Reasons clients get the boot Heavy trading, rudeness get clients canned


March 12, 2000|By EILEEN AMBROSE

A FINANCIAL planner once said that the best client would be Rip Van Winkle, someone who slept for 20 years and let the planner build the portfolio.

A comatose client isn't everyone's ideal, however. Some financial advisers say their favorite clients are knowledgeable, trusting and open to ideas.

"They know how to take gains and how to take losses," said Joan Jones of A. G. Edwards & Sons in Baltimore. "They know how to say thank you. That's not what a lot of people do."

But just as there are good clients, there are bad ones. And occasionally a financial professional must fire a client.

That happens when clients, even rich ones, won't pay for services. Clients also get canned for frequently failing to show up for meetings, withholding needed information, or having a personality or an investment philosophy that clashes with that of the adviser.

"If you've been doing this a long time, you start to have a radar about who's going to be difficult," said Kevin Condon, a planner with Baltimore-Washington Financial Advisors Inc. in Ellicott City. If it looks like a bad match, Condon said planners may refer the client to someone else or take another tack.

"You mention a fee that is the only fee that you would work for them for. And then hope they don't take it," he said.

Here are other traits that may lead you to be downsized by your planner, broker or accountant:

Heavy trading. You'd think a broker would want clients to buy and sell stocks frequently to ring up commissions. Not so, says Chris Yanson of Edward Jones in Towson, who fired three longtime clients in one day recently for heavy trading. He's fired clients only three times before during his seven years in the business.

The clients had been looking for Internet and technology stocks to hold for 10 to 90 days, and investing had become gambling or entertainment for them, Yanson said.

"I'm here to help clients accumulate wealth. I don't want them spending commission dollars," said Yanson, who told the three he couldn't do that sort of trading for them anymore. The investors would be better off, he said, by taking the money they were paying in commissions and buying quality stocks to hold for the long haul.

Financial planner Barry Glassman of Cassaday & Co. in McLean, Va., cut some ties a year ago with a couple who had become day traders.

The husband and wife started buying on stock tips from friends and sold the shares a week later if they went up or down a few points. Then they graduated to trading once a day.

"We would constantly be playing phone tag so I could get back to them so they could buy that day," Glassman said.

"Looking back, if they had bought and held most of those stocks over the past year, they would have done extremely well," he said. But once commissions and capital gains taxes are figured in, the couple probably broke even, he said.

Yanson and Glassman said they continue to manage these clients' "serious money."

High maintenance. Financial experts expect to spend time with clients to explain investments, talk strategy and do some hand-holding in choppy markets. But when one client's demands leave little time for others, the client can expect a pink slip.

Richard Klaff, a senior vice president with Lombard Securities in Baltimore, fired a client a few years ago who would phone him up to seven times a day.

"He just felt that I should be there every second of the day to talk to him," Klaff said. "Sometimes you have to go to lunch and sometimes you have to go out to the restroom."

If Klaff were away from his desk or on the phone, the client would yell at office staff.

Rudeness. Yelling at financial advisers or their staff will get you canned.

"Life is too short to not work with nice people. This job is too stressful as it is," said Bruce Dunham, a financial adviser with Morgan Stanley Dean Witter in Baltimore, who recently dropped a client for being rude.

Dunham had worked with a client for one year, and during that time the client's portfolio had risen 74 percent. But the client wanted in on United Parcel Service's November initial public offering, which Morgan Stanley was handling -- something that was reserved for the firm's biggest clients, Dunham said. That didn't include Dunham's client.

The client hollered at Dunham and his assistant, and Dunham transferred the man's account to someone else.

Not heeding advice. Clients pay for professional advice, but may not always follow it. If that becomes routine, the client and professional will part ways.

Deborah Voso, president of Voso Associates in Frederick, parted amicably with a pair of clients in the past year.

The couple was on the verge of retirement and Voso suggested a portfolio that included bonds and an 18-month cash reserve that they could draw upon for income rather than having to sell securities in a down market. She also recommended that no more than 25 percent of their investment portfolio be tied up in tech stocks.

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