Bachrach says that determining the optimal size for a business means defining the nature and scope of the services you wish to provide and assessing the number of clients you can serve effectively. It also means setting financial and lifestyle goals and figuring out what it takes to reach them. "If someone believes that they need to earn $300,000 a year to be financially successful, and they need to generate $600,000 a year in income from the business in order to do that, that might translate into a goal of having 60 clients each paying an average of $10,000 a year," he says.

Bad behavior, the other major reason for severing client relationships, often means failing to follow advice. "If someone doesn't follow advice, you need to figure out the point of having this person as a client," says Bachrach. "It means the difference between being an advisor or a product gopher."

Bad behavior can take many forms. J. Michael Martin, JD, CFP, president of Financial Advantage in Columbia, Md., has only "fired" four or five clients during his 15 years as a financial planner. One of them, a woman in her seventies, was "very high energy and wanted a lot of involvement in the investment process," a situation in which Martin did not feel comfortable.

After three years, he finally decided to break off the relationship. "I told her that her level of knowledge had gotten so strong that she could save a lot of money by handling her investments herself." Despite his kid-gloves approach, says Martin, "she got very angry and hurt."

Mary Malgiore, CFP, of The Family Firm in Bethesda, Md., is currently considering whether to cut ties with a widow whose gambling is getting out of hand. "I've been telling her to rein in her casino habit, but she's just not getting it yet," says Malgiore. "I hope she hears the wake-up call before it's too late."

Her relationship with a couple of other clients who insisted on a heavy exposure to the technology sector has soured, perhaps to the breaking point. "The clients who bent our ear to over- invest in the technology sector are complaining now that we should have timed the market better," she says. "The challenge for advisors is finding the balance between bowing to legitimate personal preference and achieving appropriate diversification."

Regardless of the reasons behind a client divorce, Bachrach says, the best approach is a direct one. Initiating a breakup in a forthright manner isn't about being nasty or mean. It's about being honest. "If you're right-sizing a business, you might talk about why you're making the change and invite the client to come into your 'new world.' If that's not feasible, the discussion shifts to alternatives, which might include helping him find an advisor that can better serve his needs."

The approach would be different for a "bad behavior" client who, say, consistently fails to follow advice. In that case, "you might point out that you wish to act in an advisory capacity, but that you cannot do so under the current circumstances," says Bachrach. "Invite the client to change the nature of the relationship, and if he does not wish to do that, suggest he would probably be better served by someone else."

Warning Signs

Of course, the best way to avoid a breakup is to look for warning signs in the initial interview. Little requires prospective clients to bring all their financial documents, as well as a spouse if there is one, to the initial meeting. Failure to do one or both of those things is a leading indicator of problems, he says.

In one instance, a prospective client who came in without his wife told Little she had no interest in the couple's financial affairs, an observation that was confirmed by the wife in a conference call. When the husband became frustrated by the notion that his spouse's presence was necessary, Little stood up, shook his hand and thanked him for coming in.