In the film "Pretty Woman," a store manager asks Richard Gere about his budget for a shopping spree for Julia Roberts. "Just how obscene an amount of cash are we talking about here?" he asks. "Profane or really offensive?" Gere responds, "Really offensive." The manager simpers, "I like him so much."

Unfortunately for brokers, clients who like cash are a vanishing species these days. In fact, many of them find the idea of having cash in their portfolios downright offensive.

Stan Allred, an 18-year veteran with Southwest Securities in Dallas, had one client whose $1 million portfolio had grown over time to $2 million. Yet the client complained that $68,000-3.4% of the portfolio-was in cash. "I am upset that money has been sitting there and not working," he groused.

Many brokers report similar cash-averse clients. "A lot of times if you have $20 sitting in cash, they feel it's $20 that's not outperforming the market," says Mike Zaccaro, a rep with Crowell Weedon in Laguna Hills, Calif.

Even conservative clients may demand explanations for a cash balance on a statement. Some come from corporations where cash management is the mantra, reports Martin Klein, a broker with Prudential Securities in Newport Beach, Calif. "They want to make money on their float all the time."

Others are swayed by discount brokers aggressively gathering assets. A few simply like the idea of being fully invested.

The main reason for cash aversion today, however, is unsophisticated pursuit of performance, say brokers. Clients are mesmerized by average-beating index funds, which are perceived as 100% invested. Many forget that market risk cuts two ways. "Today," says Klein, "standard deviation means upside."

The current craze for cash-less portfolios springs from the bull market history and, particularly, the outperforming indexes. "Their argument is that they don't need active management, because passive management outperforms active management," says Klein. "It's particularly difficult to counter in markets like this, when the perception is that you buy any stock and it'll go up."

Brokers have several problems with cash aversion. It limits your ability to hedge. It hampers opportunities to buy bargains. It causes clients to deviate from carefully planned investment strategies.

Even worse, from the broker's standpoint, keeping cash can cause clients to lose faith in a broker's judgment. "They say they can get anybody to be in cash. They're paying me to get it invested," says Allred. "We're being punished for being in cash."

Counseling the Cash Averse There are ways to cure or at least alleviate a cash aversion. First, remind clients of their investment objectives, needs and preferences. "A lot of investors who considered themselves conservative clients now want to be aggressive," says Klein. "I tell them you don't become aggressive for three months and then go back to being conservative. I try to bring people back to the beginning."

Educate them about cash's hedge value. Klein tells them that cash beat an investment in IBM the first half of this decade. "Markets are not just two years," he stresses. "You have to look at them in five-, 10- and 20-year cycles. If you do that, you don't mind having some cash."

Point out that index funds' recent record is an aberration. Klein compares index investing to buying certificates of deposit in the 1980s, when long-term Treasuries were actually better. "Everyone thinks it's going to continue to outperform," Klein says of the S&P index, "but it's not."

Hold the line if clients want to pour cash reserves into an opportunity, suggests Greg Smith, an Ohio Co. rep in Akron, Ohio. Urge them instead to liquidate a more fully valued position. "You might have preset parameters going in on the upside," he suggests. "When you reach that point, you're going to sell and reposition."

Cash Alternatives Hedge-hungry brokers offer cash-averse clients alternative investments they may prefer to traditional cash instruments. Zaccaro likes short-term paper to get higher yield and avoid the stigma of being in a money market. Other options include overnight REPOs, Treasury bills and floating-rate instruments. "A lot of brokers will stretch that to shorter-maturity bonds and CDs," he says.

For the severely cash-averse, equity diversification may be the only hedge. Allred suggests clients sell holdings that appear close to fully valued and look for opportunities in areas that haven't performed well, such as biotechnology and small caps.

For the truly adventurous, exotic investments that are supposedly uncoupled or negatively correlated to the stock market are attracting some attention. Companies pitching managed futures programs are making the rounds again and getting receptive audiences, Allred reports.

Cash Cave-in One way to cope is to simply go along. Many clients have cash assets elsewhere, and can fairly expect brokers to provide equity investments and nothing more, notes Smith.

Zaccaro agrees that "there are some legitimate reasons for clients to have a fully invested account. But if their actions continue to not match what their goals are, you may want to suggest another broker."

A bear market would bring most cash-averse people into line, says Klein. "When the S&P is down 20%, people aren't going to want to be fully invested."

Meanwhile, brokers will keep trying to maintain their cash-averse clients' happiness along with their financial health. "I hope there are enough things we can get into besides cash to keep them safe," says Allred. "Participating at some level, but safe."