Lawyers and financial advisors have something in common.
Legal clients talk with lawyers about legal issues, looking for the best possible advice to resolve those issues. Investor clients turn to financial advisors looking for the best possible advice to increase and improve their personal portfolio.
So both professions deal with giving advice on matters of great importance.
So what happens when the lawyers are the ones asking the advice of the financial professionals?
After years of studying professionals such as doctors, lawyers and accountants as one segment of the investor population we called Professionals, Spectrem has separated those different service-providing occupations and compares those lawyers, doctors or accountants to investors in other occupations to determine how these separate occupations differ from others. The Professional Series study on lawyers finds that they are wealthy, knowledgeable and more likely to use a financial advisor than other investors.
The relationship between attorneys and their financial advisors is probably easier and at the same time more complicated. Attorneys occasionally deal with the financial issues of clients. Occasionally, attorneys and advisors work together for one client in matters related to estate planning and wealth transfer.
So it makes sense that attorneys would have a healthy respect for the professionals who offer financial advice. Our research indicates that is the case.
For example, 85 percent of lawyers use a professional advisor, an unusual high percentage of investors from any one occupation. Our research shows that attorneys on average consult with financial advisors on a greater portion of their assets than do other investors.
These insights make sense from an occupational standpoint. Lawyers approach financial advisors the way clients approach a lawyer, looking for someone who can handle a situation that is too complicated or time-consuming for the client to deal with. When attorneys are looking for financial and investment assistance, they understand the advantage of using a professional in that field.
It’s noteworthy that among the small percentage of lawyers who do not use a financial advisor, most of them say it is because they believe they can do a better job of investing funds than the professional. Perhaps that is the reason some people choose to serve as their own legal counsel, although you have to wonder how well that works out for them.
Attorneys are slightly more likely than investors from other occupations to have negative reactions to advisors, believing their fees to be too high or that advisors are motivated to sell certain products for their own benefit rather than think of their clients first. But, again considering how they make their living, it would not be unusual for attorneys to be slightly suspicious of anyone’s motivations. And, despite those misgivings, attorneys are more likely than other investors to use an advisor.
Spectrem’s Professional Series shows time and again that occupational segmentation works, and exposes differences in investors based on how they make their living. In looking at lawyers, when you consider how they make their living, the research becomes sensible and the lines of reasoning are easily drawn.
Advisors who work with attorneys as clients can draw from the research and take advantage of it to create a relationship where trust is key. Attorneys know a great deal about the importance of trust in a professional relationship.
An additional benefit to providing financial advice to a lawyer is that attorneys will sometimes have an issue with their own client that requires financial or investment advice. Spectrem’s study Centers of Influence tells exactly how that relationship works to the benefit of advisors. When lawyers serve as gatekeepers, they will turn to an advisor they trust, and that might just be their personal financial advisor.