Ghosted! What to do when a client vanishes
Robert DeHollander has a client who bought a house four years ago. At least he thinks she’s still a client. He hasn’t seen or heard from her since the day of the closing.
It’s a perplexing situation, particularly since the deal required some fancy financial footwork, recalls DeHollander, a financial planner in Greenville, South Carolina.
The client borrowed her down payment from her IRA. Because she was not yet 59 ½, she had 60 days to either replace the money or pay taxes, plus a penalty, on the withdrawal. She closed on the new house, sold her old house and put the money back into the IRA within the time allowed. So far, so good. But when the client sold her old house, she realized much more than the sum she owned her IRA.
“We got the money back into the IRA, but we’re still sitting on a big chunk of cash,” DeHollander says. “She hasn’t transferred the account to another advisor. Her number has changed and her email bounces. We waived our fee on the account, and we’re waiting for contact from her or from her heirs. We don’t have the authority to do anything else with the money in the absence of client direction.”
DeHollander has had clients disappear before, he says, though not for as long. “People might go dark for 18 or 24 months. In the past, they’ve always reappeared. Usually the client was busy with an illness, a divorce, some other intense personal situation or just a busy stage of life when they didn’t want to think about money.”
His diagnosis — that disappeared clients are too stressed about a life event to talk about money — is probably accurate, says Michelle Drouin, a professor of psychology at Purdue University Fort Wayne, Indiana, who has studied the phenomena of ghosting — disappearing from a situation without notice or explanation.
“People often have anxiety around money,” Drouin says. “When faced with big financial decisions, rather than confront and complete them, the fear causes them to avoid moving forward with any action.”
Drouin says intense life events — good and bad —like illness, death of a loved one, marriage, divorce, graduation, changing homes, a new job, retirement, a birth or a child leaving home, can intensify the anxiety an already-stressed client is feeling. For those who are already a little tense about finance, additional stress from life events can push them out of contact with their financial planners.
“Sometimes people are dealing with these really big transitions in life, and they need time to sort through that. That becomes the most pressing thing they need to do. They’re not ready to deal with all the decisions that trickle down from that.”
She continues: “The money might seem like a big deal to the wealth managers, but to the person who just went through a big life transition, the money might not be the most pressing thing.”
Bill Brancaccio, another ghosted planner in Harrison, New York, has had clients disappear for long periods. The solution, he says, is to have contact details for a trusted person in the client’s life.
“When I onboard someone, I try to get some beneficiary information and ask if it’s okay to call that person if necessary,” he says. “I’d never give that person financial specifics. I call them if I can’t get ahold of the client and need to talk about something on the account.”
This routine has largely eliminated the problem of ghosting at his practice — but not completely. Brancaccio still has clients disappear when he deals with accounts that don’t include trusted contact information.
“I’ve taken over clients from retiring advisors, where I’ve met with the client but didn’t do a whole new data intake. With one [client] that I remember, I called and didn’t hear back. I didn’t think anything of it for a quarter. Then another quarter goes by.”
After a year’s worth of attempts to contact his AWOL client — particularly regarding the $78,000 in her IRA account — Brancaccio finally admitted defeat and turned off the billing.
“You can’t charge for advice if you’re not giving advice,” he says. “The number went to a full voice mailbox and email was never answered. The money was invested in the agreed-upon allocation, but the client was incommunicado.”
In addition to getting a trusted contact, Brancaccio tries to prevent ghosting incidents before they occur by urging clients to call him when life gets stressful.
“I tell clients at the beginning that when you’re having one of those bad transitions in life, please call us early. We’re here to help you through it.”