Spectrem’s new Professional Profile Series breaks down the quantitative differences between doctors, lawyers and accountants, comparing each segment to all other investors regarding their investment attitudes and behaviors.
But the series also asks many open-ended questions, and reports the responses these professionals provided regarding their investments and the professional advisors who assist them with their portfolio.
The responses from lawyers reveal a segment of investors who see the value in robo-advisors and are uncertain about the value of a human advisor.
“The research on lawyers shows that very few of them actually use robo-advisors, but many of them don’t see much difference between the services rendered in each case,’’ said Spectrem president George H. Walper Jr. “On average, lawyers are more likely to use financial advisors than other investors, since financial advisors do the same work as lawyers – offering advice to clients in need of advice.”
The research in the Professional Series delves into the percentages of lawyers who use advisors, who seeks particular forms of financial advice, or who feel they don’t need financial advice because they know as much as advisors do. But it is in the qualitative responses that the true sense of how lawyers view advisors comes out.
For example, while 85 percent of lawyers use advisors (a much higher percentage than the general population of investors), 59 percent say the services of a professional advisor are “very expensive”, another very higher percentage. It is also true that 43 percent of all lawyers say they don’t care about the fees as long as their assets are growing.
But fees are one aspect of the relationship, and commissions are another. Unlike advisors, lawyers do not work on commission.
“I would not consider advisors who are paid commissions for selling certain products,’’ said one lawyer.
Only 38 percent of lawyers consider themselves dependent in any way upon financial advisors; 17 percent are completely advisor-dependent and 21 percent are advisor-assisted, with communication on almost all financial decisions.
“We only rely on him to the extent of the funds we gave him,’’ explained one lawyer. He did not create a financial plan for us. However, we did receive a financial plan from two other advisors who hold my retirement funds and 457 fund.”
“I rely on the robo-advisor for all decisions about my brokerage account but not for a full financial pan,’’ said another lawyer.
The attitude toward robo-advisors is unique among lawyers. While very few of them believe a robo-advisor can do a better job of providing financial assistance, a great many believe robo-advisors are just as good as human advisors; 25 percent when choosing insurance programs that benefit the investor and 21 percent when choosing stocks.
“I use a robo-advisor because I wanted a simple low-cost algorithm to drive my investments,’’ one lawyer said.
“I would (use a robo-advisor) if it makes managing the future of my finances easy,’’ a lawyer replied.
Lawyers are not shy about discussing the relationship that exists between lawyers and advisors in terms of performing the same basic task (giving advice) in different circles of influence on a client’s life.
“I would say we are at the same level in our respective fields,’’ one lawyer said. “I feel that he is more family with tax aspects of investing than I am and that is very important to me.”
“I think he is as knowledgeable in his area as I am in mine,’’ another lawyer said. “If he wasn’t, I would invest myself or find someone who is more knowledgeable than I.”
Top Takeaways for Advisors
Lawyers are certainly the thinking man’s investor, even if they don’t always think the same way a financial advisor would. Advisors working with lawyers need to be prepared; lawyers often do their own research and are not the least bit shy about stating their point of view on the subject.
The one type of lawyer that advisors can best benefit from are the extremely busy ones. When a lawyer who does not have a financial advisor was asked what might make him sign up with a professional advisor, she said “If I found that I don’t have time to manage my investments myself.”
©2017 Spectrem Group