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Why are law firms broadening into financial advice?

Why are law firms broadening into financial advice?
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It is not just private equity investors that are apparently showing an interest in the financial advice industry, but law firms too.

In May, boutique firm Wildcat Law shared its intention to enter the financial advice industry as it awaits authorisation by the Financial Conduct Authority.

In the same month, law firm Irwin Mitchell announced its acquisition of chartered financial planner TWP Wealth, as the former looks to expand its wealth management arm.

So why are law firms expanding their remit into financial advice?

Although not necessarily common, the concept of a multi-service firm is not a new one, with Progeny, for example, having officially launched in 2016 to bring wealth and legal services together.

“The Progeny concept was born out of the recognition that many clients need a whole suite of professional services, but they were having to interact with multiple firms and advisers to fulfil these needs,” says Progeny chief executive Neil Moles.

“Before we launched Progeny, we spoke to clients who expressed their frustration over a lack of joined-up advice and clarity over fees and we’ve aimed to solve this by providing access to holistic, collaborative advice, where clients have all their professional services advisers under one roof.”

Wildcat Law director David Robinson speaks of a similar motivation. “We aim to offer an integrated service for our clients, as we are family and business advisers rather than just transactional lawyers.

“For example, this means when we are speaking to them about estate and succession planning we can look at all aspects, from protection through to their wills and bespoke trust arrangements, including how assets are held in those trusts.

“It is only possible to offer a seamless service by offering them together, rather than external referrals.”

Transactional vs ongoing advice

While both are client-facing industries, Chattertons Wealth Management chief executive Richard Ludlow describes legal services as often transactional in nature. “By offering our clients financial services as well, there was an opportunity to stay in regular contact and provide an ongoing service.”

Chattertons, a Lincolnshire-based law firm established in the 19th century, expanded into financial services more than two decades ago to provide clients an extra service that complemented the firm’s existing offering.

Indeed, it is often for legal advice that wealth management clients will initially approach Chattertons. “All areas of law can have a financial angle,” says Ludlow. “Our legal colleagues regularly refer clients to our wealth management division, but it also works the other way round.

“Someone making a will might want a review of their existing investments and pensions. We might be dealing with a trust case, and the trustees require advice regarding investing the trust fund.”

Edward Tomlinson, head of financial planning at Irwin Mitchell, also says wealth management clients will typically have specific financial advice needs that are related to the legal advice they have sought.