Source: The American Lawyer
By MP McQueen
Big-firm lawyers may be smart and successful, but they make retirement planning mistakes just like everyone else, say financial planners and wealth managers who work with them.
These include failing to start early enough, not saving and investing enough in their prime earning years, investing too conservatively, insufficiently diversifying their portfolios and carrying too much debt. They also have a few quirks particular to members of the profession, such as being generally risk-averse, planners say.
But now that firms are moving away from defined benefit pensions and putting more responsibility for retirement risk on the shoulders of lawyers themselves, it's imperative that lawyers pay more attention to their retirement.
Licensed and qualified financial planners revise plans and projections periodically on the basis of new information and new goals. Retirement advisers acting under a fiduciary standard must work solely in the best interest of clients.
Being clueless about pension plan basics. Many partners don't even know the fundamentals of their pension, according to a recent survey by Major, Lindsey & Africa. "Although partners were generally aware of whether their firm had a pension, they were surprisingly unfamiliar with the terms of their pensions," says Jeffrey Lowe, global practice leader at Major, Lindsey & Africa's law firm practice group. For example, over 50 percent of respondents were unsure whether their pension would be paid out in a lump sum or on a monthly basis; of those receiving a monthly sum, over 33 percent were unsure of what that monthly sum would be; and nearly 25 percent were unsure how long that monthly payment would continue, Lowe says.
Read more of this feature at The American Lawyer.