not be a good fit for you.

Here are four areas to focus on when assessing a relationship.

1. Advisor expertise vs. client needs: Some advisors provide comprehensive financial planning, while others specialize in investment management or estate planning. If a prospect needs specialized services, such as business succession planning or cross-border tax strategies, refer them to someone who can meet their needs instead of offering inadequate service.
2. Communication expectations: If misaligned, this can frustrate both advisors and clients. Some want frequent contact, while others prefer a hands-off approach. Clarifying these expectations is paramount to maintaining client satisfaction.
3. Revenue vs. time commitment: Not all clients contribute equally to revenue. Some require extensive attention and deliver little revenue. For instance, a prospect with complex needs, but a modest portfolio could demand high service levels without being financially viable. These clients can drain resources better spent on more fitting relationships.
4. Compatibility: A successful client-advisor relationship is one based on trust and respect. Difficult clients with unrealistic expectations can create stress and inefficiency for the advisor. If you sense potential challenges in a prospect’s attitude or expectations, it may be best to decline the relationship.

How to say no

It is sometimes difficult to turn down business in a professional manner. A little preparation and openness go a long way. 

Begin the conversation by thanking them for their interest in your services, and for the opportunity to discuss their financial needs. Acknowledge the time invested in having the conversation with you. This sets a positive tone and shows that you value their engagement and consideration.

Explain the reasons why your services don’t align with their needs. Whether it’s due to their financial goals, investments preferences or communication needs, transparency builds trust, even in a negative situation. Be straightforward and considerate. Make clear that the decision is a reflection of fit, not worth.

Talk about your dedication to providing a high level of service to your clients. Make clear that it is your goal to partner with the people you serve, whose needs closely align with your expertise. This reinforces your professional integrity and that you care about their best interests.

Encourage them to be open to communication in the future. Explain that circumstances change, and that your services and their needs may be a better fit in the future. This ensures they are comfortable reaching out again under more suitable circumstances.

If possible, recommend other professionals that may be suited to their specific needs. This helps the prospect, and reemphasizes your commitment to their overall well-being. It can leave a lasting, positive impression that may encourage them to return to you in the future.

Saying no leads to better growth

Saying no to a prospect may seem like a lost opportunity, but it is a powerful strategy for long-term success. By focusing only on clients whose needs align with your expertise and service model, you can improve client satisfaction, increase profitability, reduce stress, enhance practice efficiency, protect their reputation and encourage referrals.

The best advisors understand that acquiring as many clients as possible is counterproductive. Success means obtaining the right clients. By doing this, advisors can build a more substantial and sustainable practice that benefits both their clients and business.