"He was a south Georgia real estate guy. He didn't trust lawyers," Shorr says. "He thought, 'Whatever my kids get, that's more than I had.'"
About a year and a half later, Shorr got a call from the man's daughter. Shorr knew the father had died, but the mother had now passed, and the children were trying to gather up their parents' financial documents. Shorr says when he told her about the tax bill they faced, she got extremely upset and then became upset with him. Fortunately, he had brought the children into the estate planning discussions, and the girl remembered those conversations about the tax bill. The children wound up having to sell property to pay the Internal Revenue Service.
While some clients won't open their wallets, others can't seem to shut them. Kathleen Godfrey, principal with Godfrey Financial Associates in Latham, N.Y., says she had to fire a client couple in 2005 after working with them for nine months because they were addicted to spending. The couple, in their mid-forties, had a combined annual income of $350,000, and yet they could not make ends meet. Their monthly spending was more than $20,000; they each had extensive wardrobes of elegant couture, jewelry and accessories; and they vacationed at the most exclusive resorts around the world.
They owned a fleet of his and her vehicles, including Porsches, Harley-Davidsons, Cadillac Escalades and speedboats-all of which they bought on loan-and had less than 5% equity in their $450,000 home. And every time they would begin to accumulate equity again, the couple would refinance the loan and cash it out.
Their financing costs were so high, they had little to put toward retirement-they had less than $50,000 put away and contributed only minimal amounts to their 401(k)'s-and much of their $20,000 monthly expenditure went toward loan payments. Their annual bonuses, of about $30,000 each, were used to pay down debt and acquire more stuff.
"This couple was too narcissistic to follow through on any money management or retirement planning strategies," Godfrey says. "To avoid any possibility of future legal entanglements, the only prudent move was to fire them."
And then there are the clients who get seasick when the market falls and they call their advisor screaming, "Sell!" despite their advisors' pleas to hold on for the ride. That group can include anyone from the chief bottle washer to the chief executive.
One advisor says he had a client who was a concrete contractor, and during the market downturn in 2003, the client began talking about liquidating his stock portfolio. The advisor kept trying to persuade him to hold on to it, but after several months, the client could take it no longer and sent a fax that said he was done. He wanted to sell everything. The advisor complied, but he says the man's timing was impeccable. Not moments after the time stamp on the fax, the markets turned around and began what would be a five-year bull market.
And then there are clients who won't sell their stocks for anything, particularly if it's the stock of a company for which they worked. Unfortunately, if the company doled out stock to its employees, these clients' portfolios are overloaded with that company's shares and desperately need diversity. Advisors say they frequently tell their clients not to have all of their eggs in one basket, but it often falls on deaf ears. That's sage advice, as evidenced by all of the former employees of tech businesses when their companies' share prices plummeted and their pensions were wiped out.
But what happens when the client actually listens and sells his stock, only to see it jump from $30 to $300? "You're going to lose that client," one advisor predicts.