ARTICLE: Building financial resilience for attorneys and legal professionals with financial wellness solutions

A candid discussion on the factors impacting financial wellness and retirement readiness of attorneys and legal professionals.

While most Americans look forward to hanging up their boots at around age 65, legal professionals tend to have a much different retirement outlook. Even so, it’s imperative for legal professionals to have a plan. Recently we sat down with Bill Harmon, Chief Client Officer and Ginger Brennan, Head of the ABA Retirement Funds Program (“Program”) for a candid discussion on the key issues impacting retirement readiness for the legal community and how the Program has implemented solutions to help build attorney financial resiliency.

 

Q: How has the COVID-19 pandemic impacted the retirement readiness of attorneys and the legal community?

Bill

Facing court closures, a reduction in billable hours, the emergence of additional pandemic-related mental and health concerns, childcare issues and a new work-from-home environment, 6 in 10 legal professionals reported feelings of uncertainty, nervousness and frustration, which was very similar to that of the overall U.S. adult population.1

In the face of these emotions, legal professionals largely placed a high level of importance on the long-term view of their finances and remained more likely than non-legal professionals to ride out market volatility while staying the course.1 In other words, when the going gets tough, legal professionals get tougher, tend to stand firm and stay the course. One change we did notice was a shift in spending and savings habits. Specifically, two-thirds of the legal professionals surveyed said they will focus on saving more and spending less for the future. 1 And this focus is imperative considering more than one quarter of legal professionals plan to postpone their retirement date as a result of COVID-19. 1

 

Q: How is the ABA Retirement Funds Program helping attorneys and legal professionals gain financial resiliency through the COVID-19 pandemic?

Ginger

Fortunately, Congress stepped in to help alleviate COVID-related pressures by passing the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This sweeping legislation offered Americans easier access to their retirement plans through higher loan amounts and coronavirus-related distributions (CRDs). The CARES Act also offered participants the ability to defer loan repayments until the end of 2020 while eliminating the required minimum distribution (RMDs) for 2020.

Although helpful, the CARES Act created a substantial level of uncertainty throughout the legal community and beyond.  Based on Voya research, we know that legal professionals and non-legal professionals look to us and their employer for assistance and guidance, we launched a robust, multi-channel communications strategy to help plan participants and plan sponsors navigate the rapid changes with confidence. 1

The primary method of distribution for this campaign was the central digital hub that housed all of our rapid response educational content, which was easily accessible from the main site. Here sponsors and participants could access CARES Act forms and related CARES Act information, timely articles, investment information, answers to FAQs, resources from Program partners, webinars and a plethora of available tools and resources available through the Program.

By strategically delivering content via both print and electronic mediums, we were able to ensure optimum efficacy in encouraging sponsors and participants to stay the course. And the results of our campaign were telling: less than 1% of participants in the Program requested a COVID-related loan or distribution, while only 95% of Program participants stayed the course and didn’t move their money.2

 

Q: How has student loan debt affected retirement readiness?

Bill

Student loan debt has become the second largest class of debt behind only mortgages.3 Across the U.S., more than 44 million people collectively owe $1.5 trillion in student loans.4  While the lion’s share of this debt belongs to Millennials and Centennials (those born between 1979–2009), it cuts across all generations—including Baby Boomers— and professions.4  According to a report by the ABA, 75% of graduates finish law school with at least $100,000 in student loan debt, over 50% have more than $150,000 while a little more than 25% finish with over $200,000 in student loan debt.5

In spite of the financial implications, most people view post-secondary education as a career investment. In fact, those who have at least a bachelor’s degree earn 65% more than those without a degree.6 Even though college degree holders have higher lifetime earnings, those with as little as $30,000 in student loans could end up saving $325,000 less by the time they reach retirement.7

 

Q: How has the ABA Retirement Funds Program helped attorneys and legal professionals navigate student loan debt?

Ginger

While many law graduates pursue the profession expecting a six-figure income, they don’t expect or plan for the six-figure student loan tab when they finish. This albatross of a debt can impact almost every facet of their lives, including whether to have kids, purchase a home and even job choices.8 In addition, student loan debt is one of the primary contributors to financial stress, which can impact how employees feel and how they perform. For example, up to 43% of employees report that finances have been a distraction at work while 21% admit financial worries impact their productivity.9

To help employers and legal professionals navigate the best path forward, we offer a Financial Wellness experience centered around helping them find a healthy balance between living for today while preparing financially for tomorrow. The Program’s Financial Wellness experience is built on six pillars — including short-term and long-term goals — that we feel are foundational to overall financial wellness. While all of the six pillars are important, we believe those who are in control of their shorter-term goals are better equipped to handle longer term goals. Through the Financial Wellness experience, attorneys are better suited to organize their debt, get finances in order and create a plan that reflects their goals.

 

Q: How is the retirement age for attorneys and legal professionals different from other industries?

