The legal market is growing, and with it the opportunity for financial advisers to help them with their finances.
According to the Solicitors Regulation Authority, there has been a 7.7% increase in the number of solicitors practicing in England and Wales since 2019, with growth in London and major UK cities outpacing the regions.
Lawyers can often have high remuneration from quite early on within their career, which when combined with complex employment structures and lack of time to consider their own personal finances, means that many are turning to financial advisers for help.
Perhaps the most important thing to remember when starting work with a lawyer client is that while many are asset rich, they could be time poor. A key task is to make it easy for them to do what they need to at their end. They are generally too busy doing their jobs and looking after their clients to concentrate on their personal financial planning.
Part of your role is to encourage them to consider their long-term finances and remind them to take some time out for their own needs.
I have found meeting face-to-face and video conference is best, as it is important to be able to discuss in depth and detail the financial planning. It can be difficult to set time aside in their busy schedules but it is important to secure a set time with them to consider their financial planning without distraction.
Communication skills and being able to explain ideas and concepts in a short timeframe are important. You need to ensure you are organised and have all the relevant information in order.
While the majority of lawyers already have a good understanding of financial matters, sometimes they may not appreciate the financial-planning areas they are unaware of or have not had the opportunity to explore. There is often a need to build on their financial knowledge. This is usually done by listening to what their understanding is and then showing them how their existing knowledge can be enhanced by our own expertise.
Often, group seminars or webinars can work well, while case studies looking at clients in a similar position to them can provide an effective way of providing financial education. However, one on one is more effective, with the lawyer able to discuss ideas based on their individual circumstances.
Also, sharing case studies of financial plans that can help the lawyers’ own clients is a good way to begin, as they often see that the ideas could also help them address their own financial-planning needs.
It is about making it easy to take appropriate actions and to take a helicopter view, instead of getting too engrossed in the smaller picture. Patience is also important; due to the analytical and detail-orientated nature of their work, lawyers often take their time to consider the options before deciding whether to proceed.
One of the first steps when working with clients within the legal sector is to establish their conditions of employment. Are they employed directly, do they have any equity stake, or are they self-employed? The employment landscape for lawyers can be quite complex.
Some solicitors will be employed directly by the law firm, but the partners of the business are more likely to be self-employed. All barristers are self-employed but some may receive some relevant benefits via the Chambers they are registered with.
It is especially important to consider employment basis when considering pension provision, and also what protection they may need in place to support themselves and their family in the event of being unable to work.
Often, lawyers are self-employed and partners in a business with an equity stake or capital account, so it is important to understand the structure and how this is funded and repaid. Also, ask questions about what would happen should they need to take a period of absence, and what their remuneration would look like.
When self-employed, they will obviously need to make their own pension and protection arrangements – they will most likely not have death in service or sick pay provided by the law firm they work with. Even salaried solicitors often don’t have comprehensive workplace benefits and need additional planning to address shortfalls.
I’ve found that cashflow planning works well with my lawyer clients. Show them how they could access tax efficiency that is important to them now and in the future. They are often high earners and have a high tax burden, so emphasise planning for retirement as a way of saving tax in the short term.
Lawyers are often used to earning well during their working life, so it is important to illustrate their current projected retirement income and what steps they need to take to achieve their desired lifestyle.
Overall, like most clients, you have to be responsive to lawyers and understand their values, goals and needs. You need to demonstrate how you will make them accountable and regularly monitor their situation to get them where they want to be.
Ben Alcock is a chartered financial planner at Continuum
