How to make sure your finances reflect your professional standards

6 September 2024

4 minutes

At a glance

• Regulated professionals such as lawyers and accountants have extra considerations when it comes to their financial affairs, including making sure that they don’t compromise their professional integrity.
• For example, if you work with publicly traded companies and are privy to confidential information, you need to make sure none of your personal investments pose a conflict of interest.
• It’s important to work with an expert financial adviser who fully understands your requirements as a regulated professional.

Accountants, lawyers and other professional-services specialists need high-quality financial advice, just like their peers in other disciplines. But that advice may need to incorporate an extra dimension, as the financial decisions you make must not be allowed to compromise your professional integrity.

“The level of scrutiny you face as someone working in professional services may be significantly higher,” warns Obi Nnochiri, Head of Private Client Consultancy at St. James's Place. “You need financial advice that ensures the decisions you take can stand up to that scrutiny; otherwise, you’re at risk of reputational damage, professional sanction or even criminal prosecution.”

Here are some key areas you should keep a close eye on, with your adviser’s support:

Avoid conflicts

Conflicts of interest are a good example of the potential danger. The work you do with a corporate client, say, could give rise to a conflict if you also have exposure to the client through your personal finances – perhaps because you’ve invested in the business.

Insider trading could be an even more serious problem. As a professional adviser to a business, you’ll very often have access to sensitive information that could affect its value. If you trade in the shares of that business before this information becomes public, you’re potentially committing a criminal offence.

It’s therefore vital that those working in professional services – particularly in senior roles – have financial advisers who are alive to such dangers. Unless your adviser has addressed these questions directly with you, it’s possible they could unwittingly expose you to a problem – by investing your money in a business you work with closely, for example.

In practice, this means you should have an adviser who recognises the need for due diligence in this area – and has experience of doing such work. At the most basic level, they must take steps to understand where your professional work might need to be taken into account when undertaking the financial-planning process.

With that work done, it should be possible for advisers to protect their clients, says Obi. “For example, at SJP, we work using a system of clean funds. When we advise clients who work for one of the big audit firms, say, we make sure none of their money ends up in a fund that holds shares in any of the companies the firm audits.”

Be risk averse on tax

Tax planning is another area that can be difficult. HMRC has taken an increasingly tough line on tax avoidance in recent years – and while a dispute with the tax authorities could be risky and costly for anyone, the consequences for those working in professional services are potentially even more serious. At the very least, your reputation for professional integrity is at risk if a dispute becomes public – and worse still, it could lead to some form of censure from your regulatory body.

Good financial advisers will be conscious of this danger. While clearly the higher risk, alternative opportunities are not off-limits, it’s likely that you’ll want to be conservative with your strategy.

Moreover, these worries are often a question of public perception. An investment or financial-planning strategy that’s within the rules may still be regarded as unethical or ill-advised by your clients, potential clients or peers.

For all these reasons, it makes sense to work with an adviser who understands the nature of this and the responsibilities that come with it, as well as your personal financial-planning needs. If you take the time to clarify the issues your job might give rise to, an adviser will be able to protect you from these risks.

“Understanding the nature of the client’s work, how this might affect their attitude to risk, and the financial-planning choices they feel comfortable with, is a crucial part of the ‘know your customer’ process,” says Obi.

Think personal and professional

If you’re involved in running your own business – perhaps as a partner in a law firm or accountancy practice – you need financial advice that reflects this. There’s a good chance, for example, that your income will be more variable than that of someone who works as an employee, perhaps because you receive payment through dividends, bonuses or partnership distributions. As a result, you may have particular tax-planning needs that – as mentioned above – will require caution.

You may also need help with protection products, such as health and life insurance that are specific to your circumstances.

The right financial adviser can also help with professional decisions that will inevitably impact your personal finances – how to plan the sale of your business, for example. Once again, to work effectively, the adviser will need to understand fully the nuances of your profession.

How we can help

We can give you expert, trusted advice that will help you secure your financial future while protecting your professional integrity. Contact us today.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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