Financial Advisors for Lawyers: How to Choose The Right Partner for Your Finances
Attorneys spend years mastering the law, advocating for clients, and building successful careers. However, when it comes to managing their finances, many lawyers struggle with wealth optimization, tax efficiency, and long-term financial security.
This guide will help you identify the key factors to consider when selecting a financial advisor who understands your unique financial concerns and considerations as an attorney.
Why Lawyers Need a Specialized Financial Advisor
Great lawyers are trained to see around corners, anticipating challenges before they arise. Financial advisors need that same foresight to grow and protect wealth. Wealth management is a specialized field—one that most lawyers simply don’t have the time to master.
Attorneys also tend to face financial challenges that differ from other high earners. Many attorneys experience irregular income streams from bonuses, settlements, and equity distributions, which make financial planning more challenging. Additionally, high tax liabilities mean that without proactive tax planning, attorneys risk overpaying significantly.
Lawyers also tend to begin accumulating wealth later in life due to their education requirements and the time it takes to grow their practice. This can delay their ability to build substantial retirement savings. For firm partners, embedded practice equity presents unique challenges that further restrict their liquidity.
A financial advisor specializing in attorneys understands these challenges and provides tailored strategies to help lawyers optimize wealth, reduce taxes, and secure financial stability.
Key Factors to Consider When Choosing a Financial Advisor
1. A Fiduciary Ensures Your Interests Come First
Just as there are varying degrees of quality when choosing an attorney, so too is the case when choosing a financial advisor. Some advisors are more proficient than others, and many work on commission-based models that prioritize selling financial products over truly serving your best interests.
A fee-only fiduciary financial advisor is especially important for attorneys, as they provide recommendations free from conflicts stemming from commission-based compensation, always keeping the client the sole focus of the discussion.
Your bar association considers this standard to be a cornerstone of your professional obligations. Fiduciary financial advisors do too.
2. 30 years of Experience Working With Lawyers
The right advisor should have experience working with attorneys and understand key wealth building needs such as contingency fee structuring and retirement planning for both solo practitioners and firm partners.
In addition to these considerations, tax-efficient income deferral strategies are essential for attorneys. Lawyers who receive lump-sum payments, such as bonuses or settlements, require specialized planning to mitigate tax burdens and keep more wealth.
A financial advisor with decades of experience working with legal professionals—helping attorneys strategically structure their income for maximum tax advantages and long-term growth—can offer insights and strategies that other advisors simply can’t.
3. Tax Planning Expertise
Attorneys often fall into the highest tax brackets, yet many fail to utilize tax-saving opportunities, such as:
- Contingency Fee Deferral: Attorneys who receive large settlements can spread their taxable income over multiple years to reduce their tax burden.All while their corpus stays invested.
- Specialized retirement plans: These retirement savings vehicles allow high-income earners to maximize tax-deferred contributions and minimize taxable income. Contributing over $300,000/yr is materially better than a $70,000 contribution, all before tax.
- Charitable Giving Strategies: Establishing donor-advised funds or making strategic charitable donations can provide significant tax benefits while supporting meaningful causes.
- Incorporation Strategies for Solo Practitioners: Structuring a law practice as an S-corporation or similar entity can help attorneys optimize tax deductions and retain more earnings.
Your tax preparer is the final voice on this topic. But knowing how to structure investments to minimize taxes is just good financial planning. This is what sets up increasing long-term wealth.
4. Investment Strategies for Long-Term Growth
Many attorneys fall into two common investment pitfalls—either being overly conservative with their money or taking excessive risks. A well-balanced investment strategy should focus on long-term growth while considering an investor's risk tolerance.
A customized investment portfolio for attorneys should incorporate diversified assets, including equities, fixed income, private investments, and alternative assets. Additionally, structuring investments in a tax-efficient manner is crucial, ensuring that capital gains are minimized and tax-deferred growth is optimized.
A well-crafted investment strategy aligns with an attorney’s financial goals, while providing opportunities for growth of capital. A financial advisor who understands the legal profession will ensure your investment plan reflects your risk tolerance and long-term objectives.
Warning Signs to Avoid When Selecting a Financial Advisor
Not all financial advisors are well-equipped to serve attorneys effectively. It’s important to watch out for red flags such as commission-based advisors who may prioritize selling financial products rather than offering unbiased guidance. A lack of fee transparency is another warning sign—attorneys should have a clear understanding of how their financial advisor is compensated.
Additionally, a one-size-fits-all approach to financial planning is a major red flag. Attorneys have unique financial considerations that require customized strategies. If an advisor lacks specific experience in working with lawyers, they may not be able to provide the level of expertise needed. A lack of advanced tax knowledge is another potential pitfall, as failing to optimize tax strategies can cost attorneys thousands of dollars in unnecessary taxes each year.*
*Samalin Wealth does not provide legal or tax advice. Clients are advised to consult their attorney or tax professional regarding tax strategies
Secure Your Financial Future Today
Selecting the right financial advisor is one of the most important decisions a lawyer can make. A specialized, fiduciary financial advisor ensures your financial plan aligns with your career goals, risk tolerance, and long-term aspirations.
At Samalin Wealth, we offer attorney-specific financial planning services designed to help legal professionals:
- Reduce tax liabilities through proactive tax planning
- Optimize income streams and investment strategies for long-term growth
- Protect assets from legal risks and unexpected financial downturns
- Plan for retirement and ensure a smooth transition out of practice
Ready to take control of your financial future today? Whether you are a solo practitioner, a law firm partner, or transitioning out of practice, we can help you build a sustainable strategy for lasting financial success and growing generational wealth.
