Nobody is immune from committing a boneheaded move from time to time. But there are certain places no sensible or sensitive businessperson should go, and certain basic things that constitute the bare minimum of professional conduct and care. That's why it's so puzzling that one financial advisor would choose to besmirch his clients, according to a recent lawsuit.

A fired employee of financial management firm Flynn Family Office said partner Alan Kufeld made a habit of uttering obscene remarks about the firm’s celebrity clientele, which includes singer Rihanna, actresses Katie Holmes and Ellen Barkin, and fashion designer Tory Burch. The lawsuit, filed in Manhattan federal court, alleges that Kufeld, 47, went even further, commenting about the sexiness of an intern (and her mother), and that Kufeld and FFO founder Rick Flynn rated the sexiness of their assistants, one of whom scored low because her skin was too dark.

The racially-themed narrative continued when Kufeld discussed which Caribbean nationalities were the most attractive based on skin tone and when he discussed similarly-enlightened positions regarding Asians. The ex-employee, Robert Solomon, claims he was fired for objecting to the pair's sexist statements. (For related reading, see: The Dumbest Mistake Investors Make.)

Although Flynn dismissed these allegations as meritless, one thing’s for certain: making derisive comments about clients — whether in private or publicly — is an excellent way for financial advisors to get fired.

Admittedly, this is an extreme example, but there are countless other stumbles advisors can make. Most are breaches in business sense rather than lapses in decorum, but they can be nearly as deadly to a client relationship or even a practice. Here are a few examples:

  • Failure to rebalance investments. It’s tempting for advisors to stick to a buy-and-hold strategy with a client’s core investment portfolio, especially if it’s thriving. But it’s essential to rebalance holdings back to their original target allocations, at regular intervals, ideally monthly, minimally quarterly. If this isn’t done, a portfolio becomes more volatile over time, increasing its downside loss potential. This can become especially worrisome the closer a client is towards reaching retirement.

  • Failure to choose a niche. Financial advisors cannot be all things to all people. Broadly speaking, the most profitable businesses are those which specialize in a given area. For example, general practitioners usually earn less than cancer specialists, just as typical attorneys make less than corporate lawyers. Financial advisors who hone in on a specific client base and reflect this in their marketing collateral are more likely to cultivate lucrative, long-term relationships. And niches such as targeting women, wealthy families or business owners can be further sub-specialized into groups like widows, gay and lesbian couples and professional athletes. (For more, see: Advisor Tips for Marketing to Niche Clients.)

Digital Do's and Don'ts

Modern technology can be an essential tool for advisors to sell their message, increase business and drive traffic to their websites. But the relatively new frontier of Twitter (TWTR) is fraught with pitfalls if handled improperly. While the potential mistakes may seem minor in description, every advantage counts in the crowded financial advisory space. Here are some common Twitter missteps, and the solutions to avoiding them.

  • Tweets show too much "bluetext." This is when the font changes from black to blue too frequently, usually the result of a tweet containing too many links. Consequently, these tweets look like advertisements or spam, and are likely to go unread. The solution: restrict tweets to shortened links, by using sites such as Bitly to condense the links before sharing them.

  • Tweets are too long. Though it seems counterintuitive to believe that readers will have difficulty slogging through a message that’s at maximum 140 characters, heavy twitter followers are apt to skip past overly-long items in their news feed. The solution: Shorten all tweets to a scan-friendly length. Not only will this increase readership, but it will give your existing messaging more punch.

  • Failure to tweet photos. Fact: tweets containing pictorial images are clicked 36% more often than tweets without photos, and they’re retweeted 150% more often. Simply put: eye-catching visuals work. The solution: Whenever possible, use high-resolution, compelling images bearing relevance to the subject matter at hand. Even if the photos obliquely tie into the copy, they’ll make followers more likely to read your words. (For more, see: How Financial Advisors Can Best Use Twitter.)

  • Overly abundant retweeting. Yes, it’s important to share interesting information with your followers, especially when you’re the subject of an original tweet. But there’s such a thing as overdoing it, and too many retweets may cause people to unfollow you. The solution: instead of retweeting a message, reference the tweet in an original message. This will allow you to tee up the message in a personalized way, while giving followers the power to link to the original tweet, if they so choose.

The Bottom Line

It just takes one item of bad press to cripple an advisory firm’s chances for attracting future business. And it takes just one bad judgment call to risk losing existing clients. But vigilance, proper etiquette and intelligent use of social media can increase an advisor’s prospects for long-term and meaningful success. (For more, see: Social Media 'Don'ts' for Financial Advisors.)

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