Jane Jones had $450,000 in her 401(k) plan when she called up her advisor to say she wanted to withdraw half of it. Still reeling from the loss of her husband, Jones (not her real name) had been sitting up late at night watching television when she saw a commercial in which a man was extolling the virtues of gold coins.

Jones saw the ad and knew she wanted to buy some. She called the number in the advertisement, and the next morning, she was on the phone to her advisor trying to get money out of her retirement account. Her advisor implored her not to do it, to no avail.

"I don't know how this guy on television did it, but he had the fear of God in her, making her think she had to absolutely get this money immediately," says Mark Colgan, a CFP licensee in Rochester, N.Y. "At least I had some influence. In the end, she only took out $92,000."

But Colgan says he was so dead set against the purchase, and so feared what the woman might do when-not if, but when-she lost her shirt, that he asked her to sign a disclosure form releasing him of any responsibility for the transaction. He was afraid if he didn't, he might find himself in a lawsuit. The woman wound up losing most of her money.

Another advisor says he had clients, a couple in their thirties,who had $16,000 in a 401(k) that the wife wanted to cash out in order to redo their kitchen. The advisor told them that between the state and federal tax hit they were likely to take, and the 10% early withdrawal penalty, they would probably wind up with about $8,000.

"I told them they were going to lose about half the money," says Patrick P. Astre, a CFP practitioner in Shoreham, N.Y. "The wife said, 'I'll still have 8,000. That's found money!' I told her it was not 'found money' and that it might make a difference to them in 30 years."

Needless to say, the funds were withdrawn, and the kitchen got done. He says he knew that it was going to happen anyway, even as he was advising against it, because the wife kept going back to the idea of "found money," as if an old uncle had come and given her $8,000. "You find that a lot with clients. It's the immediacy of the present, versus something in the distant future," Astre says.

The other thing advisors see a lot is their clients' reluctance to purchase insurance. It's like trying to get a kid to eat spinach. They're not likely to see the benefits for 20 or 30 years. Astre says he had a client who came to his office without his wife, and as he helped construct a financial plan for the family, Astre suggested the man buy a small whole-life insurance policy and a large term-life insurance policy.

His rationale was that the small whole-life policy would kick in later in life, when the man's large expenditures, like his children's college, would already be behind him. And in the interim, because the man had three children, Astre suggested he buy term-life insurance, in case something happened early on. The client liked the whole-life policy because it accrued in value, but he didn't want to spend the money on the term policy. He wound up doubling up on the former and passing on the latter altogether, despite Astre's protests.

"My words to him were if something happens to you, you're going to create a welfare family here. His wife would be raising three kids, she doesn't work, and he has insufficient life insurance," Astre says. "It was just shortsighted."

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