One of the biggest mistakes retirement plan providers make is believing that every client is worth saving.
They’re not.
I understand why providers obsess over retention. Losing clients doesn’t look good. Nobody wants to explain why ten plans left last year. Salespeople especially hate losing accounts because they worked hard to bring them in.
But retention for the sake of retention is stupid.
Some clients don’t pay their bills. Some clients ignore every request for information until the last possible second and then blame you when something isn’t completed on time. Some clients abuse your employees. Others continually create compliance problems because they refuse to follow instructions.
Then there are clients who simply aren’t profitable.
If a client generates $5,000 in annual revenue but requires $15,000 worth of your staff’s time, that’s not a client. That’s a charity.
Providers need to periodically look at their client base and determine which relationships actually make sense. That doesn’t mean firing every difficult client. Retirement plans are complicated, and good clients can occasionally be demanding.
The issue is whether the relationship is consistently bad for your business.
I’ve always believed that one of the best business decisions I ever made was understanding that I don’t need every potential client. The wrong client can consume the time and energy that should be devoted to the right ones.
There is also a morale issue. Nothing frustrates good employees more than management allowing a terrible client to continually mistreat them because management is afraid of losing the revenue.
Sometimes losing a client isn’t a failure.
Sometimes it’s addition by subtraction.