Bill

While most professionals begin looking toward retirement in their late 50s and early 60s, legal professionals are cut from a different cloth. At this age, most are just hitting their stride with very little interest in the next phase. On one hand, the years of wisdom, knowledge and experience serve as an invaluable asset in client conversations and meetings. This may explain why an estimated 84% of Big Law attorneys who are 60 or older are also partners.10 Due to the longevity associated with the legal profession, many attorneys forgo considering retirement. And this, unfortunately, can result in the forfeiture of valuable retirement planning years.

 

Q: How is the ABA Retirement Funds Program helping lawyers and legal professionals plan for the future and retire with dignity?

Ginger

Even though the retirement age and outlook can take on a different shape for legal professionals, the goal of the Program centers on helping each individual bring their vision of the future into clearer focus— whether they retire fully, partially or not at all. Because we manage a plan with more than 37,000 legal professionals across 4,000 law firms and legal organizations, we’ve gained specialized expertise on what it takes to do so.

The first step is providing plan access, and the Program is available to everyone from sole practitioners to law firms with multiple lawyers, paralegals and staff. No matter the size of the legal practice, participants enjoy an enhanced enrollment experience that is easy to use and available across multiple devices. Once enrolled, participants can use an array of digital tools, budget calculators and virtual assistants designed to increase savings rates.

If at any time legal professionals have specific questions, they can access Online Advice and Professional Management*. Here, they can receive personalized guidance to help them create a successful investment and savings strategy through Voya Retirement Advisors, LLC. Our dedication to the attorney retirement readiness doesn’t stop once they reach retirement: we continue to meet their needs with comprehensive, end-to-end solutions.

For example, we recently launched a first-of-its-kind “Retiree Menu” within the Program’s investment platform for attorneys and legal professionals who are nearing or in retirement. This unique experience offers custom investment opportunities more aligned with their objectives such as growing their account balance and protecting their capital.

 

The goal of the Program is to help all attorneys and legal professionals achieve a more secure financial future. And to best meet this need, we are taking a more concentrated look at the issues that may impact their ability to save for retirement, such as COVID-19, student loan debt, health care costs and others. We’re looking forward to rolling out more tailored health and wealth solutions that can help legal professionals enter the next phase of their life with confidence — if — and when the time comes.

 

  1. Voya Consumer Insights & Research Team, Consumer Sentiment during COVID-19: Legal Professional Deep Dive, August 2020.
  2. Program data for the period of 3/2021 to 9/2021
  3. com, “U.S. Average Student Loan Debt Statistics,” June 2019.
  4. SHRM, “Employers Explore Repaying Student Loan Debt,” July 2018.
  5. American Bar Association Young Lawyers Division, 2020 Law School Student Debt Report
  6. S. Bureau of Labor Statistics, “Measuring the value of education,” April 2018.
  7. LIMRA, “LIMRA Secure Retirement Institute: $30,000 in student loan debt could mean $325,000 in lost retirement savings,” November 2015
  8. American Bar Association Young Lawyers Division, 2020 Law School Student Debt Report
  9. PWC Employee Financial Wellness Survey, 2018
  10. com, “Mandatory retirement policies and you,” December 2015

 

 

*Advisory Services provided by Voya Retirement Advisors, LLC (VRA). VRA is a member of the Voya Financial (Voya) family of companies.  For more information, please read the Voya Retirement Advisors Disclosure Statement, Advisory Services Agreement and your plan’s Fact Sheet. These documents may be viewed online by accessing the advisory services link(s) through your plan’s web site. You may also request these from a VRA Investment Advisor Representative by calling your plan’s information line. Financial Engines Advisors L.L.C. (FEA/Financial Engines) acts as a sub advisor for Voya Retirement Advisors, LLC. Financial Engines Advisors L.L.C. (FEA) is a federally registered investment advisor and wholly owned subsidiary of Edelman Financial Engines, LLC. Neither VRA nor FEA provides tax or legal advice. If you need tax advice, consult your accountant or if you need legal advice consult your lawyer. Future results are not guaranteed by VRA, FEA or any other party and past performance is no guarantee of future results. Financial Engines® is a registered trademark of Edelman Financial Engines, LLC. All other marks are the exclusive property of their respective owners. FEA and Edelman Financial Engines, L.L.C. are not members of the Voya family of companies. ©2021 Edelman Financial Engines, LLC. Used with permission.

 

Please read the Program Annual Disclosure Document (April 2020), as supplemented (November 2020), carefully before investing. This Disclosure Document contains important information about the Program and investment options. For email inquiries, contact us at:  joinus@abaretirement.com.

 

Voya and the ABA Retirement Funds are separate, unaffiliated entities, and not responsible for one another’s products and services.

 

Bill Harmon and Ginger Brennan are registered representatives of Voya Financial Partners, LLC (member SIPC)

 

Products and services offered through the Voya® family of companies.

 

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