Silence isn't always golden.

    Last fall, Steven Wightman realized he had a dilemma: After five months, the Lexington, Mass.-based planner could see that he'd devoted far too much time to his new clients with way too few results. "I presented them with a comprehensive financial plan featuring an entirely new asset allocation designed to provide tax-efficient, low-risk income for the long term," Wightman recalls. "They said the allocation was what they wanted, but they seemed afraid to invest and unable to trust."
    After spending five hours one day covering every detail of their financial plan and three hours another day educating them on investment risks, taxes, cash flows, disclosures and the benefits of working with all their assets at one custodian, Wightman's clients said they wanted to "think about it." Furthermore, they asked him to lower his fee because they only valued the investment advice he was providing not the advice about risk, cash flows or the other components of the financial plan. "Yet, they drilled me ad infinitum for every possible planning detail, from IRAs to insurance and taxation," says Wightman.
    He eventually put nearly 80 hours into their planning and education, or what he valued to be $12,000 of work, of which only $5,000 had been paid for. At that point, Wightman was thinking more about how to get rid of the clients than how to reform the relationship. Should he refer them to another advisor and simply call it quits? If so, should he ask them to sign a release absolving him and his firm of any responsibility for how they used or didn't use the advice he'd provided since he wouldn't be part of the implementation process?
    Friends in NAPFA offered him advice. Michael Potito, with Singer Potito Associates in Amherst, Mass., confirms he told Wightman: "Have them sign a release and refund all their money. As a condition of the refund, have them return the financial plan you prepared with a prohibition against their copying it. In the release, state that they did not complete the process and, therefore, any and all recommendations were null and void."
    Curt Weil with Weil Capital Management in Palo Alto, Calif., says he advised, "Send them a letter. It should say, 'I've spent X hours with you doing this and this and this, as stipulated in our engagement letter. Of your own choice, you have declined to proceed with what, by your own admission, is a well-crafted plan. Our professional engagement is complete, and I wish you well going forward. Enclosed is my invoice for services rendered. I expect full and prompt payment as I provided you full and prompt service."
    Weil advised further that Wightman take no "BS" from these clients. "Small Claims Court is an easy and simple remedy and, with good notes, you will prevail. We did, in a similar situation. Under no circumstances should you reduce your fee or refund a nickel," Weil added.
    And if one of these remedies worked and Wightman was free of his client, what was the lesson learned? "Here is a solution that can work for the future," David Lewis of Resource Advisory Services in Knoxville, Tenn., says he told Wightman. "We have two engagement agreements. The first is for the work you've already done with your clients, and that part of the relationship has a separate fee structure. If the client does not sign an agreement for an ongoing retainer relationship, your responsibility ends. Like you, we generally venture more work than will be paid for in the fee for the initial planning. If the relationship goes forward, we will recoup our ventured resources. If it does not continue, you and your clients both lose, because that initial project is of little value to either of you without the ongoing relationship."
    So, to summarize, Wightman was advised to refund his clients' money, to not refund their money, and to protect himself with a different contractual arrangement in the future. What did he decide to do?
    First, he had to make contact with them, and that wasn't easy. "After a point, they didn't answer my e-mails or phone calls," says Wightman. Eventually, he got the husband on the phone, who said he'd talk with his wife and get back to Wightman. Further e-mails and another phone call from Wightman went unanswered.
    Just prior to this break in communication, Wightman had made his final asset allocation recommendations to the clients and had proposed an investment policy statement that would govern the continuing relationship he'd hoped for. An early adopter of outsourcing strategies, Wightman had recommended that an outside manager handle the couple's investment management and that his clients sign a disclosure and authorization for such. When finally able to resume communications with the couple, Wightman learned they were highly distrustful of this arrangement, fearing the recommended manager would run off to Mexico with their money.
    Says Wightman, "Following my presentation, they had requested a few days to review my recommendations, to which I agreed; I later believed it to have been a mistake. [When communication lapsed], I sent them a termination letter, concluding there was nothing further I could do to support them in reaching a decision. I offered a settlement for half of what they owed for the time I'd taken to complete their plan and meet with them hours upon hours explaining every detail of it, as well as going over their choices and strategies."
