Advocating for wealth

The one thing we know is that every successful lawyer is short of time to invest in structuring their assets effectively. And when they reach partner, that could be having a serious impact on their wealth.

Author: Mark Campbell, Head of Wealth Proposition, Isio.

It’s always the details. Whether they specialise in corporate law, family affairs or criminal proceedings, legal professionals excel at highlighting the essential details that make their case compelling. The work is hard, the hours are long… and when they make it to partner, the responsibilities grow.  

But for many law firm partners, making their wealth has come at the cost of being able to manage it well. They may be comfortable in the finer detail of case law, deal term-sheets, or the nuance of a complex case; but their drawings might end up in unmonitored investments or sub-optimal strategies whose principal attraction is that they don’t demand much time. And they don’t always grow – or even protect – your wealth the way they should.  

Time: on your side? 

The biggest issue we encounter with law firm partners, then, isn’t necessarily lack of knowledge. It’s lack of time. The profession itself is mentally demanding; when you’re in more senior positions, the combination of client and team management and high stakes make planning personal financial affairs an additional task you might rather avoid. 

If we’re being frank, what we often see among partners with less well optimised portfolios is apathy. There’s a natural disinclination to tackle issues such as portfolio balancing, retirement and estate planning when, well, ‘maybe it can wait’. And when we’ve been called in to help partners facing a house-move, promotion, or change of firm, it’s often because they’ve realised at these junctures that they do need outside help. 

Inflection control 

These inflection points sharpen the mind: money is more visible when there’s more of it (when becoming partner) or a sudden need for it (school fees, say). Reaching partner is a pivotal moment for most lawyers that poses meaningful questions about wealth management. 

That’s not just about a bump in income. Partnership means colleagues at the same level are also better off, so expectations about lifestyle might change. For lawyers later in their career, there’s also a major inflection point on the horizon that makes deferring serious planning even more risky: retirement. 

The advice trap 

One problem is that professionals who have sought some help earlier in their careers assume that their wealth continues to be well-managed as they climb the professional ladder. Here’s where our teams tend to encounter two other issues. 

The first is that what suits them as a junior in a firm – with a decent income by society’s standards, but far off what they’ll end up drawing – probably won’t be right as they progress. Part of that is those inflection points. But it’s also important to re-evaluate your objectives as you get older. 

We’ve worked with lots of lawyers who were planning to keep going as a partner until retirement – but then realised in middle-age that perhaps a change of pace or even a move into a different profession felt right after years of hard graft. Those kinds of changes demand a fresh look at wealth planning. 

The second is that time-poor professionals will often call in an expert to handle their financial planning, not realising they’re no longer getting value for money. We recently started working with one partner who’d hired an adviser years ago and assumed the arrangement was fine. But the fee structure was geared to a much smaller portfolio; we were able to save them £14,000 a year simply by applying more appropriate rates as their wealth had grown. 

Getting it right 

There can be more significant risks in letting things slide. With one client, we calculated they’d missed out on £250,000 of overall portfolio value simply because some relatively straightforward steps hadn’t been taken since they last looked at their investments. 

It’s never too late (or too early) to avoid these kinds of situations. It boils down to four steps. 

• Bite the bullet. Carving out even limited time to talk to an impartial, professional adviser is a must. Moving it up the to-do list will actually create time and headspace – or better protect your wealth. 
• Have the conversation. Good advisers don’t have a one-size-fits-all approach. Be open to discussing long-term goals. If that conversation reveals a pathway to better wealth management, only then can we talk portfolios, structures and fees. 
• Understand the approach. Our Big Four heritage means we understand partnerships and professional standards. We know that the plan detail and rationale should be available. The time burden should be off your back; but you can always check the workings. 
• Review the performance. Circumstances and life goals change and the markets are always shifting. Regular, light-touch reviews ensure the approach remains aligned to those goals.  

For Isio, great technology, deep market knowledge and the DNA of senior professionals in our own toolkit makes a huge difference. But establishing a trusted relationship via that conversation is what ensures advice is timely, impactful and frees you up to achieve their broader personal and professional goals. 

The aim is to allow high-performing lawyers to focus on creating personal wealth, not worrying about managing it. A Vanguard client survey this summer found advised investors are roughly half as likely (14%) as self-directed ones (27%) to experience high levels of financial stress; and 76% of advised clients say advice saves them time, rather than just generating additional returns.  

That’s something even the most successful lawyer can’t buy.