Hoffman, who served as a lawyer in the US for 18 years before moving into financial planning, says quite a few of his clients are legal professionals – and many have similar experiences when it comes to managing their money. He says two issues commonly come to the fore: lack of time and a desire for control.
“Lawyers work so hard that they don’t have time to look after their finances. Many lawyers make a lot of money and they tend to spend chaotically or recklessly,” says Hoffman. “They don’t have a budget and they don’t take the time to figure where the leaks are when it comes to their spending. They have little time to enjoy their money, but when they do have a chance, they throw money at things rather than spend wisely.”
Hoffman says some try to manage their own investment portfolios, but often don’t have the time required to manage the essentials of their daily lives.
“We’ve seen several lawyers who take the first step toward setting up a portfolio or a plan. They need to collect certain information to move forward with setting up a plan or beginning a portfolio. They never make it to the next step because it’s too hard to take the time to gather a few pieces of essential information to begin to make a plan,” says Hoffman.
For others, he says, there’s a strong aversion to relinquishing control of their finances to a separate party or individual.
“They don’t want to relinquish control to someone else because they think they should be able to do it themselves,” he says. “They might have the ability to manage a portfolio if that was their primary focus. However, many lawyers work 12 to 14 hours a day on a regular basis. They are chronically exhausted and can’t begin to manage their finances.”
The first step to combating these issues, says Hoffman, is for lawyers to consider whether they actually have the time and experience to establish a financial plan or manage their portfolio.
“The second step,” he says, “is to find a financial adviser that you trust and that you think you can work with…The next step is for the lawyer to commit the time to put together the information that your financial adviser needs to develop a financial plan for you. You only need to do it once. Make it happen. It’s not simply a matter of hiring an astute financial planner. It’s taking the time to get a plan in place, establishing a reasonable budget and sticking to it. Many lawyers get side-tracked because other ‘priorities’ get in the way.”
Despite many earning relatively high salaries, lawyers often struggle when it comes to saving for retirement, according to financial advisor and former lawyer, Drew Hoffman.