Following the launch of the ‘Financial Wellbeing for the Legal Sector’ report, I was pleased to be involved in a discussion into some of the key findings during a webinar hosted by Legal News Wales.
Drawing on research undertaken by The Lawyer Magazine, the financial wellbeing report draws on lawyers’ attitudes and experiences around their personal savings, pensions and investments. (Please click here to request a copy of the report.)
Perhaps unsurprisingly the report suggests that lawyers are not as on top of their finances as they would like to be. Interestingly, it also indicates that lawyers are not sure where to get help from.
The report highlights financial wellbeing as a corner of a larger wellbeing triangle, with the other two corners being physical and mental wellbeing.
Our recent event with Legal News Wales: ‘Money for life: stress or fun for lawyers like you’ highlighted that whilst many people are increasingly talking about physical and mental wellbeing, less attention tends to be given to financial wellbeing.
Financial wellbeing can be an uncomfortable concept
There may be understandable reasons for this. For example, some may believe that physical wellbeing is something they have greater control over, i.e. it’s possible to eat or exercise differently whereas they feel their finances are more defined, even set in stone, by their incomes and expenditure requirements. In my experience this is definitely not the case.
Mental wellbeing is also increasingly talked about, particularly with high profile support from royalty and celebrities, and there tends to be a recognition that our minds and bodies are connected – where one functions well then the other also tends to benefit.
As a financial planner I appreciate that financial wellbeing can be an uncomfortable concept for some, particularly for those who feel that their finances are not as strong as they would like them to be.
As a consequence, I have come across individuals who would prefer to live in the moment rather than plan for their futures even if this leads to worry, stress and longer-term financial shortfalls.
This is the point behind financial planning, and I’m always encouraged by those who, irrespective of their levels of income or financial position, decide to do something about it.
Importantly, financial planning is about looking at an individual’s broad lifestyle and financial circumstances, whether for example that’s taking the first steps towards investments, saving for a particular objective (wedding, house purchase etc), or looking towards future retirement. It is not a case of helping only already wealthy people get wealthier. Instead it is about carefully crafting a course of action that matches each individual’s best life to their finances – what would you like your life to look like and how do you organise your finances to facilitate that life? Sometimes referred to as the ‘why behind the what’.
51% of partners do not believe they are saving enough*
Not everyone believes they need a financial planner to create a financial plan. A regular self-check on incomings and outgoings, coupled with knowing what their ideal lifestyles look like, might be considered enough.
However, using the analogy with health, most of us know that regular exercise and a healthy diet will pay dividends on our physical wellbeing. Yet knowing is not the same as doing. Having someone to help you focus on a physical exercise or dietary plan is likely to ensure greater success than going it alone; weight watchers and the Body Coach are perhaps two great examples from a physical wellbeing perspective. The same is true for financial planning.
The Lawyer Magazine research reinforces this point. The majority of partners approaching ‘retirement age’ confirmed that they would seek advice to help them understand when they can retire. ‘What advice would you give to your younger self?’ is a question often asked about life, the survey results indicate it might also be a question to ask of your financial planning.
Most would think the first conversation we have with a potential new client is about a financial product, a pension, an ISA or even the latest investment ideas. However, this is not the case. It was mentioned earlier that your finances are a facilitator. This means that to build a plan and organise your finances around you, the first step is to understand what you really want out of life.
People will often say that they have no idea of when they would like to retire so they are not ready to start planning. Not knowing when you would like to retire often makes perfect sense. It could be a long time away and there will be a number of variables that feed into the ultimate decision; happiness at work, affordability, health and commitments outside of work to name a few.However, it is often easier for people to express what they don’t want. Where the question is rephrased along the lines of ‘would needing to work full time from age 65 be a good outcome?’ we can begin to focus on what is important.
Once we understand why we are planning, we can begin to consider what actions need to be taken.
Understanding what you want for your future self
Retirement is a common theme because there is a UK-wide savings shortfall for people planning for later life.
During the Legal News Wales presentation, a question arose about whether ISAs were a good place to save for retirement?
The answer lies in understanding what your savings need to facilitate for you. Current legislation means that for most people pensions cannot be accessed until age 55. If your life goals include a year’s sabbatical or career break at age 50, saving into a pension is not going to facilitate that time away.
A career break at age 50 is not something that everybody aspires to, and for most will likely feel unachievable.
The key point is not to be constrained by the conventional but to understand what you would like your future to be. A financial plan will determine what steps you need to take to achieve your best life.
Whether you are a partner, an associate, or a lawyer at the beginning of your career, good financial planning is likely to pay dividends for today and for your future. As the Financial Wellbeing for the Legal Sector report demonstrates, for many lawyers at different stages of their career, their personal finances would benefit from receiving better attention.
Money for life: stress or fun for lawyers like you? A two-part event series.
Legal News Wales and Brewin Dolphin have already hosted Part I of their two-part event series that firstly covered the findings of the report and then, in Part II, will offer practical advice for lawyers looking to achieve financial wellbeing and their life goals.
Part II: BOOK NOW!
For more information and to book for Part II of this free online Legal News Exchange event on Friday 10th July 2020 (2-3pm), click here.
If you’d like to download a copy of the Financial Wellbeing in the Legal Sector report, please click here.
* From the Financial Wellbeing in the Legal Sector report
The value of investments and any income from them can fall and you may get back less than you invested. The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
The opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin.