Mark's Response: There are many tactful ways to have this conversation with grace.

The hardest work occurs prior to communicating with your Non-Ideal Client.  First, you have to be honest with yourself.  Admit that they are Non-Ideal Clients.  Acknowledge that you cannot afford the time or expense to serve them well.  Accept that another (perhaps younger) advisor could afford to spend the time with them they deserve.  In short, you have to decide that it is in both of your best interests to politely disengage (not just yours).

The conversation generally goes well.  The backdrop is your mindset of caring about them and their situation and your commitment to point them in the direction of another advisor.  The conversation is pretty simple:

In contemplating what will best serve your intersts, 

• Here's what I've decided (to refer you to another advisor)
• Here's how I came to that view
  
• Here's why I feel it's in your best interest to work with this advisor I'm recommending

My general experience with this has been their appreciation for my candor.  Rather than outrage or tears, rather you should expect, as I have experienced, that your Clients mentally "move-on" surprisingly fast from this conversation.  The actual experience is nothing as compared to the grief and protest I thought these clients would display. 

While their reaction may have been slight surprise at first, the majority of these conversations ended up with a focus upon their concern about what needs to happen next (mechanics of account transfers or how not to interrupt regular distributions).