Can a Lawyer Also be a Financial Advisor | Real Experience Shared

It’s a most commonly asked question can a lawyer also be a financial advisor? A background in a legal study is an extremely valuable and useful resource for a career in wealth management as a financial advisor. After serving as a lawyer, becoming a financial advisor can be overwhelming.

The common concerns for just starting a career are a big challenge to build your own business. This uncertainty in making up the handsome salary. These are the two factors on which being a lawyer can be a financial advisor mostly depends.

This discussion will discuss how a lawyer can be a financial advisor, so keep reading the valuable article.

Can a Lawyer Also be a Financial Advisor?

Can a Lawyer Also be a Financial Advisor

To become a successful financial advisor, you need more than just an interest in money and investments. All this, as with all careers that involve advising others on their finances or managing large amounts of it yourself. Among them, are lawyers and accountants before them.

There’s also the matter of preparation for what comes next: learning about every possible aspect of taxes code (and how it applies to your client)to understanding various investment strategies. When clients come looking out for a potential retirement plan, you can offer sound advice based on research rather than guesswork.

What else?

A career change may seem daunting, but law school prepares prospective advisors better than most other backgrounds due to its heavy focus.

It is on preparing individuals for the task at hand since it’s not simply enough to know how to practice law or prepare for a trial (or any other aspect of being a lawyer). Still, you have to be able to back it up with knowledge -something that will come in handy if, say, your client comes looking for advice on the best way to structure his estate so he can protect himself from the government should anything happen.

However, given everything above, certain aspects of being a lawyer could prove problematic when transitioning into a financial advisor- mainly having access to privileged information regarding your client’s finances, which might expose them to risks where this information somehow leaked. This is especially true if they’re involved in some litigation with third parties, and it comes time to prepare for the case where you’re representing the said party.

Role of a Financial Advisor

Can a Lawyer Also be a Financial Advisor | Real Experience Shared

Lawyers who work as financial advisors can offer their services in larger firms and sole proprietorships. Since personal finance and corporate involves a host of regulatory and legal issues, law schools are doing their best to provide a legal background to graduates and problem-solving skills to make efficient financial advisors.

Investment or financial advisors oversee financial strategies for individuals or institutional investors. Like Today’s guests, some focus on high net worth individuals.

The available strategy widens from securities like bonds, mutual funds, and stocks to include private equities, hedge funds, and another alternative plan that needs a minimum amount of liquid net worth.

Becoming a financial advisor is a growing trend for lawyers nowadays. The roles and responsibilities of financial advisors include:

  • Introducing the new investors in the market.
  • Talking and communicating with clients who can easily tolerate the risk in business.
  • Knowing proper investment plans and strategies.

Then they work to maximize their returns and profits, reduce their risks and get their financial goals.

High net worth financial advisors meet with hedge fund managers and bond managers to know what will be the great work on their behalf as a financial advisor.

David Sadkin is a great example. A financial advisor at Bel Air Investment Advisor in Los Angeles explains how legal skills helped him become a financial advisor and success in this field.

In 2020, the median average pay of the highest 10% financial advisors was more than 208,000. According to BLS, this figure is 3000$ more than the median annual earnings for all occupations.

Two examples, as a lawyer can be a financial advisor

Success in the wealth industry greatly depends on a passion for the market, a strong desire to help people, and a healthy dose of entrepreneurial spirits. All these abilities prove that the individual must have multifaceted talents to succeed in the competitive market of the wealth industry. 

Many different career backgrounds can smooth a p[ath for being a financial advisor for a lawyer. The practice for law prepares the motivational financial advisor better than others to give valuable advice to their clients. 

The two examples are based on my opinion as a practicing lawyer who became a financial advisor who adds a valuable legal background to a wealth management career.

Example -1 preventing potential inter-family disputes

One event in which my background as a lawyer is greatly impacted the entire family that lives in the southeast area of the United States. 

The two families were matriarchs and patriarchs in the late 70s. Both did not save anything for their future after their retirement. They did not have the property of liquid net worth beyond the $9 million home at beachside that they owned.

