Financial wellbeing and retirement planning in law firms – is enough being done?

Many law firms are making good progress in improving the wellbeing of their partners and employees, understanding that when their team performs at their best, it benefits everyone; partners staff, clients and the firm itself.

Many firms have introduced initiatives to address one of the most significant problems in today's work environment: financial stress. While wellbeing has been a key focus in the legal sector over the past few years, too often the financial aspect of this issue has been overlooked. Stress related to finances and money, in particular, retirement planning, are major concerns for not just legal professionals but the overall workforce.

We look at the current state of employee benefits and financial wellbeing in the legal sector, how the workforce is adapting to change and why employee assistance programs offer a win-win for legal firms, partners and professionals.

Our analysis highlights both the current strengths and areas for improvement in the financial wellbeing of lawyers as well as the support provided by employee assistance programs. While a sizeable portion of respondents (52%), the majority of whom were partners, reported positive income stability and lifestyle management, major concerns remain around savings accumulation and retirement planning.

As well as this, over half of respondents (53%) said they already used a financial planner or wealth manager, and a further 41% of respondents said they had created a financial plan for retirement. However, 28% of respondents said they had taken no action on retirement planning, had no planned steps or didn’t feel prepared for retirement financially, whilst only 36% of respondents rated their personal saving accumulation as either ‘excellent’ or ‘very good’.

The data also suggests that financial challenges, such as long working hours, limited retirement savings options and lifestyle pressures, significantly impact financial health. 

Our report also highlights clear demand for comprehensive benefits schemes, particularly private medical insurance, income protection and life assurance. The provision of these benefits could enhance overall financial security and wellbeing among legal professionals, leading to firms retaining and procuring quality talent in a more progressive organisation.

One of these issues is around retirement planning and being offered the level of support appropriate to your present circumstances and what you want for the future. With an increasing number of people nearing retirement age, a large proportion of legal professionals are not planning for when they do decide to stop working.

Furthermore, last year’s survey showed that 54% of firms didn’t have a mandatory retirement age for their partners, and of the 46% that did so, the mandatory retirement age varied from 55-70. This clearly highlights that if partners don’t have the financial stability to retire, then it can cause succession issues across the firm.

As younger generations join the workforce, they introduce new values and view their careers through a different lens. The relationship between the employer and the employee has therefore been evolving over the years. Throughout the 20th century it was largely seen as a ‘loyalty contract’, wherein employees were provided pay, benefits and security in exchange for commitment. In a post-pandemic world, however, it can be seen as a lifestyle contract.

Employees want a healthy experience (physical, mental and financial) in exchange for sustainable performance. Organisations are constantly looking to attract and retain talent, and this hasn’t got any easier. For many potential employees, a balanced lifestyle, and one in which they can contribute more widely to society, may even eclipse the priorities of pay and benefits.

Addressing these issues through targeted support and planning could foster a more financially resilient and satisfied workforce. The rise of wellbeing propositions across the market is evident, most likely due to the increase in the number of employees working remotely and the acceptance of virtual meetings that a post-pandemic world ushered in.

Access to webinars, seminars and workshops around financial health and wellbeing is something that a lot more employers are prioritising, recognising the importance to the workforce. Increasingly employees are scrutinising their benefits package as a key component of their total reward, so ensuring that these keep pace with change can be critical in respect ofboth the attraction and retention of staff.

More and more organisations are deciding to focus their financial wellbeing programs on someone’s life stage, for example, if they’re looking to buy a home, planning to put children in school or thinking about retirement. Flexibility can be built into a benefits package to ensure it captures the needs of a diverse workforce.

Regardless of an employee’s life stage, this year’s law firm survey found that the top benefits lawyers were private medical insurance, income protection/long-term sickness cover and life assurance.

So an employee benefits scheme that favours these benefits is likely to see more success in staff retention and talent acquisition with employees significantly prioritising benefits packages above other criteria such as salary amounts.