How do you deal with clients who take more of your time than you bargained for?

    I remember Betty Brandywine. She came into my office as a freshly minted widow and I was full of sympathy.
Betty was only 52. She was a young widow because her husband committed suicide, a fact that promoted my feelings of sympathy that much more. Yet, she wasn't a widow without a clue; she seemed to know something about the investments she held and didn't seem particularly worried about the future. That should have been red flag number one.
    I produced a plan and we went over it together. Again, her only real interest seemed to be in the specifics of my investment recommendations-flag number two. She asked me to revise my recommended portfolio to include some different mutual funds she liked better than the ones I'd recommended. That was flag number three.
    Understand that this was a fixed-fee planning engagement. Betty hadn't expressed an interest in ongoing financial management. My plan revisions, which several months after the start of our engagement could be counted on the fingers of two hands, were leading nowhere. I had lost sight of our original planning objective and she seemed quite happy to engage me in endless conversations about the merits of this vs. that mutual fund.
    The letter I finally sent her-my sympathy now being primarily for her deceased husband-was a toned-down version of, "It's been great, but you've more than exhausted the amount of time I owe you vis-a-vis the fixed fee I charged you. Have a nice life."
    Of course, I would handle a time-waster like Betty differently today. I'd better clarify her needs up front, and maybe refer her elsewhere. Or perhaps I'd take a radically different, life-planning approach with her to get to the issues underlying her focus on investment returns and her obvious attempt at pain avoidance. But I didn't know any better back then.
    I learned from my mistake, as have the other planners I talked to for this article. In fact, more than one planner referred to these clients as PITAs-Pains in the Ass. "These are the clients who you used to enjoy being around. Now they complain about everything," says Jane Marchand of Marchand Faries Financial Management Inc. in Jacksonville, Fla. "They want weekly meetings. They call on a daily basis. They suck the life out of you and your staff and use much more than their fair share of your limited resources. Some advisors make an annual habit of cutting loose their most aggravating PITAs. Yes, you will lose the income. If you think they are worth keeping from a pure dollar standpoint, then retain them. But if they cause you to lose your staff-or your mind-you might want to reconsider."
    It's not that we who've dealt with PITAs are hard-hearted and unsympathetic. Many seem nice enough at first, and we respond appropriately. It's just that their constant nattering eventually undermines our desire to serve.
    Says a seasoned Greg Fenton of Cambridge Cape Cod Advisors in Sandwich, Mass., "They're easy to spot because the only thing they're interested in is the day-to-day, minute-to-minute movements of the stock market. During a preliminary interview, after I've explained the comprehensive approach to financial planning we take and how investments are just one of many parts of the process, they will invariably keep asking what my predictions for the Dow are. I usually quote them a high fee and figure they will go elsewhere."
    Sometimes PITAs aren't deterred by the high fee and, for the right price, some advisors aren't deterred by the worst PITAs. Neil Brown of Burkett Financial Services LLC in West Columbia, S.C., says, "I state a maximum fee in my registration and most clients typically pay less. But if they are difficult, I charge the max and it allows me to smile and go about my merry way."
    Interestingly, some clients know they're PITAs. Vivian Honeycutt of Honeycutt Financial LLC in Chesapeake, Va., says, "I advised one client who was [wasting my time] that his case was more involved than I first thought and his fees would need to be adjusted to recognize this. His comment was that he agreed with me. It seems he didn't like the fact that I thought his financial planning needs were not complicated-which they weren't."
    Honeycutt doubled the client's fee, told him approximately how much of her time that fee would buy him each year, and now bills him extra hourly fees if he goes over the limit with time-wasting requests or phone calls. "Some people just think if they don't pay a lot, they aren't getting the best. Go figure," she concludes.
Not all advisors have their price, though. Says Fenton, "In the past, I would charge [PITAs] triple fees-yes, they always pay them-and I would just give the extra money to staff as a 'putting up with it' bonus since, ultimately, it's my staff's time they waste. Now, my employees tell me they would rather not deal with these time-wasters [even for the extra income."
    With enough time in the business, you can learn to see these clients coming and design a plan to deal with them that goes beyond assuaging the pain with higher fees. Charles Neff at Balasa Dinverno & Foltz LLC in Itasca, Ill., a fee-only advisor for the past 15 years, says he's encountered a few PITAs in his time. "It may seem obvious, but one way I've found helpful to avoid the time-waster is to explore in our first meeting the prospect's view of an ideal advisory relationship. If he's looking for a sounding board-or worse, a 'research associate'-with whom he can converse several times a week, I know he won't be a profitable client."
    On the other hand, says Neff, some clients don't remain "high maintenance" if the advisor can gain their trust. In those situations, he may take on the client. If the client's not likely to change, Neff sends him elsewhere. How did he develop his radar? The same way we all do-experience. "I had one client who I had to terminate after I realized I had met with her 18 times in one year," he says.
    At Legend Financial Advisors in Pittsburgh, director of marketing Christopher Kail describes the firm's scientific process for characterizing every client's financial worth to the firm. "We formed a contract review committee that meets weekly to evaluate all clients based on hours spent on them, the complexity of their situation and their financial net worth," he explains. "Everyone in the firm completes a daily time log to track all work being done for each client so we can adjust the fees we charge, if necessary."
    Kail says this process has been of great value to Legend over the past couple of years. "Our comprehensive analysis has caused us to reduce fees, in some cases, or to increase fees for 'high maintenance' clients."
    How about the PITA you take on at a higher fee-knowing he's a PITA-who trusts you, yet still refuses to "behave?" "I spend the first month 'training' them to understand that we do not take daily calls about their investments," says Fenton. "I also make it a point in the first quarter of working together to call them about a subject unrelated to the stock market: a tax tip, a reminder about getting their wills completed, a nonfinancial issue ... anything to continue to show them that we're working on a complete plan, we have things under control, and we'll call them." If Fenton's time-waster continues his bothersome ways beyond the first three to six months of the relationship, Fenton figures that's just who the client is and doesn't offer him a renewal.
    Just remember, you're in business for two reasons: to make money by helping people and to have a good life. If, in the context of your relationship with a single client, he prevents you from achieving one or both of these objectives, don't hesitate to give him the axe.

An independent financial advisor since 1981, David J. Drucker, M.B.A., CFP, is president of Drucker Knowledge Systems. He also speaks at industry conferences and consults with other financial advisors. Learn more about him at