The home came with a mortgage of $1 million. There were three children in the next generation, two of whom were my wealth management clients. One member was lending money to their parents to lead their lives because patriarch and matriarch could not refinance their loan and could take any cash from their property because they have a source of income and assets outside their property.

Both were hesitant to sell their property because they wanted their children to get the setup on a cost basis for tax purposes on the real estate after their death. 

My training as a lawyer lets me identify the issues that my client is facing; most probably, there may be interfamily disputes regarding the loans. However, the next generation is going well, as money changes things and events, especially when the older generation has no involvement. 

There are more details

Since no bank could refinance the current loan and provide both parties with lifetime liquidity, I helped the family by finding a third party to give $3 million to both parties after the first mortgage payment to get the full lien on the property. 

The child who lent them money on a month-to-month basis got the full payment. After this, both parties could produce the amount of capital for the investment in a conservative portfolio. That could offer them some top dropdown and income for their remaining lives. 

So the main aim was to prevent the conflict among the two parties, in which one sibling of one party had money, and the other did not have. Thus the result was a dispute. 

Example -2 sudden tragedies and their effect on the family concerns

The other scenario is when a legally trained financial advisor can offer financial assistance when there is a case of an individual’s unexpected and sudden death.

For instance, at the age of 42, he suddenly died, all of the rest of his family members were living in any other country, but his fiancé lived in Maryland. His family came to the US and did not know what to do financially. 

My first advice to the family member was to determine if there is a will of him. Even in these issues, no family member in his family can look for the will. There should not be anyone in the apartment except two people who can look for the will.

It was a simple process, but the whole family was confused about taking steps further. I suggested they take help from the person’s assistant to procure the financial information. This helped access the investment accounts and bank statements. 

After getting all the essential information and hiring the attorney, much discovery was possible. This was the simple value-added financial advice to the family and straightforward advice in the crisis. 

Knowledge is power

The lawyer’s legal background with analytical skills is essential to accomplish their clients’ results. Some career opportunities can offer many benefits of experience. Being a legal advisor, your career evolves, risk, momentum, deep understanding of people. Also having investor psychology, and nurturing decision-making ecosystems on the basis for your career growth in your financial advising career. 

Being a lawyer is not the only step to studying law, and skills are also necessary for wealth and financial advisory. Being a problem solver and a lawyer was the best way to jump my career as a financial advisor.

Frequently asked questions

What kind of jobs can I find with a law degree?

Undoubtedly, the law is an integral part of almost every field and aspect of our lives. It is not amazing that there are many career opportunities with the law degree that you can pursue. The roles that directly relate to the law include the courtroom and law firm careers, to alternative and non-law careers. That involves law enforcement, teaching, business, politics, marketing, diplomacy, and finance.

Who are financial advisors?

A financial advisor or investment advisor is an expert professional who offers financial services to clients according to their financial position. Financial advisors have to complete specific training in most countries and be registered with the regulatory body to provide advice.

What is the responsibility of a financial advisor?

Personal financial advisors analyze individuals’ financial needs and help their decision-making process, like stocks and bonds, insurance, and tax laws. Advisors help their clients to plan short and long-term goals. Among these, budgeting for educational expenses and saving for retirement through investments. 

Does a financial advisor make you money?

In this arrangement, financial advisors make their money by earning commissions; advisors earn their fees when they recommend and sell special financial products like mutual funds or annuities to a client. For instance, you may invest 5000$ into a mutual fund your advisor recommends. 

Do lawyers do financial planning?

Most lawyers lack the time and extensive financial background needed to make critical decisions that affect their long-term financial security. That’s where financial planning for lawyers provided by a qualified and skilled financial advisor can help

Conclusion

One can also be a financial advisor of the firm, company, or organization. He can also give legal advice and financial advice to individuals. The ultimate goal of the financial advisor is to help the client access and get financial peace. They do their job by directing and advising people to set their goals. They also create the financial plans to operate retirement funds, estate plans, school savings, and even large purchase buying. 

References

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