Getting rid of the unprofitable, the time wasters, and the crazy-makers in your midst
Not every client can be your favorite. That's what Debra Brede, an investment adviser and owner of five-person D.K. Brede Investment Management in Needham, Mass., used to think about one of her most demanding customers. For 20 years, the woman showed up at appointments with bags stuffed with every slip of paper connected with her investments—proxy statements, annual reports, dividend notices—expecting Brede to go over each one with her. Brede did. She wanted to offer good service, and this woman had a $1 million account. That's a healthy amount for Brede's company, which has about $1.7 million in revenues each year.
Then, as part of Harvard Business School's Owner/President Management Program, Brede took a class in which the professor stressed the importance of evaluating the profitability of each client. Brede spent two months doing just that. It turned out that even with a million-dollar balance, this client wasn't a winner. She spent a lot of time with Brede and her staff, but because her holdings didn't change much, she paid virtually no fees. Brede discovered she was losing money on the arrangement. Says Brede: "I was shocked."