With that in mind, and with some influence from his wife Jillians professional experience, Jones zeroed in on young professionals in general, and more specifically young lawyers.
Jones, 29, has been working in financial services for about six years, most recently at Merrill Lynch, where, he said, the model wasnt set up to help young people.
The challenge is true across most of wealth management, where the popular asset-based pricing formula typically dictates that clients have lots of assets.
At Developing Financial, the San Francisco Bay-area firm Jones launched a year ago, the income-based fee model is a key element of making his niche work.
Figuring out how to charge was probably harder than finding my niche, he said. I knew asset-based fees wouldnt work, and I knew fees based on net worth wouldnt work because most lawyers graduate with more debt than assets.
Thus, considering cash flow management to be among the biggest challenges facing young lawyers, Jones decided to charge a fee equal to 2% of household income, which is capped at $4,000 for households earning more than $200,000.
He said the focus on young lawyers was hatched after watching his wife, a recent law school graduate, and some of her classmates face some financial obstacles unique to the career. Top of the list is an average of $150,000 worth of student loan debt just from law school.
But Jones said there are other issues and circumstances that a lot of lawyers deal with early in their careers.
Going from school or a lower-paying job into the legal profession can mean a significant income boost, which Jones said can be both a blessing and a curse if the cash flow isnt managed and monitored properly.
There is a natural tendency to have a lifestyle creep, where they start spending more in accordance with the increased income, and expenses can jump drastically, he said. They worked hard to get there, and they should allow the expenses to go up, but it can go up without saving for retirement or building a safety net. Sometimes people are so focused on spending to enjoy today that theyre not focused on saving for the future.
Jones said he helps clients stay grounded through conversations about career planning and lifestyle balance.
Well talk about whether the goal is to make partner or if they have other goals that might include starting a family, he said. What does an ideal career look like and how do we plan for that?
Another reason Jones stresses the importance of budgeting and financial safety nets is because in the legal profession, burnout is a big thing.
There can be a lot of financial insecurity when leaving a big firm and a big income, he said. Its important to set up a financial safety net so they know if they do get burned out, they can take time to find another job.
We're here to help. Send us an email or call us at +1 (585) 329-9661. Please feel free to contact our experts.
A donation will be made by Adviser First Partners to a Veterans organization on behalf of all financial professionals and firms that register each month
Contact Us© 2024 Adviser First Partners. All Rights Reserved.
Web Design by eLink Design, Inc., a Kentucky Web Design company