Focus on short-term goals like billable hours deflect from planning for the worst
Early in the pandemic, wills and estates lawyers noted a surge in interest from clients looking to make sure their finances were set for the worst case scenario. As financial markets have fluctuated, and work in some practice areas slowed, lawyers were taking stock of their own potential retirement plans.
“The whole COVID-19 situation and the uncertainty that it has brought should be a wake-up call for a lot of lawyers to try to possibly sit back and assess how resilient
their financial plans are. How long can you go without income, if your clients start saying, ‘I can't afford you anymore’?” says Jean-Pierre Laporte, lawyer and CEO of Integris Pension Management Corp.
“We really believe that you need to have thought of how to weather these types of shocks. Now that things seem to be slowly opening up, before people rush back to the day-to-day, they should make sure that they think about how well protected they are. You never know when it's going to be resurgence — a new bug, something else happens — and the authorities close down the economy again.”
Laporte practised as a private firm lawyer, acting for pension companies, but says he was inspired to start Integris because he realized lawyers themselves were not taking advantage of opportunities to plan for their own retirement.
“Lawyers are notorious for caring more about their client's affairs than their own. They're so busy with the day-to-day practice, that often they run out of juice and don't take the time to look after their own interests,” he says. “You need to have a proper will in place. You need to start thinking about retirement, because no one's going to give you a pension.”
Lawyers don’t have the type of large-scale, established wealth management options like doctors have with MD Financial, says Laporte, saying that there’s a lack of awareness and advertising of the similar products available to lawyers. For example, says Laporte, sometimes lawyers are not prepared for events like a partner’s death or illness, which could be weathered with buy-sell insurance.
“Lack of information, lack of bandwidth . . . when you combine all that together, that explains why most lawyers are completely in the dark,” he says. “That type of insurance should be basic knowledge. I mean, I'm not a financial planner, but there are a lot of things that aren't being done because people are so busy focusing on the day-to-day, the billable hour, the client files. They are just running out of bandwidth and making decisions which are suboptimal.”
Laporte says a bit of time invested now can have long-run benefits when it comes to saving on taxes, incorporating, or creating pension plans (the latter of which is what his company offers.) Companies like his now offer pension plans with higher contribution limits that are better shielded from creditors, and allow for more flexibility when adding beneficiaries. For example, he says, some pension plans allow for special payments when the stock market falls, which can build up more money for when the market swings back up.
“Take the time when you're at home and maybe not traveling as much to think about yourself. Think about your financial plan and make sure that you've built as solid of a fortress around yourself,” he says.