After the news broke recently that former Johnny Carson sidekick Ed McMahon was being foreclosed out of his Beverly Hills mansion, he went on "Larry King Live" to say (with a straight face), "I just want to give [the millions of other people facing foreclosure] hope... some kind of guidance."

The first question that came to my mind was not, How did this happen? As a southern California financial planner for the past quarter century, I've had more than my share of clients in Ed McMahon's bracket and predicament-enough to cast a whole season of "Lifestyles of the Rich and Dumb." You know the profile: very successful at earning a living and so convinced it will never stop that they spend like there's no tomorrow.

Who needs to plan when you're rolling in dough? People who think this way are often easy prey for salesmen, and entrepreneurs tend to believe that all their cash should go back into their companies.

Even when such people do find competent advisors, they often fail because these advisors aren't comfortable confronting high-profile clients who are making a mess of their financial futures. It's our job to apply a little tough love where necessary. The most important role I play in people's financial lives is to protect them from their worst instincts. This means I have to rein in certain clients who are like McMahon.

One of my techniques is to scare them with examples of famous people who were rich and successful and lost it all: Olympic skater Dorothy Hamill, Mike Tyson, Willie Nelson, Debbie Reynolds-the list is long.

I'm sure to tell them about my father. He built a successful elevator maintenance company, sold it for such a big payday that he was set for life and then gradually blew it all on risky investment schemes.

I have fired clients who stubbornly resisted my efforts to detour them from the path to self-destruction. I've also refused to take on new clients whom I knew wouldn't listen to my advice.

I once declined the account of a high-ranking corporate executive. The executive and his wife had the vacation home, luxury cars in the garage, the country club membership—the works. They spent all of his $500,000 annual earnings, but had only two months of emergency cash set aside, and $150,000 in his 401(k). He was about to get a bonus, but he'd already spent it on a yacht. He was 10 years from retirement.

"What kind of income are you looking for in retirement?" I asked, pencil poised expectantly over my legal pad. "I'd like to net about what I do now—$300,000 a year," he replied nonchalantly.

I laid down my pencil. "You don't stand a chance. There's nothing I can do for you." Stunned, he stared at me in silence. I felt bad for him, but he deserved to hear the ugly truth.

I continued: "Look, your only hope right now is to sock away as much of your income as you can into the deferred compensation plan you have at work. And you and your wife need to sit down, make a reasonable budget and unload some of your toys. There's nothing I can do for you here."

His silence told me that no one had ever dared to put it to him so bluntly. I offered to give him free advice on occasion and sent him away, certain I would never see him again. I was right.

The true financial planning professional, like a good doctor, should be honest with clients. When necessary, it's your responsibility to try your hardest to jolt them out of their McMahon-like delusions.

Thomas C. Scott, CFP, is a registered principal with LPL Financial and CEO of Scott Wealth Management in Irvine, Calif.