No one would want to buy a stock at $100/share and immediately have a $60/share cost basis, but that's what happens with mutual funds.

bantam inc jack duval financial planning for attorneys - blind trust image

If justice can be blind, so can your portfolio.

Many attorneys work at firms that have prohibitions against owning individual securities.  This removes potential conflicts of interest that could lead to lost business or the appearance of impropriety. The result of this is that attorneys at these firms are often invested in high fee and tax-inefficient mutual funds.  This

is a mistake that can, and should, be avoided. There are at least two ways to avoid investing in mutual funds and still comply with firm by-laws: utilizing a discretionary separate account, or; investing through a revocable blind trust. Discretionary Accounts Many of the same firms that prohibit the ownership…

Planning alpha is abundant, available, and non-scarce. Unlike investment alpha, planning alpha is not a zero-sum game.

bantam inc jack duval planning alpha george v hotel

View from the George V Hotel in Paris.

Planning alpha should be primary objective of every investor.  However, because of the way the business of investing is structured, it isn't.  Why is that?  Because investing is a strange business.  For the vast majority of investments, the cheaper they are, the better they are. This flies in the face

of just about everything we've ever seen, been taught, or experienced with any other product or service. Does anyone think a Hyundai is better than a Bentley?  How about a sandwich at the local deli versus a dinner at Per Se?  Do you think a $1,500/hour attorney is better than…

One of the most powerful aspects of proper attorney second career planning is the ability to "see" into the future.

attorney second career planning - charles dickens

Charles Dickens, early adopter of financial planning projections.

When doing attorney second career planning, I've found that some rigorous analysis can clarify things very quickly. Questions such as, can I afford to switch now, how risky is this, and what are the long-term financial implications, all need to be uncovered and contemplated before the decision is made. Indeed,

if you've had a successful legal career and are looking to start something new, you need to think it through very carefully, get the timing right, and then plan it out with precision. No attorney leaves a successful career lightly.  However, the proper planning can lessen the uncertainty, reveal the…

In lateral hiring situations, the acquiring firm is playing a repeated game, whereas the partner is playing a single-shot game. 

Show. Me. The. Analysis!

Attorneys as Unrestricted Free Agents The most interesting phenomenon in the world of professions is attorneys as unrestricted free agents, able to sign with whatever firm they want and, in some instances, getting 8-digit signing bonuses and salaries.[1]  Indeed, AmLaw 100 firm partners are making more than professional athletes. For

example, the average NFL player salary number that gets quoted is typically over $2M per year, but this is misleading because of a few outsized contracts for quarterbacks and defensive ends.[2]  The more relevant number is the median salary, which is $860,000.[3]  (Medians are unskewed by outliers.) The NFL league minimum…

An elegant alternative to unwanted exposures to a sector is to build a custom index.

Like John Wick's suits, your portfolio should be tailor made.

Many AmLaw 100 firms don't allow their partners to own individual stocks due to conflict of interest concerns.  However, there are other ways to achieve attorney diversification. The obvious solution is for the partners to own diversified baskets of equities such as index funds or ETFs and mutual funds.  However, these

are not good options because of the likely large overlapping risk exposures to the partner’s firm and practice group. For instance, if the partner is doing transactional work in the technology sector, an investment in an S&P 500 index fund would be sub-optimal due to the large weighting of…