Why should Millennial and Gen Z attorneys hire a financial advisor?

By Joel Chouinard, ChFC®

December 7, 2023

Attorneys are taught to delegate early in their careers. From a junior associate assigning tasks to paralegals and secretaries, to equity partners delegating tasks to senior associates, delegating happens at all levels of the firm.  And attorneys don’t just delegate in the workplace, they delegate all sorts of personal tasks from lawn care to childcare. Generally, it’s not because they are not qualified to perform these tasks, it’s because their time is better spent on activities for which they are most qualified. At what point, though, would it make sense to “delegate” your finances and hire a financial advisor?

Key Takeaways

• Collaborating, rather than delegating, is a better term to describe working with a financial advisor.
• Certain “triggers”, such as buying your first home, having a baby, becoming a partner, or changing careers signal the need for attorneys to consider hiring a financial advisor.
• Collaborating with a financial advisor should provide better clarity into goals and concerns, a detailed plan to achieve those goals, and the accountability to get things done.

Delegate, Delegate, Delegate

Why is learning how to delegate such an integral part of being an attorney? In my eyes, it’s twofold. On one hand, there’s the ethical aspect toward the firm’s clients. Billing a client at a partner’s hourly rate for a task a junior associate can handle is not ethical. Likewise, a junior associate should not perform back-office tasks that a secretary could handle.

The other aspect to consider is time management. From equity partners to junior associates, every attorney at a law firm is confined to the same 24 hours a day. The daily tasks of a partner may consist of doing legal work, speaking at a conference, attending board meetings for business development, and taking part in inter-office management meetings. With such a busy schedule, it might not be possible for them to complete certain entry-level tasks, such as putting together signature pages for a contract. Could they do it better than a brand-new junior associate? Sure! Would it be the best use of their time? Probably not. Delegating allows everybody at the law firm to maximize their time.

Attorneys also delegate tasks in their personal lives. Spending several hours every weekend doing household chores might not be what you want to be doing with the little spare time you have. At the end of the day, we all delegate to make our lives better and more enjoyable.

Collaborating, Not Delegating

So far, I’ve discussed the concept of delegating. But when it comes to working with a financial advisor, I prefer using the term collaborating instead of delegating. Finances are such an integral part of life, and I don’t believe someone should be completely removed from the process. As life becomes more complex, collaborating with a financial advisor can help free up your time by outsourcing the research and analysis of certain financial decisions, without losing sight of the overall plan. In the end, you are the CEO of your household, and financial advisors are there to support you.

When Should an Attorney Hire a Financial Advisor?

There are certain trigger events at which attorneys should consider hiring a financial advisor.

1. Buying your first home (or second): Buying a house is a complex process that involves a lot more than just finding a house and qualifying for a mortgage. You need to know not only how much you need to accumulate for a down payment, but you need to know how your mortgage payment will impact your ability to achieve your long-term life goals, such as retirement or saving for college.
2. Having a baby: The birth of a child is a magical moment in a parent’s life. But it also comes with some challenges, especially for busy attorneys. First, your expenses will go way up, even if you have a spouse staying at home (trust me, diapers are crazy expensive)! Second, babies demand a lot of our time, so you will have even less time to devote to your finances.
3. Becoming a partner: Becoming a partner comes with added responsibilities at the firm, such as business development and management. Depending on how your firm is structured, it might also mean you are now technically a self-employed individual, and you need to pay taxes quarterly. I broke down how to prepare your finances ahead of becoming a partner in last month’s blogpost.
4. Going in-house: Transitioning to an in-house position usually comes with a significant pay cut, especially if you are coming from Big Law, so it is likely to put a strain on your budget if you don’t have a plan. You may also be joining a private company that offers very different benefits than at the law firm, such as stock options, or restricted stock units.
5. Your finances have become too complex: As you gather more things, and as your income grows, your finances get more complicated. From having to pay quarterly taxes when you become a partner, to making sure you are investing enough money for retirement, to buying the right amount of insurance to protect your family, the list of financial decisions in a household is almost endless. And each of these decisions requires a deep and sometimes very complex analysis.
6. Lacking time: Sometimes, even if you haven’t faced one of the above “triggers”, there are still not enough hours in the day to devote to your finances. This may not happen early on in your career, but as you take on more responsibilities within the firm and things get more complex at home, you may not have enough time or energy to devote the necessary hours to run your finances.

What Working With a Financial Advisor Looks Like

Now that we’ve established when an attorney should consider hiring a financial advisor, let’s discuss what a client-financial advisor relationship should entail and what clients should expect.

• Goal Clarity:
  I’m sure you’ve heard of the saying that identifying the problem is 50% of the solution. A good financial advisor should take time to dive deep into your goals and concerns and help you prioritize them. When your goals are clearly defined, it is much easier to design a solution that will help you achieve them.
• Action Plan:
  Once your goals are crystal clear, your advisor should recommend concrete action items that will help you get where you want to be. The recommendations should be based on your own agenda, not your advisor’s. If it means starting the relationship by creating a budget and getting out of debt first before you talk investment management, that’s okay.
• Accountability:
  Once the road map is created and you know what steps to take to achieve your goals, a good advisor should keep you accountable to those goals. Whether it’s using task management software, or simply checking in once in a while to ensure things get done, there should be a follow-up system in place to ensure tasks don’t slip through the cracks. Remember, as Joel A Barker famously said, “Vision without action is merely a dream”.
• Confidence:
  Ultimately, working with a good financial advisor should give you confidence that you are on track to reach your goals. It doesn’t mean that all of your problems will go away (we’re not magicians), but it does ensure that you will have a solid plan and the accountability to get you where you want to be.

Final note

Hiring a financial advisor should not be an afterthought. After all, the reason you work so hard in your career is to set yourself up for the future, so you don’t want those hard-earned dollars to go to waste. You should make sure that you work with someone who has your best interest in mind, not theirs. Although that can be difficult to tell from the get-go, you should have a pretty good idea after meeting with them a few times.

SharpEdge Financial LLC is a registered investment adviser registered with the State of Texas. Registration does not imply a certain level of skill or training. The views and opinions expressed are as of the date of publication and are subject to change. The content of this publication is for informational or educational purposes only. This content is not intended as individualized investment advice, or as tax, accounting, or legal advice. Although we gather information from sources that we deem to be reliable, we cannot guarantee the accuracy, timeliness, or completeness of any information prepared by any unaffiliated third-party. When specific investments or types of investments are mentioned, such mention is not intended to be a recommendation or endorsement to buy or sell the specific investment. The author of this publication may hold positions in investments or types of investments mentioned. This information should not be relied upon as the sole factor in an investment-making decision. Readers are encouraged to consult with professional financial, accounting, tax, or legal advisers to address their specific needs and circumstances.