When you first started your financial services business, you likely were thrilled to get new clients - any clients. Keeping money coming in the door is the first priority and a dollar is a dollar.

Over time, however, you will notice that there are clients you look forward to seeing and clients who make you cringe every time you have to deal with them. The good clients will undoubtedly have some common characteristics: they're pleasant to deal with, undemanding, appreciative of the work you do, and they pay on time. On the flip side, the disliked clients often complain, are price-sensitive, frequently pay late and never refer new clients to you. Clients like this often take up an inordinate amount of your time and energy for the money they bring in.

SEE: How To Get Referrals

Think for a moment about what you could do with all that time that you don't have to deal with problem clients. You could be out bringing in new good clients. You could be taking more time to strategically plan the future of your business. You could be relaxing more instead of dreading your next client meeting. While it may not be a concept you have considered before, it is not only perfectly acceptable, but also healthy to prune out the bad clients.

Separating the Wheat from the Chaff

How does one fire clients? The first step is identifying them. Start by making a list of all of your current clients. Develop a rating scale. For example, you could use "A" for your best clients, "D" for your worst and "B" and "C" for those in between. The goal is to shake off your "D" clients.

There are several ways to fire the clients, but it can be as simple as sending them a letter, letting them know that you are paring back your client list and that their needs may be better met with other advisors. You can even provide them with a list of other advisors and their contact information; just don't give out the information for advisors you have a close relationship with - you don't want to make your problem clients theirs. Always stay professional; this is not the time to tell them what horrible clients they are.

In my own financial services practice, I held a weekly team meeting where my staff had the opportunity to nominate a client to be fired. I quickly realized that the frustrations that I was having with certain clients was shared by my staff. Not only did these meetings end in letting go of problem clients, they also resulted in boosting staff morale.

SEE: How To Deal With (Seriously) Dysfunctional Clients

The Next Step
Make a concrete plan for the time that you have now freed up. If your main goal is to replace the revenues that you just kicked to the curb, outline the steps you will take to bring in new business, such as going to trade shows or sending referral requests to existing clients. Now that you know who your good clients are, find ways to attract more of them. For example, if you determine that most of your best clients have investment portfolios over $250,000, target similar potential clients. If you want to spend more planning time, carve it out of your schedule and stick to it.

The time that you take to analyze your current client base and prune out the dead wood will both boost your bottom line and lower your blood pressure. If you have staff, it will result in higher overall productivity.

The Bottom Line
Reviewing your client list and firing those who take more of your time and effort than others for the revenue they contribute is a great way to improve your bottom line. It serves two main purposes: to get rid of problem clients and to make room on your client roster for satisfied, well-paying clients.

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Investing

    Career Choice: Bulge Bracket Vs. Boutique Bank

    Bulge bracket banks offer higher salaries and prestige. But boutique banks are rapidly gaining market share and may offer better work/life balance and job security.
  3. Personal Finance

    Careers: Equity Research Vs. Investment Banking

    Equity research is sometimes viewed as the unglamorous, lower-paid cousin to investment banking. In this article, we compare the two careers.
  4. Investing

    7 Reasons You Will Make a Good Investment Banker

    Many seek at the door of investment banking, but few can enter. Possessing these seven traits will help you land a job and succeed in investment banking.
  5. Investing

    7 Reasons Investment Banking Is Not for You

    Even if you possess the education, experience and enthusiasm to land a coveted investment banking gig, here are seven reasons to find another career.
  6. Personal Finance

    The 10 Must Watch Movies For Finance Professionals

    Finance makes for great cinema; here are 10 of the best offerings by Hollywood on the subject.
  7. Professionals

    Career Advice: Management Consulting Vs. Investment Banking

    Compare the career opportunities available in management consulting and investment banking. Learn about salaries, skills needed and work-life balance.
  8. Professionals

    Career Advice: Management Consulting Vs. Law

    Compare the career opportunities between management and law using such criteria as skills needed, starting salary and work-life balance.
  9. Professionals

    Career Advice: Management Consulting Vs. Private Equity

    Compare the career paths of management consulting and private equity, using criteria such as skills needed, starting salary and work-life balance.
  10. Professionals

    Career Advice: Management Consulting Vs. Hedge Fund

    Compare careers in management consulting and hedge funds using criteria such as skills needed, educational requirements, salaries and work-life balance.
  1. Advanced Diploma In Insurance

    A qualification earned by insurance professionals and conferred ...
  2. Associate In Personal Insurance ...

    A designation earned by professionals looking for training in ...
  3. Associate In Reinsurance (ARe)

    A designation earned by insurance professionals looking for reinsurance ...
  4. Associate In Surplus Lines Insurance ...

    A designation earned by insurance professionals involved with ...
  5. Associate In Fidelity And Surety ...

    A designation earned by bond producers, bond underwriters, and ...
  6. Associate In Insurance Services ...

    A designation earned by insurance professionals and conferred ...
  1. How can an investment banker switch to a career in corporate finance?

    It's pretty easy for an investment banker to switch to a career in corporate finance. The career skills are easily transferable, ... Read Full Answer >>
  2. What are the best MBA programs for corporate finance?

    Opinions vary based on which publications you consult, but the best MBA programs for a career in corporate finance are at ... Read Full Answer >>
  3. How stressful is the typical corporate finance job?

    In the financial industry, corporate finance jobs are often contrasted with investment banking jobs. The traditional view ... Read Full Answer >>
  4. What should I study in school to prepare for a career in corporate finance?

    Depending on which area you want to specialize in, corporate finance can be one of the most competitive fields in business. ... Read Full Answer >>
  5. What are the differences between a Chartered Financial Analyst (CFA) and a Certified ...

    The differences between a Chartered Financial Analyst (CFA) and a Certified Financial Planner (CFP) are many, but comes down ... Read Full Answer >>
  6. What types of positions might a Chartered Financial Analyst (CFA) hold?

    The types of positions that a Chartered Financial Analyst (CFA) is likely to hold include any position that deals with large ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!