    Imagine yourself in this position. New clients have come in, discussed with you their goals, given you financial information, made it clear they want an investment plan, and you've worked diligently to devise such a plan and present it to them. So far, a fairly typical arrangement-until they disappear on you. They won't answer your calls or e-mails. You've busted your butt for them, yet their silence is sending loud and ominous signals.
    The clients finally contacted Wightman after a long absence. "They responded with a bitter letter accusing me of everything under the sun from having the outside manager I'd recommended do their financial plan to taking kickbacks for steering their investments to Ameritrade. They attacked my professionalism. They requested a full refund of the planning retainer that covered less than half my cost to create their financial plan. It was then that I realized these folks must have been burned somewhere in the past-that their level of trust was near zero," Wightman says.
    As bleak as all this seems, Wightman was able to turn things around, crediting Stephen R. Covey's principles from his book, The 7 Habits of Highly Effective People, for the solution. "I responded by acknowledging all of their concerns," he says. "I took responsibility for delaying their financial plan somewhat because, when they became clients, I was learning and working through the sheer complexity of a recent upgrade to my planning software, Naviplan Extended. One by one, I addressed each of their accusations with facts and supporting documentation."
    Wightman learned that he and his clients had both begun using overly aggressive spam-blocking software during their engagement. "I discovered my failure to receive their e-mails when I searched my spam-catcher for blocked communications."
    Once respective responsibilities had been acknowledged, Wightman proposed a different resolution the clients could hear. "I offered to meet with them to arrive at a win-win solution and I reminded them of their signed agreement calling for binding arbitration if we could not resolve the dispute within 30 days and at a 50/50 shared cost," says Wightman. The husband called him just a day prior to the deadline and the clients signed a release agreeing not to implement any part of Wightman's plan. "They also requested that I keep the retainer," he says. Thus, the dispute was settled.
    The lessons Wightman learned can benefit us all. Remember, on its face, this engagement seems typical of interactions we have every day with new clients; it could have happened to any of us-or could it? What do some planners know that would have allowed them to circumvent these problems?
    First, and perhaps most important, they know when to accept and when to reject new clients. "This is where I truly failed miserably in this case," says Wightman. "I simply didn't have my antennae raised high enough." Are those antennae something we all possess, or do they need to be cultivated? The answer is-probably a little bit of both. The intuition one develops about new clients comes from experience; the more clients one works with, the more personality nuances and quirks become recognizable.
    But there's more to it than that. It's possible Wightman, or any advisor, could have made the decision in the very beginning that he either couldn't work with this couple, or that he knew exactly what they needed and, though they would be challenging, he could provide it. And what would that have taken? Simply, more conversation. We can all learn how to draw out our clients, learn their fears, their defining experiences-in short, all of the quirks that would have explained this couple and the hesitations they felt about certain courses of action.   
    Wightman now realizes this, and a lot more. "I've made lots of improvements in my practice, including a service manual that will be at the fingertips of every client, and an owner's manual outlining hiring, training and other procedures. Most important of all, I've learned that selecting the right clients is crucial." He believes he gave his client couple too much rope by allowing one too many meetings in which he now realizes they were scrutinizing the validity and wisdom of the financial strategies he'd planned for them.
    Isn't that a client's right? Yes. But, Wightman says, "I now realize they were just looking for any reason not to proceed because they were afraid. In the final analysis, I take this experience as both my failure and a valuable lesson." He's also gotten the tech support he was lacking, switched to planning software he believes is more appropriate for his clientele and picked up valuable client interaction training with a prominent industry coach.
    Thus, he pronounces, "I've sprouted a pair of very long antennae."

David J. Drucker, M.B.A., CFP, a financial advisor since 1981, sold his practice 20 years later to write, speak, and consult with other advisors. Please visit www.daviddrucker.com for more information.