I'd give him exactly what he wants,you get paid he is happy.You could charge for positive reviews as well.Offline clients don't get it,if they do they try it themselves to save money.
You have to get clients,give them what they want and slowly educate them.
how hard will it be to rank his own website(which probably has his name so it would rank iself anyway).
Now once it ranks high,ask him are you happy you're site is in x position.He will say.Give it a month or 2 (in the meantime try and get the emd for local searches in the area) and ask if he has gotten more clients,answer will be no to not much,THEN put your point across(whilst building that EMD nicely).
Good luck but never turn down easy money,you're getting paid the same,I can't see the problem here.