The burden of knowledge

I was surprised to read new research recently reporting that 70 per cent of lawyers are worried they won't be able to adequately fund their retirement. That's concerning, of course, but what really caught my eye is that they appear more
worried than others. The research also reports that,
in comparison, only 55 per cent of the general public shared the same fears.

Legal professionals tend to be highly educated and often rub shoulders with those in the financial world, so we might expect their financial planning to be better than average. So why the discrepancy?
Well, it might be that lawyers do indeed have a greater insight, and that the higher level of concern reflects a greater understanding that their planning is poor. Unfortunately however, it seems that lawyers are no more inclined than anyone else to get to grips with actually taking action.

Part of this is simply the natural inertia that we all share. With busy lives and professional commitments, our own financial planning often gets pushed down the priority list. Lack of trust can also be a reason for a reluctance to take advice; some see financial planners as the poor relation among other professionals and that's partly justified. It has to be admitted that despite the Retail Distribution Review abolishing commission and tightening qualifications, there remain some advisers who (in terms of professionalism and expertise) are not all that they should be. For the many who are truly excellent, these relatively few bad apples are a matter of frustration and dismay.

Having said that, most lawyers will know at least one adviser they trust, and the major factor is perhaps not so much about trust, as it is a preference for the DIY approach. However even assuming the expertise is sufficient (and often it's not), this approach always cuts out a vital component. It's the role of a good financial adviser not just to advise, but also to drive action, to prompt and even to challenge. We all need this external prompting sometimes. I have come across financial advisers who themselves needed a nudge to sort their own planning, just as I've come across solicitors without wills in place.

If you're to avoid the traps of the DIY approach and benefit from what a genuinely excellent financial planner can offer you, there are three simple steps to getting your retirement planning in order.

1. Get to grips with your current position

Until you know where you are, you can't even start to draw up a realistic financial plan. Start by drawing up a detailed summary of your current assets, liabilities, income and expenditure. Some people seem to resent scrutinising their spending this closely, but these people often find the biggest surprises.

2. Agree your retirement goals

Think about the age at which you want to retire, what you'd like to be doing and what that would cost. Involve your partner or spouse at all times as they may have different ideas. Again, without at least a target in mind, how can you hope to get there?

3. Appoint a Chartered or Certified Financial Planner

While you might be able to do your financial planning by yourself, the odds really aren't in your favour. For most people, appointing a professional financial planner is the way to go.

The financial planner will be able to help you draw up realistic goals and a plan to achieve them; assess your attitude towards investment risk, your capacity for loss and how much risk you ‘need’ to take to achieve your goals; recommend the most tax efficient methods of managing your affairs; and, sit down with you at least once a year to review all of this, making any necessary changes and act as a financial coach to keep you on track.

Scott Gallacher is a director at Rowley Turton

He writes the regular IFA comment in Private Client Adviser