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A legal background is an extremely useful resource for a career in wealth management.
Becoming a financial advisor is a daunting career step after serving as a lawyer. The challenge of having to build your own business and the uncertainty of making a salary are common concerns for advisors just starting out.
These two factors alone are enough to dissuade most from embarking on what could be a successful career path. Furthermore, success in the industry depends on a strong desire to help people, a passion for the markets and a very healthy dose of entrepreneurial spirit. All this proves that the one must have many, multi-faceted talents in order to be a success in the wealth management industry.
There are many different career backgrounds that can pave the way to being a successful financial manager, but the practice of law prepares an aspiring financial advisor better than most others to give meaningful advice to clients. Below are two examples, based on my own experiences as a practicing attorney-turned financial advisor that illustrate the value a legal background adds to a career in wealth management.
Example 1: Preventing potential intra-family disputes
One scenario in which my background as an attorney was impactful concerned an entire family that lives on the Southeastern coast of the United States. The matriarch and patriarch of the family, who are both in their late 70s, had unfortunately not saved for retirement and did not have much in liquid net worth beyond the $9 million beachside home that they owned, which came with a $1 million mortgage. The next generation included three children, two of whom were also my wealth management clients. One member of this next generation had been lending the parents significant cash flow so that they could live, because the matriarch and patriarch were unable to refinance their loan and take any cash out of the property as they had no income or assets outside of the property itself. The matriarch and patriarch were also reluctant to sell the property as they wanted their children to receive the “step-up” in cost basis for tax purposes on the real estate after they were deceased.
My training as an attorney enabled me to immediately identify the issues facing my client, most notably that there could be some future intra-family dispute regarding the loans being made. Although the next generation all got along with each other, money has a habit of changing things especially when the older generation is no longer involved.
Since no major bank was able to refinance the existing loan and provide the matriarch and patriarch with the lifetime liquidity they needed (due to the new and stricter loan underwriting that was required by the Dodd-Frank Consumer Protection Act), I helped the family identify and select a third party that was able to lend the matriarch and patriarch $3 million after paying off the first mortgage to have the first lien on the property. Their child, who had previously lent them money to live on a month-to-month basis, was paid back in full. Furthermore, the matriarch and patriarch were able to create a pool of capital that was invested into a very conservative portfolio that would provide them with income and some principal drawdown for the remainder of their lives.
The main goal was to prevent a potential conflict down the road, in which one sibling was owed money and the others weren’t, thus leading to a dispute. Secondly, there was the issue of having a third party providing the liquidity to care for the parents for the rest of their lives again without potentially further impacting the intra-family dynamic.
Example 2: Sudden tragedies and their impact on the family dynamic
Another scenario of how a legally trained financial advisor can provide added value can be found in the instance in which there is a sudden and unexpected death. For example, one of my clients is an estate where the decedent died suddenly and tragically at the age of 42. All of the decedent’s family were located internationally, with the exception of her fiancé, who lived in Maryland. The decedent’s family, including her mother, brother, aunt and uncle, came to the U.S. and did not know what to do financially.
My initial advice to the family was to determine whether the decedent had a will (she did not). Even in this regard, the family’s concern was that there were so many people in the decedent’s apartment that they were unable to look for the will. I simply advised them to go back to the apartment and ask everyone to leave. Consequently, the only two people allowed to stay and look for her will were the decedent’s mother and brother. It was so simple, but the family was so paralyzed that they were unsure what steps to take. I also suggested that we get the decedent’s personal assistant heavily involved with the procurement of her financial information. This gave us much needed access to the decedent’s bank and investment accounts.
Once we had gathered all of the information and by the time we got to the attorney to whom I had referred them, much of the “discovery” had been completed. This was a serious value-add to the family, both in terms of straightforward guidance during a time of crisis and economically related to the procurement of counsel.
Knowledge is power
My legal background has provided me with the analytical skills necessary to accomplish these results for my clients, but there are many careers that can provide numerous benefits of experience. As your legal career evolves, recognize that having a deep understanding of people, risk, momentum, investor psychology and creating a nurturing decision-making ecosystem to live within, are the foundational seeds of growth for a career as a financial advisor.
Being a practicing attorney is not the only next step for those studying law and the skills acquired are transferable to a range of career paths, wealth-management and financial advisory in particular. Given my nature and predisposition to being a problem-solver, practicing law was the best thing to jump-start my career as a financial advisor.
Stuart Riemer is a managing director and private wealth advisor at HighTower’s Treasury Partners, a member of the team’s wealth management group and a graduate of the Cardozo School of Law. He specializes in working with fellow attorneys on their own and client wealth management concerns. Stuart holds a Series 65 Securities License, and is life and health insurance licensed. He is a retired member of the New York State Bar.
Treasury Partners is a team of investment professionals registered with HighTower Securities, LLC, member FINRA, ; and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through High Tower Advisors, LLC.
Treasury Partners has obtained all data and other information referenced herein from sources believed to be reliable. Treasury Partners and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein.
This document was created for informational purposes only; the opinions expressed are solely those of Treasury Partners, and do not represent those of HighTower Advisors, LLC, or any of its affiliates.
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