How financial advisors can handle defiant clients: 3 strategies

The problems can start with a simple request.

Processing Content

“Hey,” the client says, “some unexpected expenses came up, and I need to withdraw another $10,000 from my retirement accounts for this quarter.”

At first, it seems manageable. But the exception quickly becomes a pattern. Each quarter, the client agrees to a retirement budget. And each quarter, they take out more than planned anyway.

Bryan Bibbo, president and CFO at JL Smith in Westlake, Ohio, has seen that cycle play out firsthand.

“If once every few years, they’re pulling out a little bit of extra money, well, that’s going to happen. That’s life, right? And they should be able to enjoy their money,” Bibbo said. “But when … they’re [constantly] pulling out more money than we agreed to for their budget, you’ve got to start making some changes and have a heart-to-heart meeting with them.”

What happens when that conversation comes and goes, and nothing changes?

Clients don’t always follow advice — and when they actively push back, the consequences can be costly. From overspending that derails long-term plans to heightened liability and emotional strain, defiant clients present a unique challenge for financial advisors.

Still, with the right approach, advisors can protect themselves while helping clients avoid their worst financial impulses. Here’s how.

Say it early, say it carefully

Early intervention can help stop bad financial habits from becoming costly patterns. But advisors who scold or lecture risk pushing clients further away instead of changing their behavior.

“The goal is never to scold anyone, right? That’s the worst thing you can do,” Bibbo said.

In cases where a retired client is taking out more money than they budgeted for, Bibbo starts with a concerned approach.

“Next time I sit down with them, I’m like, ‘Hey, we’ve pulled out a little bit more money than expected within the last 12 months. We expect you to live off of $80,000 a year, and you pulled out $115,000. … Do you think that’s going to be consistently like that? Do you want to revisit your budget? Because the last thing I ever want to see happen is you having to go back to work.'”

That last line, Bibbo said, often gets a client’s attention.

“That kind of starts that conversation, that ball rolling,” he said. “Because most retirees don’t want to have to go back to work. But if they continue down this path, it might very well be where they need to go back to work.”

Jonathan Harrison, partner and wealth advisor at Sound Stewardship in Overland Park, Kansas, said that aggressive, interventionist tactics may feel helpful but often produce an undesirable result.

“If you just approach it head-on, some people can handle that. But what tends to happen if you say, ‘Well, you have a spending problem, and you need to change your habits,’ or ‘Your financial system is going to crash and burn,’ people tend to get really defensive,” Harrison said.

When that happens, clients often justify their spending, focusing on why they feel they have no other choice. As they dwell on these reasons, the advisor’s guidance can get lost. Instead of taking the advice with them, clients leave with their existing beliefs reinforced, mentally rehearsing why they feel stuck.

With his own clients, Harrison said he tries to help them feel as though they’re coming to certain conclusions themselves, rather than simply lecturing them.

“The more you can pull it out of them, the more they take it home with them,” he said. “But there is this fear in a lot of professional services … that if we’re not delivering the advice instead of pulling it out of them, that they’ll be like, ‘Well, what am I paying you for? I’m the one who came up with this conclusion.’ And I just think that’s false. I don’t think it’s true.”

Protecting yourself when interventions fall short

Even well-timed, well-intentioned interventions don’t always lead to behavior change. In those cases, advisors need to prioritize documentation and liability protection.

“There’s a lot of ambulance chasers out there that chase financial advisors who are trying to figure out where they went wrong and trying to make some money off it,” Bibbo said. 

That makes documenting client conversations essential, especially when concerning behavior persists. After repeated, unsuccessful discussions, advisors may need to escalate the issue internally, Bibbo said. That can mean flagging the situation to compliance and clearly documenting how ongoing overspending raises the risk of a client running out of money later in life.

At that point, advisors also need to assess whether the relationship is still workable. Bibbo said he has had hard conversations with clients about whether the firm remains the right fit and, in some cases, has ended those relationships.

The risk becomes even greater when withdrawals spike suddenly or suggest possible financial exploitation, such as online romance scams. In those situations, Bibbo said, he has brought family members or beneficiaries into the discussion — though even that doesn’t always resolve the issue.

“There’s too much liability,” Bibbo said. “I can’t approve withdrawals when I don’t feel comfortable knowing exactly what’s going on. It’s their life savings. They can do as they please at the end of the day, but the last thing you want to be responsible for is someone running out of money.”

With troubled clients, referrals are your friend

It’s tempting to view defiant clients as beyond help, but Harrison said the issue is sometimes a poor fit rather than resistance to advice itself. In those cases, referring a client to a different advisor can be a constructive way to part ways.

Harrison pointed to one longtime client referred to him by another advisor. The client, a single woman, had struggled through a series of major life challenges. Her prior advisor — also a woman — was a capable planner, but the relationship never worked.

“One of her coworkers said, ‘I think the client reminds the advisor too much of her mom,'” Harrison said.

The example underscores how unseen personal dynamics can shape an advisory relationship. A client may appear resistant or defiant, Harrison said, when the real issue is discomfort, trust or communication style — not the advice itself.

That’s why referrals can matter. Harrison said some advisors thrive with clients who expect a direct, even confrontational style, while others take a more measured approach.

“I have friends who are former professional athletes, and they work with a lot of athlete clients,” he said. “And the way they talk to their clients, there’s just no way I would talk to my clients that way. But their clients are used to being coached, used to being challenged more head-on and directly. … And that’s just not my style.

“There are lots of ways of approaching this, and different clients need different approaches,” Harrison said.